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LATIN  AMEEICAN 

COMMERCIAL  LAW 


BY 

T./ESQUIVEL  OBREGON 

HONORARY  MEMBER  OF  THE  SPA^fISH  KOYAL   ACADEMY  OF  JURISPRUDENCE 

AND  LECTURER  ON  LATIN-AMERICAN  COMMERCIAL  LAW  IN 

NEW  YORK  AND  COLUMBIA  UNIVERSITIES 


WITH  THE  COLLABORATION 
OF 

EDWIN  M.   BORCHARD 

PROFESSOR  OF  LAW,   YALE   UNIVERSITT 


THE  BANKS  LAW  PUBLISHING  CO. 

NEW  YORK 

1921 


COPYRIGHT.    1921, 

BY 

THE  BANKS   LAW  PUBLISHING   COMPANY. 


til. 


PREFACE 

i  This  volume  is  designed  to  serve  both  a  scientific  and  a 

practical  purpose.     In  teaching  Latin- American  commercial 
law  in  Columbia  and  in  New  York  universities,  I  met  with 
great  difficulties  because  of  the  lack  of  any  book  which  could 
-  serve  as  a  text.    This  deficiency  is  at  least  partially  respon- 

sible for  the  fact  that  as  yet  the  special  study  of  the  com- 
mercial law  of  Latin- America,  comparatively,  has  not  been 
undertaken,  to  my  knowledge,  in  other  universities  of  the 
United  States.  As  the  pioneer  in  these  courses,  I  considered 
myself  under  obligations  to  serve  that  need  by  the  prepara- 
tion of  this  volume. 
~  My  purpose,  however,  is  also  to  satisfy  a  practical  need 

■g       of  lawyers  and  business  men.    Of  all  branches  of  private  law 
~       throughout  the  world,  the  law  of  trade  and  commerce  is 
^       perhaps  more  nearly  uniform  in  its  provisions  than  any  other, 
g       And  yet,  to  the  lawyer  trained  in  the  system  of  the  common 
.E       law,  the  commercial  law  in  the  civil  law  countries  presents 
tQ       difficulties  and  peculiarities,  partly  by  reason  of  its  character 
t^        as  a  distinct  branch  of  private  law,  and  partly  by  reason  of 
^        its  civil  law  origin  and  influence.    This  need  of  the  lawyer, 
I        and  the  practical  need  of  the  business  man  for  a  descriptive 
and  interpretative  work  I  have  sought  to  meet.    A  glossary 
]         of  Spanish  legal  terms  has  been  added. 
I  The  commercial  law  of  the  various  countries  of  Latin- 

i         America  is  sufficiently  uniform  in  its  fundamental  principles 
n         to  warrant  systematic  treatment  in  one  volume;  yet  its 
variations  in  detail  require  careful  examination  and  differen- 
tiation. 

iii 

405174 


iv  PREFACE 

The  method  adopted  in  this  volume  is  to  present  the  rules 
as  they  are  found  in  the  code  of  Spain  and  in  the  codes  which 
follow  it,  and  then  to  present  in  groups  or  systems  the 
variations  found  in  the  other  codes  of  Latin- America.  When 
it  has  seemed  useful,  illustrations  from  judicial  decisions  have 
been  quoted  and  cited. 

I  have  taken  the  Spanish  code  as  a  basis  because,  on  the 
one  hand,  it  is  in  force  in  Cuba  and  Porto  Rico,  and  because, 
on  the  other  hand,  the  draftsmen  of  the  codes  of  Latin -Amer- 
ica, with  the  exception  of  Haiti  and  Santo  Domingo,  which 
adopted  the  French  code,  were  inspired  by  the  Spanish 
commercial  law.  The  codes  of  Argentina,  Bolivia,  Chile, 
Colombia,  Costa  Rica,  Ecuador,  Guatemala,  Nicaragua, 
Paraguay  and  Uruguay  show  the  influence  of  the  Spanish 
commercial  code  of  1829,  and  the  others  that  of  the  Spanish 
commercial  code  of  1885. 

As  the  commercial  code  of  Cuba,  apart  from  recent 
amendments,  is  the  same  as  that  of  Spain,  and  the  commer- 
cial code  of  Paraguay  the  same  as  that  of  Argentina,  I  shall 
omit  references  to  Cuba  and  Paraguay,  except  when  some 
special  law  or  when  an  important  decision  of  their  courts 
seems  to  warrant  it. 

The  subject  of  maritime  law,  a  very  special  branch  of 
commercial  law,  has  not  been  included  in  this  volmne. 

In  the  preparation  of  this  work  I  was  particularly  fortu- 
nate in  having  secured  the  collaboration  of  Professor  Edwin 
M.  Borchard,  prominently  known  by  his  excellent  contribu- 
tions to  the  Uterature  of  international  and  comparative  law. 
He  is  professor  of  international  and  comparative  commercial 
law  at  Yale  University;  he  made  in  1915  an  extended  investi- 
gation of  commercial  law  in  South  and  Central  America  for 
the  United  States  Government,  and  a  part  of  his  research  was 
pubUshed  in  his  ''Guide  to  the  Law  and  Legal  Literature  of 


PREFACE  V 

Argentina,  Brazil  and  Chile."  With  that  rich  equipment  and 
the  notes  of  his  investigations  in  Latin- America,  he  has  made 
valuable  suggestions  and  additions,  and  principally,  with 
his  better  knowledge  of  English  has  made  a  revision  of 
the  book  invaluable  for  the  English-speaking  reader. 
I  gratefully  acknowledge   his  helpful  collaboration. 

In  view  of  the  growing  importance  of  Latin- America  in  the 
world  of  commerce  and  of  the  widening  interest  of  the 
United  States  in  the  field  of  comparative  law,  I  entertain 
the  hope  that  this  book  will  serve  both  a  scientific  and  a 
practical  end. 

T.  E.  0. 

New  York 
November,  1920 


CONTENTS 

PAGE 

Table    showing    relative    value    of    Latin-American 

MONEYS  TO  United  States  money   ix 

Abreviations xi 

CHAPTER 

I.  Introductory  and  general  matters 1 

II.  Commerce  in  general 32 

III.  Commercla-L  law  in  federal  countries 42 

IV.  Merchants 68 

V.  Mercantile  registry 85 

VI.  Commercial  bookkeeping 101 

VII.  Auxiliaries  of  commerce 116 

VIII.  Institutions  for  helping  commerce 139 

IX.  Commercial  associations  (1) 154 

X.  Commercial  associations.  (2)  General  part- 
nership   173 

XI.  Commercial   associations.    (3)  Corporations 

AND  manner  of  ESTABLISHING  THEM 188 

XII.  Commercial  associations.  (4)  Management  .  .    216 

XIII.  Commercial  associations.  (5)  Dissolution  and 

LIQUIDATION  OF  COMMERCIAL  ASSOCIATIONS.  .  .  .    230 

XIV.  Commercial  associations.    (6)  Limited   part- 

nership AND  JOINT  adventure 239 

XV.  Foreign  corporations  and  partnerships 249 

XVI.  Mercantile  contracts.  General  principles.  .   277 
XVII.  Mercantile  contracts.  General  principles. 

(continued) 298 

XVIII.  Commercial  agency 315 

XIX.  Mercantile  deposit 344 

XX.  Commercial  loans 351 

XXI.  Pledge 361 

XXII.  Purchase  and  sale 366 

XXIII.  Contract  of  transportation  overland 393 

XXIV.  Contract  of  insurance.  General  principles.  .   422 
XXV.  Fire  insurance 436 

vii 


Vlll 


CONTENTS 


CHAPTER  PAGE 

XXVI.  Life  insurance  and  overland  transportation 

INSURANCE 451 

XXVII.  Suretyship 460 

XXVIII.  Bills  of  exchange  (1) 472 

XXIX.  Bills  of  exchange.  (2)  Indorsement 495 

XXX.  Bills  of  exchange.  (3)  Presentation,  accept- 
ance AND  suretyship 502 

XXXI.  Bills  of  exchange.  (4)  Protest,  acceptance 

AND  PAYMENT  FOR  HONOR,  LEGAL  ACTIONS,  ETC.    531 

XXXII.  Local  bills  of  exchange,  promissory  notes, 

CHECKS,  ETC 558 

XXXIII.  Negotiable  instruments  payable  to  bearer..   577 

XXXIV.  Letters  of  credit 586 

XXXV.  Current  account 593 

XXXVI.  Bankruptcy  in  general 599 

XXXVII.  Bankruptcy.    (2)  The  declaration  of  bank- 
ruptcy and  its  effects 613 

XXXVIII.  Bankruptcy  (3)  Receivers  and  classification 

OF  creditors'  claims 640 

XXXIX.  Bankruptcy  (4)  Classification  op  bankruptcy 

and  its  effects  upon  the  bankrupt 657 

XL.  Legal  procedure 688 

XLI.  Legal  procedure  (2)  Rules  of  general  appli- 
cation     737 

XLII.  Legal  procedure  (3)  Contentious  and  non- 
contentious  jurisdiction 764 

XLIII.  Conflict  of  laws  in  Latin-American  coun- 
tries   804 

Glossary 833 

Alphabetical  index 905 


For  a  proper  understanding  of  references  herein  to  money  in  Latin- American 
countries  the  following  table  will  give  the  relation  between  the  monetary 
units  used  to  the  dollar. 

Countries  are  grouped  according  to  their  monetary  standard. 

GOLD  STANDARD 

Countries  Unit  Value  in  U.  S.  money 

Bolivia Boliviano $0.38932 

Costa  Rica Col6n 0.43336 

Cuba Peso 1.00 

Ecuador Sucre 0.48666 

Peru Pvn.  pound 4.86656 

Porto  Rico Am.  dollar 1 .  00 

Santo  Domingo Am.  dollar 1 .00 

Uruguay Peso 1.03424 

Venezuela Bolivar 0. 19295 

The  monetary  unit  referred  to  in  the  commercial  code  of  Peru  is  the  sol, 
which  is  worth  $0.48666  U.  S. 

GOLD  EXCHANGE  STANDARD 

Countries  Unit  Circulation  Value  in  U.  S.  money 

Argentina Peso Paper $0 .  42449 

Brazil Milreis Paper 0.32444 

Mexico Peso Gold 0.4986 

Nicaragua C6rdoba Silver 1 .  00 

Panama Balboa Gold 1 .  00 

The  unit  referred  to  in  the  codes  of  Nicaragua  is  the  peso  with  a  nominal 
value  of  $0,435. 

SILVER  STANDARD 

Countries  Unit  Value  in  U.  S.  money  when 

silver  is  at  Sdcs  an  ounce 

Honduras Peso $0.39786 

San  Salvador Peso 0.39786 

INCONVERTIBLE   PAPER 

Countries  Unit  Valu£  in  U.  S.  money 

Chile. Peso about  $0.20 

Colombia Peso about    0.01 

Guatemala Peso about    0 .  05 

Haiti Gourde about    0 .  25 

Paraguay Peso about    0 .  07 

In  Latin-American  coimtries  the  sign  $  is  used  to  indicate  the  monetary  unit 
of  each  country.  Sign  is  derived  from  the  letters  PS  as  an  abbreviation  in 
the  Spanish  style  of  the  word  "pesos"  (meaning  weights)  used  since  early 
colonial  times  before  the  mints  started  to  coin  money.  When,  therefore,  the 
sign  $  is  used  it  must  be  understood  that  it  refers  to  the  monetary  unit 
referred  to  in  the  text.  In  Brazil  the  sign  $  is  used  after  the  figures  relating  to 
the  milreis  e.  g.,  300$000,  which  must  be  read  300  milreis. 


ABBREVIATIONS 

When  after  a  number  indicating  an  article  or  section  of  a 
code  or  law  no  mention  is  made  of  any  special  code  or  law,  it 
must  be  understood  that  such  number  belongs  to  the  code  of 
commerce  or  to  the  special  law  mentioned  in  the  body  of  the 
chapter;  otherwise  and  except  in  cases  of  special  indication, 
the  letters 

c.  c.  mean  Civil  code 

p.  c.  mean  Political  constitution 

c.  p.  mean  Code  of  civil  procedure. 


GENERAL  BIBLIOGRAPHY 


Spain 


G6mez  Herrero,  Teodoro.  Dicconario  guia  legislative  espaiiol.  Madrid, 
1890—5  V.  and  2  suppl. 

Colecci6n  legislativa  de  Espafia.  Sentencias  del  tribunal  supremo  de 
justicia.    Materia  civil.    Madrid,  1874-1904.    55  v. 

Biblioteca  Jurldica  de  la  Revista  general  de  legislaci6n  y  jurisprudencia. 
Secci6n  de  jurisprudencia  civil.    Madrid,  1838-1913.    123  v. 

Diaz  Dominguez,  A.  Tratado  elemental  de  derecho  mercantil  conforme  a  la 
filosofia,  la  historia  y  la  legislaci6n  vigente  en  Espafia  y  en  las  principales 
naciones  de  Europa  y  America.    Granada,  1908-1909. 

Repertorio  doctrinal  y  legal  de  la  jurisprudencia  civil  (years  1883  to  1909) 
por  la  Redacci6n  de  la  Revista  general  de  legislaci6n  y  jurisprudencia,  2d  ed. 
Madrid,  1912. 

Pantoja,  Jos6  Maria.  Repertorio  de  la  jurisprudencia  civil  espanola  (years 
1838  to  1887)  3d  ed.    Madrid,  1887.    2  v.  4  app. 

Sdenz-Hermua  y  Espinosa,  P.  Diccionario  recopilador  de  los  puntos  de 
derecho  resueltos  en  sentencias  del  Tribunal  Supremo  de  justicia  desde  1838 
hasta  1887.    Madrid,  1884r-1890.    4  v.  and  3  suppl. 

Escriche,  Joaquin.  Diccionario  razonado  de  legislaci6n  y  jurisprudencia. 
Madrid,  1874-1876. 

The  same.  Nueva  edici6n  por  don  Juan  B.  Guim,  y  un  suplemento  que 
contiene  el  c6digo  de  comercio,  la  ley  de  enjuiciamiento,  las  ordenanzas  de 
mineria,  las  ordenanzas  de  tierras  y  aguas  y  la  nueva  ley  de  enjuiciamiento 
civil,  etc.,  etc.,  va  afiadido  un  cuadro  sin6ptico  de  los  juicios  civiles  ordinarios  y 
extraordinarios  con  arreglo  a  la  legislaci6n  peruana.    Madrid,  1873. 

Gallostra  y  Fran,  Jose.  Cddigo  de  comercio  espanol  vigente  en  la  peninsula 
e  islas  de  Cuba  y  Puerto  Rico.    Madrid,  1887. 

Pedret  y  Torres,  Victor,  Oliver  Rodriguez,  Enrique,  and  Torres  Ballasts, 
Juan.  Enciclopedia  juridica  espanola.  Barcelona,  1910-1911.  8  v.  and  2  app. 
through  1912. 

Martinez  Alcubilla,  Marcelo.  Diccionario  de  la  administraci6n  espafiola, 
5th  ed.  Madrid,  1892-1894.  9  v.  and  21  app.  through  1912;  6th  ed.  1914. 
6  V.  to  1917  and  annual  supplements. 

Marti  de  Eixald  ,Ram6n  y  Durdn  y  Bas.  Manual  Instituciones  del  derecho 
mercantil  de  Espafia,  9th  ed.    Barcelona,  1911. 

O'Malley,  Frank.  Our  South-American  Trade  and  its  Financing.  New 
York,  1920. 

Romero  y  Gir6n,  Vicente  and  Garcia  Moreno,  Alejo.  Colecci6n  de  las 
instituciones  politicas  y  jurldicas  de  los  pueblos  modernos.  Madrid,  1885- 
1889.    13  v.,  2nd  series.    2  v.  and  19  app. 

Posada,  Adolfo.  La  ensefianza  del  derecho  en  las  universidades.  Madrid, 
1889. 

xiii 


XIV  BIBLIOGRAPHY 

Piilmer,  Thomas  W.  Guide  to  the  law  and  legal  literature  of  Spain,  prepared 
under  the  direction  of  Edwin  M.  Borchard.    Washington,  1915. 

The  commercial  laws  of  the  world.  American  edition,  consulting  editor  Sir 
Thomas  Edward  Scrutton  .  .  .  general  editor  William  Bowstead  .  .  .  with  a 
general  introduction  by  Charles  Henry  Huberich.  Boston,  1911-1913.  33  v. 
(in  course  of  publication). 

Same.  German  edition.  Begriinder  des  werkes:  Dr.  Oskar  Borchardt. 
Berlin,  1911-1913.     14  v.  (in  course  of  publication). 

The  code  of  commerce  in  force  in  Cuba,  Porto  Rico,  and  the  Philippines. 
Translation  by  the  United  States  War  Department.  Washington,  Govern- 
ment Printing  Office,  1899. 

C6digo  de  comercio  con  las  ultimas  reformas  .  .  .  concordando  con  las 
leyes  civiles,  etc.  .  .  .  anotado  con  la  jurisprudencia.  Por  la  Redaccion  de  la 
Revista  de  los  Tribunales.    12th  ed.    Madrid,  1910. 

Walton  Clifford,  S.  Leyes  comerciales  y  maritimas  de  la  America  Latina 
comparadas  entre  si  y  con  los  c6digos  de  Espana  y  las  leyes  de  los  Estados 
Unidos  de  America.    Washington,  1907.    5  v. 

Estasen,  Pedro.  Repertorio  de  la  jurisprudencia  mercantil  espanola  o 
compilaci6n  completa  .  .  .  de  las  diversas  reglas  de  jurisprudencia,  1838- 
1902.    Barcelona,  1894-1903.    2  v. 

Same.  Repertorio  de  la  jurisprudencia  y  doctrina  mercantil  e  industrial 
espanola  o  compilaci6n  en  forma  de  prontuario.    Madrid,  1911. 

Espejo  de  Hinojosa,  R.  Legislaci6n  mercantil  espanola,  Parte  hist6rica  y 
racional  o  filos6fica,  c6digo  de  comercio  vigente  etc.    Valencia,  1917-1918.  2  v. 

Pastor  y  Bustos,  F.  El  c6digo  de  comercio  interpretado  por  la  jurisprudencia 
del  tribunal  supremo.    Madrid,  1911.    3  v. 

Barrio  y  Moraito,  L.  Esplritu  de  la  jurisprudencia  espanola.  La  del 
c6digo  de  comercio.    Madrid,  1910. 

Garcia  Moreno,  Alejo.  C6dico  de  comercio  de  1885  con  las  reformas  hasta 
1907  y  anotado  con  la  doctrina  de  los  autores  y  todas  las  sentencias  del  tribunal 
supremo.    Madrid,  1902. 

Rodriguez  Altunaya,  R.  Derecho  mercantil.  Carta  pr61ogo  de  J.  A.  del 
Cueto.  Estudio  sobre  el  derecho  mercantil  vigente,  en  Cuba.  Espana,  Peru  y 
el  Salvador.    Madrid,  1917. 

Te6filo  y  Doroteo  .  .  .  C6digo  de  comercio  profusamente  anotado  y  pre- 
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Estasen,  Pedro.  Instituciones  de  derecho  mercantil,  2d  ed.  Madrid,  1907. 
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Blanco  y  Constans,  Francisco.  Estudios  elementales  de  derecho  mercantil 
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las  principales  naciones  de  Europa  y  America,  3rd  ed.  Madrid,  1910-1911. 
2v. 

Alvarez  del  Manzano  y  Alvarez  Rivera,  Faustino;  Bonilla  y  San  Martin, 
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in  course  of  publication.) 

Benito  y  Endara,  Lorenzo.  Manual  de  derecho  mercantil.  Valencia,  1904- 
1908.    3v. 

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Akgentina 

C6digo  de  comercio  de  la  Republica  Argentina.  Nueva  edici6n  corregida 
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The  commercial,  bills  of  exchange,  bankruptcy  and  maritime  law  of  the 
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Siburu,  Juan  B.  Comentario  del  c6digo  de  comercio  argentine  precedido  de 
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y  concordado  con  el  derecho  civil.    Buenos  Aires,  1863. 

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Calatayud,  Alfredo  P.,  and  Giustiniani,  Emilio.  El  c6digo  de  comercio 
interpretado  por  los  tribunalos  de  la  capital  federal  comprendicndo  los  fallos 
de  la  Suprema  Corte  Nacional  de  Justicia;  Cdmara  federal  de  apelaci6n  de  la 
capital  y  Cdmara  de  apelaci6n  en  lo  comercial  y  criminal  de  la  capital.  Buenos 
Aires,  1909.    2  v. 


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Grau,  A.  Manual  juridico  del  comercio  (Libro  de  consulta).  Buenos  Aires, 
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Colombia 

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Corte  de  Casaci6n,  Sentencias.    San  Jos6,  1892  to  1915.    38  v.  continued. 
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Rodriguez  de  San  Martin,  Juan  Nepomuceno:  Diccionario  razonado  de 
legislaci6n  civil,  penal,  comercial  y  forense  por  don  Joaquin  Escriche,  anotado 
y  concordado  por  el  referido  jurisconsulto.    Mexico,  1837. 

Silva  y  Valencia,  Agustin:  Formularios  de  escrituras  y  documentos  de  uso 
diario  entre  notaries,  abogados,  comerciantes,  etc.    Mdxico,  1898. 

Tarifa  de  la  ordenanza  general  de  aduanas  de  los  Estados  Unidos  mexicanos. 
Mexico,  Herrero  Hermanos,  1900. 

Vidal  y  Flor,  Luis  A.:  Colecci6n  de  leyes  federales  vigentes  sobre  insti- 
tuciones  de  cr^dito,  ferrocarriles,  compafllas  de  seguros,  almacenes  generales  de 
dep6sito,  etc.    Mexico,  1900. 


XXll  BIBLIOGRAPHY 

Wheless,  Joseph:  Compendium  of  the  laws  of  Mexico  oflBcially  authorized 
by  the  Mexican  Government.    St.  Louis,  1910.    2  v. 

Peru 

Aflales  judiciales  de  la  Corte  Suprema  (Peru)  Lima.    1906-1917.     10  v. 

Calle,  Juan  Jos6:  Diccionario  de  la  legislaci6n  municipal  del  Peru.  Lima, 
1906-1911.    4  V. 

El  Derecho.    Lima,  1885  et  seq. 

Elmore,  Alberto:  Tratado  de  derecho  comercial.     Lima,  1888-1899.     2  v. 

Fuentes,  M.  A.,  and  Lama,  M.  A.  de  la:  Diccionario  de  jurisprudencia  y  de 
legislaci6n  peruana.    Lima,  1877.    3  v. 

Fuentes  Castro,  P.:  C6digo  de  comercio.    Lima,  1902. 

Garcia  Calder6n,  Francisco:  Diccionario  de  la  legislaci6n  peruana,  2d  ed. 
(Lima),  Paris,  1879.    2  v. 

Lama,  Miguel  Antonio  de  la:  Codigo  de  mineria  anotado  y  concordado. 
Lima,  1909. 

Same :  C6digo  de  comercio  y  ley  procesal  de  quiebras  y  suspensi6n  de  pages, 
con  notas  crfticas  explicativas  y  de  concordancia.    Lima,  1902-1905.    2  v. 

Same:  Revista  de  legislaci6n  y  jurisprudencia.    Lima,  1885. 

Rodriguez,  J.  M.:  Reglamento  de  comercio  y  aduanas  del  Peru.  Lima, 
1893. 

Tola,  Fernando:  Los  impuestos  en  el  Peru  and  Supplement.  2d  ed.  Lima, 
1914-1915.    2v. 

Salvador 

Alvarado,  Herm6genes,  y  Suarez  Belisario  U.:  Revista  de  derecho  y  juris- 
prudencia.   San  Salvador,  1904. 

Corte  Suprema  de  Justicia:  Revista  judicial.  Organo  de  la  Suprema  corte. 
Quincenal.    San  Salvador,  since  1892. 

El  foro  del  porvenir ,  por  la  Sociedad  Jurldica  Salvadorena.  Salvador,  since 
1899. 

Reyes  Arrieta,  Rossi:  El  derecho  mercantil,  de  cambios,  de  quiebras  y 
maritimo  de  San  Salvador.    Berlin,  1909.    Spanish  and  German. 

Sudrez,  B:  Indice  para  la  consulta  del  repertorio  de  legislaci6n,  1880-1908. 
San  Salvador,  1909. 

Suplemento  a  la  nueva  edici6n  de  los  c6digos  patrios  comprendiendo  las 
reformas  decretadas  hasta  1892,  el  arancel  judicial  y  la  ley  del  papel  sellado  y 
timbres.    San  Salvador,  1893. 

Trigueros,  Jose;  Ruiz,  Antonio  y  Castellanos,  Jacinto:  C6digo  de  comercio  de 
la  repiiblica  del  Salvador.    New  ed.    San  Salvador,  1893. 

Ulloa,  Cruz:  Codificaci6n  de  leyes  patrias  desde  la  independencia  hasta 
1875.    1  v.,  1876. 

Vaquero,  Francisco:  Codificaci6n  de  leyes  del  Salvador  desde  1875  a  1889. 

Santo  Domingo 

Colecci6n  de  leyes,  decretos  y  resoluciones,  edici6n  oficial.  Santo  Domingo, 
since  1880. 

Hostos:  Lecciones  de  derecho  constitucional.    Santo  Domingo,  1887. 
Kuck,  Roberto:  Das  Dominikanische  Wechselrecht.    Leipzig,  1905. 


BIBLIOGRAPHY  XXIU 

The  Dominican  code  of  commerce  compiled  in  Official  Gazette.  Translation 
of  the  commercial  laws  in  force.  .  .  .  Washington,  1906. 

Uruguay. — Acevedo,  Eduardo:  Teoria  de  legislaci6n  financiera.  Monte- 
video, 1915. 

Same:  Notas  y  apuntes.  Contribuci6n  al  estudio  de  la  historia  econ6mica  y 
financiera  de  la  Republica  Oriental  del  Uruguay.     Montevideo,  1903.     2  v. 

Codigo  de  comercio  de  Uruguay.  Con  todas  las  leyes,  decretos  y  acuerdos 
dictados  hasta  la  fecha,  4th  ed.,  por  E.  Jimenez  de  Ar^chaga.  Montevideo, 
1916. 

Revista  de  derecho,  jurisprudencia  y  administraci6n.  Dirigida  por  los  Drs. 
Daniel  Garcia  Acevedo  y  J.  P.  Massera.    Montevideo,  1894 — 26  v.  to  1919. 

Revista  de  derecho  y  ciencias  sociales.  Director,  Rafael  E.  de  los  Reyes 
Pena.    Montevideo,  1914. 

Venezuela 

C6sar  Rivas,  Angel:  El  derecho  comercial  de  cambio,  de  quiebras  y 
maritime  de  Venezuela.     Berlin,  1908. 

Dominici,  Anibal:  Comentarios  al  c6digo  de  comercio  de  Venezuela.  Cara- 
cas, 1891. 

Revista  de  derecho  y  legislaci6n.  Director  Alejandro  Pietri,  Hijo.  Caracas, 
1911-1918.    7v. 

Sanojo,  Luis:  Exposici6n  del  c6digo  de  comercio  con  su  texto.  Caracas, 
1874.    2v. 


LATIN-AMERICAN  COMMERCIAL 
.     LAW 

CHAPTER  I 

INTRODUCTORY   AND   GENERAL  MATTERS 

Whether  or  not  there  is  any  prospect  of  bringing  about 
uniformity  in  the  non-commercial  part  of  the  private  law  of 
the  countries  of  the  world,  there  is  no  question  that  the  ever 
growing  intercourse  among  the  nations  induced  by  trade  and 
commerce  has  given  great  impetus  to  the  gradual  unification 
of  commercial  law.  Many  factors  have  contributed  to  this 
movement,  incidental  to  the  economic  necessity  for  cer- 
tainty in  the  law — ^treaties,  international  conferences,  special 
publications  on  commercial  law  and  courses  in  universities. 
These  are  constantly  demonstrating  the  advantages  to  be 
derived  from  the  abandonment  of  mere  local  commercial 
traditions,  suitable  to  an  epoch  of  isolation,  and  the  adoption 
instead  of  common  rules  in  matters  of  commercial  law,  which 
in  its  very  nature  is  cosmopolitan. 

As  an  illustration  of  this  movement  of  unification  we  may 
mention  the  organization  in  Brussels  in  1862  of  the  Inter- 
national Association  for  the  Advancement  of  Social  Science, 
and  in  1873,  of  the  Institute  of  International  Law  and  the 
Association  for  the  Reform  and  Codification  of  the  Law  of 
Nations,  now  known  as  the  International  Law  Association. 
The  Belgian  government,  with  a  view  to  procuring  the 
unification  of  commercial  legislation,  promoted  the  holding  of 
the  international  congresses  of  Antwerp  and  of  Brussels, 
which  met  in  1885  and  in  1886  respectively.  In  the  history 
of  this  movement  in  America,  the  South  American  Congress 
on  private  international  law,  which  met  in  1888  and  1889  in 
Montevideo  is  worthy  of  notice.  In  1889  a  maritime  con- 
gress met  in  Lisbon;  and  in  1900  the  International  Congress 

1 


2  LATIN-AMERICAN    COMMETICIAL    LAW 

of  Stock  Corporations  and  the  International  Congress  of 
Industry  for  the  discussion  and  regulation  of  commercial 
international  relations  met  in  Paris.  The  International 
Congress  of  Maritime  Law  met  in  Geneva  in  1892  and 
finally  the  Hague  Conferences  for  the  unification  of  the  law 
of  bills  of  exchange  met  in  1910  and  1912. 

One  of  the  most  important  instruments  operating  to  pro- 
mote uniformity  is  to  be  found  in  certain  legal  journals 
published  in  various  countries  whose  sphere  of  interest 
covers  the  entire  world  and  who  lay  before  their  domestic 
public  an  accurate  knowledge  of  the  way  in  which  different 
problems  having  an  international  interest  have  been  solved 
in  each  country.  They  have  thus  inspired  that  interchange 
of  ideas  which  is  the  best  guide  to  law  makers.  The  most 
notable  of  these  publications  are  Clunet's  Journal  du  Droit 
International,  (Paris)  published  since  1874;  and  the  Tables 
Generates,  4  v.  (1905);  Darras'  Revue  de  Droit  International 
Prive,  (Paris)  since  1905;  Horn's  Nouvelle  Revue  pratique  de 
Droit  International  Prive,  (Paris)  since  1905;  the  Annuaire 
de  Legislation  Comparee,  since  1871;  in  Belgium,  Revue  de 
VInstitut  de  Droit  Compare,  since  1908;  Revue  de  Droit 
International  et  de  Legislation  Comparee,  since  1869;  in  Italy, 
Archivio  Giuridico,  since  1868;  Rivista  Italiana  per  le  Scienze 
Giuridiche,  since  1886;  Anzilotti's  Rivista  di  Diritto  Inter- 
nazionale,  since  1906;  Rivista  di  Diritto  Commerciale,  since 
1903;  in  Germany,  Niemeyer's  Zeitschrift  fur  Internationales 
Privai-  und  Strafrecht,  (Leipzig),  since  1891;  Zeitschrift  fUr 
vergleichende  Rechtswissenschaft,  since  1878;  Jahrbuch  der 
internationalen  Vereinigung  fiir  vergleichende  Rechtswissen- 
schaft, since  1895  and  the  monthly  Blatter  of  the  same  society; 
Kohler's  Zeitschrift  fiir  Volkerrecht,  since  1906;  and  Gold- 
schmidt's  Zeitschrift  fiir  Handelsrecht,  since  1858;  in  Spain, 
the  Revista  de  los  Tribunales  y  de  Legislacion  Universal, 
(Madrid)  since  1875;  Garcia  Moreno,  and  Rodriguez. 
Coleccion  de  las  Instituciories  Politicas  y  Juridicas  de  los 
Pueblos  Modernos,  34  vols.,  and  Dahnan  and  Olivart's 
Revista  de  Derecho  Internacional,  (Madrid)  since  1905; 
in  Holland,  the  recently  established  Bulletin  of  the  Inter- 


INTRODUCTORY    AND    GENERAL   MATTERS  3 

national  Intermediary  Institute;  in  Argentina,  Zeballos' 
short-lived  Bulletin  Argentin  de  Droit  International  Prive, 
1903-10.* 

Special  attention  should  be  directed  to  the  important 
publication  Handehgesetce  des  Erdballs  or  Commercial  Laws 
of  the  World,  begian  in  Germany  late  in  the  eighties  which 
has  now,  in  a  new  edition  in  some  30  volumes,  been  issued  in 
English,  German,  French  and  Spanish  and  contains  the 
original  text  and  a  translation  of  the  codes  and  statutes  of  the 
various  countries  of  the  world  relating  to  commercial  law. 

Among  the  American  writers,  who  have  contributed  to  the 
dissemination  of  information  concerning  foreign  law,  we  may 
mention  E.  S.  Zeballos  in  Argentina,  and  Arosemena  Gara- 
\'ito  in  Colombia,  Rodrigo  Octavio,  de  Freitas,  and  Bevilaqua 
in  Brazil,  and  in  the  United  States,  Joseph  ^^Tieless,  Chfford 
S.  Walton,  Phanor  J.  Eder,  R.  J.  Kerr  and  Edwin  M.  Bor- 
chard,  whose  Guides  to  foreign  law,  published  under  the 
auspices  of  the  Government,  have  laid  a  foundation  for  the 
more  scientific  study  of  comparative  law  by  lawyers  and 
legislators  in  the  United  States. 

Among  the  treaties  mention  should  be  made  of  those 
entered  into  by  seven  countries  of  South  America  at  the 
Congress  of  Montevideo  covering  matters  relating  to  civil 
and  commercial  law,  civil  procedure,  copyright,  trade-marks, 
patents,  and  criminal  law,  and  the  treaties  on  private  inter- 
national law  entered  into  in  1893,  1894,  1900  and  1905  by  all 
the  countries  of  Europe,  with  the  exception  of  England  and 
Turkey,  at  the  Hague.  The  Hague  Convention  of  1912  on 
bills  of  exchange  and  checks  has  been  adopted  by  several 
countries  of  Europe  and  Latin-America. 

Courses  in  comparative  law  have  been  inaugurated  in 
nearly  all  the  universities  of  Europe  and  of  many  of  the 
Latin-American  countries.  In  Mexico,  as  far  back  as  1880 
there  was  a  course  of  comparative  law  in  the  national  school 

*  The  Journal  of  the  Society  of  Comparative  Legislation  (London),  published 
since  1899  and  the  Annual  Bulletin  of  the  Comparative  Law  Bureau  of  the 
American  Bar  Association  now  published  as  one  of  the  quarterly  numbers  of 
that  Association's  Journal  constitute  useful  repositories  of  information  on 
comparative  law. 


4  LATIN-AMERICAN    COMMERCIAL    LAW 

of  jurisprudence.  In  the  United  States,  only  two  or  three 
law  schools  have  thus  far  recognized  the  great  practical  and 
scientific  importance  of  comparative  law  by  the  institution 
of  courses. 

Of  all  the  branches  of  law,  the  one  of  greatest  practical 
international  interest  is  commercial  law.  All  business  men 
have  an  interest  in  the  study  of  the  law  which  regulates 
conmiercial  transactions  and  governs  rights  and  obligations 
in  other  countries  with  which  they  are  brought  into  contact. 
While  certain  common-law  practitioners  may  frown  upon  the 
term  commercial  law,  it  has,  nevertheless,  a  very  practical 
significance  for  jurists  throughout  the  world. 

It  may  here  be  pointed  out  that  the  existence  of  commer- 
cial law  as  an  independent  branch  of  private  law  has  been 
a  matter  much  discussed  in  countries  of  the  civil  law.  It  has 
divided  jurists  into  three  groups,  namely:  the  civihsts,  the 
mercantiUsts,  and  the  partisans  of  a  separate  contractual 
law  for  both  civil  and  commercial  acts. 

The  civilists  contend  that  there  is  no  such  special  inde- 
pendent branch  of  law  as  commercial  law,  but  that  it  is  only  a 
complement  of  the  civil  law.  Resting  upon  the  general 
principles  of  civil  law,  e.  g.,  those  referring  to  the  capacity  of 
persons,  to  the  essential  requisites  for  the  validity  of  con- 
tracts, etc.,  it  makes  special  and  exceptional  pro\'ision  for 
commercial  matters  but  is  governed  by  the  rules  of  civil  law 
in  the  matters  not  expressly  comprised  within  the  specific 
provisions  of  law  governing  commercial  transactions. 

The  mercantilists  argue  that  mercantile  law  has  an  inde- 
pendent character;  that  if  it  embraces  the  general  principles 
of  the  civil  law,  this  is  due  to  the  fact  that  both  branches  of 
law  find  their  source  in  general  legal  principles;  that  the 
mercantile  law  is  the  branch  which  has  aided  in  a  larger  way 
in  amplifying  and  humanizing  civil  law,  and  has  helped  its 
evolution;  that  mercantile  law  classifies  persons  into  traders 
and  non-traders,  into  principals  and  auxiliaries,  and  this 
with  important  practical  consequences,  and  it  rejects,  on  the 
other  hand,  the  distinction  between  citizens  and  foreigners 
which  civil  law  admits;  whereas  the  civil  law  classifies  prop- 


INTEODUCTORY    AND    GENERAL   MATTERS  5 

erty  into  real  and  personal,  devoting  greater  attention  to  the 
former,  mercantile  law  considers  real  property  as  of  second- 
ary, and  personal  property  as  of  primary  importance; 
whereas  the  ci\'il  law,  from  an  economic  view^^oint,  has  as  its 
main  object  those  acts  which  relate  to  the  production  and 
consmnption  of  wealth,  mercantile  law  is  concerned  with 
circulation;  the  individual  subject  of  legal  relations  in  civil 
law  aims  to  satisfy  his  own  necessities,  whereas  in  commer- 
cial relations  he  has  in  view  the  necessities  of  others;  thus, 
persons,  objects  and  acts  of  commercial  law  differ  from  those 
of  civil  law. 

Finally,  there  is  a  third  group  which  maintains  that  the 
law  relating  to  contracts,  whether  mercantile  or  civil,  must 
constitute  a  separate  branch  of  law.  It  bases  its  ideas  on 
Uberty,  the  necessar}^  foundation  for  all  contracts,  on  the 
inconvenience  of  establishing  social  classes,  and  on  the 
uncertainty  of  all  classifications. 

This  variety  of  opinion  has  had  its  immediate  effect  in 
positive  legislation.  The  system  that  considers  mercantile 
law  as  a  mere  exception  to  the  civil  law  has  been  adopted 
by  the  mercantile  codes  of  Chile, ^  Ecuador,^  Guatemala,^ 
Haiti,'*  Honduras,^  Mexico,"  San  Salvador,^  Santo  Domin- 
go," and  Venzuela.^  In  all  these  codes  we  find  it  pro- 
vided that  in  cases  not  specifically  covered  by  the  commer- 
cial code,  the  provisions  of  the  civil  code  are  to  be  applied. 

The  mercantile  or  German  doctrine  has  been  adopted  by 
Spain,  ^°  Colombia,  ^^  and  Peru.^^  The  commercial  codes 
of  these  countries  prescribe  that  cases  not  specified  in  them 
shall  be  governed  by  the  commercial  customs  generally 
observed,  and  in  default  of  both,  by  the  rules  of  civil  law. 
The  provisions  of  the  Colombian  code  deserve  literal  quota- 
tion, because  they  express  the  most  advanced  ideas  on  this 
point : 

Article   2.    "Mercantile   customs   shall   have   the   same 


lArt.  2. 

2  Art.  4-. 

'  Art.  2. 

*  Art.  18. 

5  Art.  3. 

«Art.  6. 

'  Art.  2. 

8  Art.  18. 

» Art.  8. 

'» Art.  2. 

"  Arts.  2,  34. 

'2  Art.  2, 

6  LATIN-AMERICAN    COMMERCIAL    LAW 

authority  as  the  law,  provided  they  are  not  contrary  thereto 
expressly  or  tacitly,  and  when  the  acts  which  constitute  the 
custom  are  uniform,  well-known  and  reiterated  over  a  long 
period  of  time,  in  the  judgment  of  the  court,  in  the  place 
where  the  transaction  to  which  the  rule  is  applied  has 
occurred." 

Article  3.  ''In  default  of  local  customs  which  may  suggest 
a  solution  for  doubtful  points  in  commercial  transactions, 
foreign  mercantile  customs  of  the  most  advanced  countries 
may  be  offered  in  evidence,  provided  that  they  have  the 
characteristics  set  forth  in  article  2,  and  that  the  customs  are 
proved  according  to  the  law  of  procedure." 

Article  4.  ' '  Mercantile  customs  and  usages  shall  serve  as 
a  rule  for  determining  the  meaning  of  words  or  technical 
terms  of  commerce  and  for  construing  commercial  acts  and 
conventions." 

Argentina  has  a  mixed  system.  In  the  introduction  to  its 
commercial  code  it  is  provided  that  in  cases  unforeseen  in  it 
the  provisions  of  civil  law  must  be  applied;  but  in  later 
sections  it  leaves  to  judges  the  power  to  decide  in  accordance 
with  commercial  custom,  should  it  be  necessary  to  do  so,  in 
order  to  give  to  contracts  and  commercial  acts  their  proper 
effect,  according  to  the  presumptive  will  of  the  parties  when 
they  failed  to  follow  the  rules  of  the  law. 

The  third  system  is  followed  by  England,  by  the  United 
States  and  by  Switzerland  in  its  federal  code  of  obligations. 

In  addition  to  the  commercial  law,  commercial  customs 
and  usages,  and  the  civil  law,  there  is  another  source  of 
positive  commercial  law,  namely,  jurisprudencia,  which  in 
Latin-America,  as  in  all  countries  following  the  civil  law 
system,  constitutes  the  body  of  rules  established  by  the 
courts  in  deciding  practical  cases.  But  the  weight  given  to 
judicial  decisions  varies  greatly.  In  England  and  the 
United  States  the  historical  origin  of  the  municipal  law  in 
the  principle  of  stare  decisis  has  endowed  judicial  decisions 
with  a  conclusive  authority  unknown  to  civil  law  countries, 
although  the  heterogeneous  growth  of  the  mass  of  decisions 
in  modern  times  has,  in  the  attempt  to  preserve  the  principle, 


INTRODUCTORY   AND    GENERAL   MATTERS  7 

sacrificed  its  purpose  and  tended  to  bring  confusion  instead 
of  certainty,  mazes  of  rules — often  conflicting — instead  of 
fundamental  principles. 

The  Spanish  traditions  present  the  mercantile  law  as  the 
result  of  decisions  of  the  consulates,  chiefly  those  of  Barce- 
lona and  Bilbao.  Yet  when  the  commercial  code  of  1829  was 
drafted,  no  mention  was  made  of  court  decisions  among  the 
sources  of  the  law.  Nevertheless,  there  are  writers  who 
maintain  that  in  spite  of  the  silence  of  that  code,  jurispru- 
dencia  in  mercantile  matters  is  one  of  the  sources  of  law,^^ 
and  a  decision  of  the  Supreme  Tribunal  of  Justice  of  June 
28,  1894,  expressly  so  declares. ^^ 

In  Latin-American  countries,  the  constitutional  principle 
of  the  division  of  the  sovereignty  into  three  independent 
powers  has  led  to  the  doctrine  that  the  courts  cannot  decide 
cases  which  might  arise  in  the  future,  just  as  the  legislature 
cannot  enact  rules  for  the  past  by  means  of  provisions  having 
retroactive  efTect.  The  Chilean  code  provides:  ''Judicial 
decisions  are  not  binding  except  with  respect  to  the  cases  in 
which  they  are  actually  rendered." 

This  by  no  means  implies  that  the  decisions  of  the  courts 
have  no  authority  whatever,  but  that  they  have  none  as  a 
source  of  positive  law.  A  settled  ''practice"  has  very 
considerable  authority  as  a  doctrine  supplying  the  deficien- 
cies of  legislation,  whose  rules,  because  of  the  general  way  in 
which  they  are  framed,  require  adaptation  to  the  varied 
conditions  of  the  concrete  facts  of  life,  provided  such  adapta- 
tion or  interpretation  does  not  prove  erroneous  in  the  light  of 
legal  science.  Hence  for  a  Latin-American  lawyer  the  codes 
and  scientific  works  which  comment  thereon  or  which  study 
the  principles  of  law,  are  of  more  interest  and  authority  than 
mere  judicial  records. 

Nevertheless,  it  must  be  observed  that,  in  most  of  the 
countries  of  Latin-America,  as  in  the  United  States,  the 
courts  have  power  to  disregard  an  unconstitutional  statute 

*'  Blanco  Constans,  Francisco.  Estudios  clementales  de  derecho  mercantil. 
Madrid,  Hijos  de  Rcuk,  1910. 

1*  Spain,  Gacela  of  Noveuilx^r  9,  1894. 


8  LATIN-AMERICAN    COMMERCIAL   LAW 

or  to  declare  it  so  when  deemed  at  variance  with  constitu- 
tional provisions;  in  that  case  such  decisions  naturally  have 
greater  force  than  the  statute,  and  constitute  limited  prec- 
edents. 

In  reference  to  Brazil  an  exception  to  the  foregoing  rule 
may  be  noted,  in  that  article  59,  section  88  of  the  constitution 
invests  judicial  decisions  with  binding  power.  That  article 
reads:  "In  cases  that  involve  the  application  of  the  laws  of 
the  States,  the  Federal  court  shall  consult  the  jurisprudencia 
of  the  local  tribunals,  and  vice  versa,  the  State  courts  shaU 
consider  that  of  the  Federal  tribunals,  when  the  interpreta- 
tion of  the  laws  of  the  Union  is  involved." 

Order  of  preference  in  the  application  of  the  sources  of  law. 

In  the  French  system,  which  is  followed  by  the  codes  of 
Chile,  Guatemala,  Haiti,  Honduras,  Mexico,  San  Salvador, 
Santo  Domingo  and  Venezuela,  the  order  of  preference  in  the 
apphcation  of  the  sources  of  law  is:  first,  the  mercantile  law; 
second,  the  civil  law;  third,  commercial  customs;  fourth, 
jurisprudencia  and  doctrine. 

In  the  German-Italian  system,  followed  by  Spain,  Costa 
Rica,  Ecuador  and  Peru  the  order  is:  first,  the  commercial 
law;  second,  commercial  customs  and  usage;  third,  civil  law; 
fourth,  jurisprudencia  and  doctrine. 

In  the  Colombian  system,  the  order  is :  first,  the  mercantile 
law  and  commercial  customs,  which  have  the  same  force  as 
the  law ;  second,  the  mercantile  customs  of  the  most  advanced 
countries;  third,  commercial  usage;  fourth,  the  civil  law. 

Different  forms  of  enunciating  the  law. 

Before  entering  upon  an  outline  of  the  history  of  Latin- 
American  commercial  law,  it  is  proper  to  say  that  the 
evolution  in  the  enunciation  of  the  law  is  marked  by  some- 
what the  following  stages:  first,  an  act,  by  creating  legal 
relations  between  persons  with  respect  to  things  or  acts, 
requires  a  law  to  define  those  relations;  second,  a  group  of 
laws  governing  acts  of  the  same  kind  calls  for  a  compilation 
that  makes  consultation  easier;  third,  traditions  well  rooted 


INTRODUCTORY    AND    GENERAL   MATTERS  9 

and  defined  in  a  series  of  laws  and  compilations  produce  the 
idea  of  a  fundamental  unity  and  harmony  among  them  and 
call  for  a  systematic  and  succinct  restatement  of  the  law 
expressing  that  unity;  and  a  methodical  classification  that 
briefly  embodies  the  principal  rules  and  facilitates  the  inter- 
pretation of  the  law  through  the  independence  of  its  parts. 
This  evolution  has  taken  place  in  the  fundamental  branches 
of  the  law  in  many  countries,  and  is  continuing  with  the 
discovery  of  new  facts  and  new  relations.  The  different 
stages  of  this  evolution  are  illustrated  in  various  legal 
systems. 

The  first  system  embracing  special  independent  laws,  is 
that  of  England.  The  second  system,  that  of  compilation, 
was  followed  by  the  Roman  law  in  the  imperial  epoch  and  by 
the  Spanish  law  at  the  time  of  the  law  of  Seven  Parts  (Siete 
Partidas),  of  the  Nueva  Recopilacwn,  the  Recopilacion  de 
Leyes  de  Indias,  and  Novisima  Recopilacion.  In  the  United 
States  there  is  a  tendency  toward  the  compilation  of  laws, 
as  may  be  seen  in  the  so-called  codes  of  civil  procedure.  The 
third  system  is  that  of  codification,  inaugurated  by  Germany 
with  the  Allgemeine  Landrecht  of  Prussia,  greatly  extended 
by  France  and  followed  very  closely  by  Spain,  where  the 
traditions  and  the  existing  compilations  presented  the 
materials  indispensable  to  codification;  and  as  these  legal 
traditions  and  compilations  had  already  been  communicated 
to  the  Spanish  colonies  of  America,  they  became  established 
institutions  when  the  colonies  became  independent  states. 
They  were  thus  indebted  to  Spain  for  a  system  which  allowed 
them  to  follow  the  modern  movement  of  private  law.  It 
suits  their  character  and  necessities  so  well  that  all  the  unrest 
created  by  the  inadequacy  of  their  political  institutions  has 
not  destroyed  the  fundamentals  of  their  private  law.  All 
the  countries  of  Latin-America  possess  a  commercial  code. 

Historical  Data.    Civil  and  commercial  law. 

Civil  law  is  the  product  of  the  history  and  customs  of  every 
community;  the  better  it  adapts  itself  to  those  communities 
the  more  it  is  likely  to  differ  from  that  of  other  communities 


10  LATIN-AMERICAN    COMMERCIAL    LAW 

and  the  better  it  serves  for  the  settlement  and  adjustment  of 
the  relations  between  private  citizens.  The  laws  governing 
the  family  and  real  estate  are  the  conservative  basis  upon 
which  the  civil  law  is  founded. 

This  specialization  of  civil  law  was  more  noticeable  in  times 
when  the  means  of  communication  were  few  and  slow,  and 
when  there  was  no  opportunity  for  the  interchange  of  ideas 
and  for  mutual  influence.  The  law  of  the  city,  on  the  other 
hand,  sufficed  to  regulate  mercantile  relations  between 
citizens.  Moreover,  in  ancient  times  trade  was  considered  a 
sordid  occupation  by  some  peoples,  notably  by  the  Romans; 
therefore  mercantile  law  could  hardly  develop. 

The  necessity  of  commerce,  however,  compelled  the 
Romans  themselves  to  provide  in  some  way  for  the  arrange- 
ment of  the  differences  which  arose  between  citizens  and 
foreigners,  according  to  principles  taken  from  what  was 
called  the  jus  gentium;  they  found  their  place  in  the  edict  of 
the  prcetor  peregrinus.  Based  on  equity  and  common  sense, 
they  were  gradually  incorporated  in  the  civil  law. 

The  nucleus  of  the  formulation  of  the  commercial  law  is  not 
found,  however,  in  the  interchange  between  citizens  and 
foreigners  within  the  city,  where  all  parties  had  to  submit 
themselves  to  the  local  authority  of  the  laws  and  officers  of 
the  city.  It  is  found  in  maritime  commerce,  where  the 
universal  need  was  felt  for  a  rule  which,  instead  of  preserving 
the  distinctive  characteristics  and  formalities  of  the  civil  law, 
could  obtain  the  common  assent  of  all  peoples  by  sheer  force 
of  its  equity  and  reason  and  by  its  eminently  human  char- 
acter. 

Maritime  law  was  the  first  branch  to  be  detached  from  the 
old  trunk  of  the  civil  law,  consecrated  by  the  religion,  cus- 
toms and  history  of  the  city;  even  the  Romans,  so  jealous  of 
their  law  that  they  would  not  extend  it  to  the  different  social 
classes  of  the  city,  accepted  the  Rhodian  law  which  was 
adopted  by  the  ancient  peoples  who  inhabited  the  Mediter- 
ranean coast.  But  very  few  of  the  texts  of  that  law  were 
preserved  in  the  Digest  of  Justinian;  they  comprise  rules 
governing  the  crews  of  vessels  and  other  persons  who  engage 


INTRODUCTORY    AND    GENERAL    MATTERS  11 

in  maritime  coimiierce,  considering  them  as  a  separate  class, 
and  establishing  rules  governing  vessels,  the  risks  of  naviga- 
tion and  the  method  of  compensating  them. 

Spain,  while  a  colony  of  Rome  under  the  laws  of  the  mother 
country,  was  conquered  by  the  Visigoths.  But  as  the 
Roman  civilization  of  the  natives  was  superior  to  that  of  the 
conquerors,  the  Roman  spirit  soon  penetrated  the  mind  of 
the  victorious  race,  a  fact  that  was  revealed  by  the  adoption 
of  the  idea  of  codifying  the  customs  and  rules  of  the  Germanic 
tribes  in  a  code  similar  to  the  Roman  compilations.  The 
resulting  work  was  the  code  called  of  Euric  or  of  Tolosa, 
made  especially  for  the  people  of  the  conquerors'  race.  Later 
the  code  of  Alaric  or  Breviarium  Aniani  or  Lex  Romana 
Visigothorum  was  issued  to  regulate  the  rights  and  obliga- 
tions of  the  Roman  population  of  Spain.  Thus,  the  law  was 
not  territorial,  generally  binding  on  all  persons;  instead,  the 
individual  was  subject  to  a  given  personal  law  according  to 
his  origin. 

This  confusion  ceased  when  the  Fuero  Juzgo,  Codex  legum 
or  Liher  Gothorum,  was  issued  in  the  late  seventh  or  early 
eighth  century  intended  to  govern  the  Goths  as  well  as  the 
Romans  in  Spain.  The  unimportance  of  commerce  at  that 
time  is  indicated  by  the  small  number  of  mercantile  laws  in 
that  compilation. 

It  is  worth  noticing  that  when  an  epoch  of  mercantile 
activity  was  initiated  in  the  twelfth  and  thirteenth  centuries 
certain  resulting  movements  in  the  field  of  law  were  promi- 
nently reflected  in  Spain.  On  the  one  hand,  the  civil 
law  preserv'ed  the  local  traditions;  on  the  other  hand,  the 
mercantile  law  endeavored  to  transcend  the  limits  of  the 
country  and  win  an  acknowledged  authority  over  all  the 
Mediterranean  countries.  The  first  was  the  product  of 
royal  authority,  the  second  the  work  of  private  initiative  in 
the  consulates  or  corporations  of  traders.  The  former  was  an 
inland  law,  the  latter  a  maritime  law.  The  civil  law  had  its 
origin  in  Roman  traditions,  in  canon  law,  in  provisions  of 
councils  in  which  the  clergy  had  preponderating  influence; 
while  the  commercial  law  was  born  of  the  study  of  popular 


12  LATIN- AMERICAN    COMMERCIAL    LAW 

customs,  at  home  and  abroad,  undertaken  by  merchants. 
The  civil  law  found  its  paramount  expression  in  the  famous 
book  of  Alfonso  the  Wise,  called  the  Siete  Partidas  (Seven 
Parts) ;  the  commercial  law,  in  the  no  less  famous  compilation 
called  Consulado  del  Mar  or  methodical  arrangement  of  the 
decisions  of  the  consulate  of  Barcelona  in  Spain,  which, 
although  not  authorized  by  any  monarch,  was  the  basis  of 
mercantile  law  throughout  the  Mediterranean  coasts,  in 
France,  in  Italy  and  even  in  England.  Its  provisions  com- 
prise all  commercial  acts  and  contracts,  except  maritime 
insurance  and  bottomry  loan,  which  were  not  yet  in  use. 

It  may  be  observed  that  neither  the  Siete  Partidas  nor  the 
Consulado  del  Mar  received  the  sanction  of  the  king,  nor  had 
they  any  authority  other  than  that  derived  from  traditions 
and  the  learning  of  their  authors  or  compilers.  Nevertheless, 
the  Partidas  were  recognized  as  subsidiarj^  law  a  century  after 
their  publication  by  the  grandson  of  Alfonso. 

Besides  Barcelona,  Bilbao,  in  the  northern  part  of  Spain, 
by  reason  of  its  dealings  with  the  northern  peoples,  had 
different  traditions  from  those  of  the  Mediterranean,  and 
also  had  a  consulate  which  formulated  and  compiled  its 
ordinances  at  four  different  times — in  1459,  when  the  profes- 
sion of  brokers  was  regulated  for  the  first  time,  in  1560  and  in 
1565,  and  finally,  in  1737,  when  new  ordinances,  the  most 
important  of  the  four,  were  issued. 

Modern  times. 

With  the  discovery  of  America  the  mercantile  activity 
of  Spain  increased  and  the  attention  of  the  monarchs 
turned  especially  and  directly  to  commercial  law,  which 
theretofore  had  grown  spontaneously.  Numerous  rules  were 
promulgated  governing  maritime  commerce,  brokers,  the 
textile  trade,  weights  and  measures,  contracts  of  resale, 
peddlers,  mercantile  contracts  in  general,  bills  of  exchange, 
banks,  fairs,  ship  building,  seamen,  etc.  All  these  provisions 
were  compiled  in  two  books  which  appeared  successively 
and  were  called  respectively  the  Nueva  Recopiladon  (1567) 
and  the  Novisima  Recopiladon  de  Leyes  (1805). 


INTRODUCTORY    AND    GENERAL   MATTERS  13 

At  the  same  time  the  consulates,  in  order  to  meet  the  new- 
requirements  of  commerce,  were  actively  engaged  in  the 
formulation  of  mercantile  law  by  means  of  regulations  and 
ordinances,  which  were  afterwards  confirmed  by  the  mon- 
archs.  The  most  famous  of  these  collections  of  ordinances 
were  the  Ordenanzas  de  Burgos,  1495,  1511,  1514  and  1520; 
those  of  the  same  city  governing  maritime  insurance  of  1537; 
the  Ordena7izas  de  Sevilla  approved  by  Charles  I  in  1554  and 
those  of  the  same  city  in  1555  governing  maritime  insurance 
on  navigation  to  and  from  the  West  Indies;  the  Ordenanzas 
de  Barcelona  of  1763  and  those  of  Valencia  of  1773. 

The  Nuevas  Ordenanzas  de  Bilbao  of  1737,  as  already 
observed,  were  in  force  in  the  Spanish  colonies  of  America, 
and  constituted  their  mercantile  law  when  they  became 
independent  nations.  The  last  of  these  nations  to  repeal  the 
Ordenanzas  de  Bilbao  were  Uruguay  in  1865,  Chile  in  1867, 
Paraguay  in  1870,  Guatemala  in  1873,  and  Mexico  in  1884. 
The  Nuevas  Ordenanzas  de  Bilbao,  except  in  details  of  style, 
were  almost  a  commercial  code,  in  the  modern  acceptance 
of  that  word.  In  order  to  appreciate  the  advanced  position 
of  Spain  in  commercial  matters  at  this  early  date,  we  may 
enumerate  the  subject  of  the  various  chapters  of  these 
Ordenanzas.  The  book  contains  29  chapters,  entitled  as 
follows:  1  to  8,  The  Regime  of  the  Consulate;  9,  Merchants 
and  their  Books;  10,  Mercantile  Companies;  11,  Contracts; 
12,  Commission  or  Mercantile  Agency;  13,  Bills  of  Exchange; 
14,  Notes  and  Drafts;  15,  Exchange  Brokers;  16,  Ship 
Brokers;  17,  Bankruptcy;  18,  Chartering  of  Vessels;  19, 
Shipwrecks;  20,  Average;  21,  Manner  of  Settling  Gross 
Average;  22,  Insurance  and  Policies;  23,  Bottomry  Loan; 
24,  Captains  of  Vessels;  25,  The  Main  Pilot  of  This  Port; 
26,  Steersmen;  27,  Rules  to  be  followed  in  the  Mouth  of 
the  River;  28,  Carpenters  and  Calkers;  29,  Stevedores  and 
Bargemen. 

The  commercial  codes. 

The  work  of  codification  begim  in  Germany  in  the  middle 
of  the  eighteenth  century  and  vastly  stimulated  in  France 


14  LATIN-AMERICAN    COMMERCIAL    LAW 

under  the  auspices  of  Napoleon  I,  was  imitated  everywhere; 
Spain,  with  the  rich  material  afforded  by  her  prior  legis- 
lation, followed  naturally.  In  1829  she  issued  her  first 
conunercial  code,  in  the  framing  of  which  the  French  code, 
the  Ordenanzas  de  Bilbao,  the  Consulado  del  Mar,  the  con- 
sular decisions,  the  theoretical  doctrines  of  Spanish  writers 
and  of  the  celebrated  Pardessus  were  taken  into  considera- 
tion. The  rapid  expansion  of  commerce  and  of  means  of 
transportation  made  necessary  the  revision  of  this  code; 
and  a  conmiission  was  appointed  for  that  purpose  as  early 
as  the  year  1834.  Finally;  in  1885  a  new  commercial  code, 
still  in  force,  was  enacted;  it  adopted  modern  ideas  concern- 
ing mercantile  law,  considering  it  as  independent  of  the  civil 
law  and  the  result  of  special  activities  and  social  functions. 
The  code  is  composed  of  four  books,  the  titles  of  which  are: 
1,  Merchants  and  Commerce  in  General;  2,  Special  Com- 
mercial Contracts;  3,  Maritime  Commerce;  4,  Insolvency, 
Bankruptcy  and  Prescription. 

More  recently  new  laws,  royal  decrees  and  royal  orders 
were  promulgated,  complementing  or  modifying  the  code. 
The  most  important  of  these  are:  the  law  of  June  25, 
1908,  amending  article  137  of  the  code  relating  to  corpora- 
tions; that  of  August  21,  1893,  on  maritime  mortgages, 
covering  one  of  the  most  notable  deficiencies  of  the  code; 
that  of  May  16,  1902,  on  patents;  that  of  June  10,  1897, 
modifying  some  of  the  provisions  respecting  suspension  of 
payments;  the  royal  decree  of  December  31,  1885,  approving 
the  regulations  for  the  government  of  commercial  exchanges ; 
the  regulation  for  the  execution  of  the  law  of  September  13, 
1888,  which  considers  the  certificate  or  note  of  sale  drawn 
up  by  the  exchange  or  by  commercial  brokers  as  public 
instruments;  the  royal  decree  of  December  26,  1885,  ap- 
proving the  regulations  for  the  mercantile  registry,  and 
that  of  February  12,  1886,  ordering  the  same  regulations 
to  be  enforced  in  Cuba  and  Porto  Rico;  the  regulations  for 
the  mercantile  marine  published  by  royal  order  of  January,  1 
1885;  the  ordinances  of  custom-houses  promulgated  by 
royal  decree  of  October  15,   1894,  and  the  royal  order  of 


INTRODUCTORY    AND    GENERAL   MATTERS  15 

January  16,  1896,  approving  the  regulations  for  the  opera- 
tion of  custom-houses. 

The  commercial  law  in  Latin- America. 

It  may  be  useful  to  present  an  outline  of  the  external 
history  of  the  commercial  law  in  each  of  the  countries  of 
Latin-America.  It  is  necessary  to  bear  in  mind  that  during 
the  colonial  period  all  the  Latin-American  countries  were 
governed  in  coimiiercial  affairs  by  royal  orders  issued  after 
the  careful  study  of  a  specific  case  by  the  Consejo  de  Indias, 
the  ruling  being  in  many  cases  inspired  by  the  experiences 
of  the  Casa  de  Contratacion  de  Sevilla,  an  institution  es- 
tablished by  the  Spanish  kings  with  a  view  to  controlling 
the  trade  with  thfe  American  colonies.  All  these  provisions 
were  later  incorporated  in  the  Recopilacion  de  Leyes  de 
Indias  (1680),  which,  however,  was  not  intended  to  supply 
all  the  rules  of  commerce;  indeed,  the  laws  of  the  Consulado 
del  Mar  and  the  Ordenanzas  de  Burgos  were  a  very  important 
part  of  the  commercial  law  until  the  Ordenanzas  de  Bilbao 
were  pubUshed  in  1737.  This  book  was  the  "commercial 
code"  of  America  when  the  independence  of  the  former 
Spanish  colonies  was  achieved,  and  the  Ordenanzas  con- 
tinued in  force  up  to  the  date  of  the  publication  of  the 
respective  national  commercial  codes. 

Argentina. 

The  code  of  conmaerce  was  first  enacted  as  a  law  by  the 
province  of  Buenos  Aires  on  October  6,  1859,  and  was  after- 
wards adopted  as  a  code  by  the  whole  nation  on  Septem- 
ber 10,  1862. 

A  draft  of  the  civil  code  for  the  Republic  of  Uruguay, 
prepared  by  Dr.  Eduardo  Acevedo,  and  the  codes  of  Spain, 
Brazil,  Holland,  and  Wiirtemberg  were  the  sources  from 
which  the  provisions  of  the  Argentine  code  were  taken. ^^ 

The  many  criticisms  of  the  code  made  necessary  a  general 
revision  which  was  undertaken  by  a  special  commission, 

1*  See  Borchard,  Guide  to  the  law  and  legal  literature  of  Argentina,  Brazil 
and  Chile,  p.  76. 


16  LATIN-AMERICAN    COMMERCIAL    LAW 

and  as  a  result  of  its  studies  a  new  commercial  code  was 
promulgated  on  October  9,  1889,  and  went  into  operation 
on  May  1,  1890. 

Important  amendments  and  laws  on  related  matters 
have  been  enacted,  the  most  important  being  law  number 
4156  of  December  30,  1902,  which  repealed  all  of  Book  IV 
on  bankruptcy;  law  number  9643  of  September  30,  1914, 
amending  the  law  of  warrants;  a  law  of  August  5,  1878,  the 
first  24  articles  of  which  were  ordered  incorporated  in  the 
code  of  commerce;  law  number  8867  of  February  6,  1912, 
dispensing  foreign  corporations,  under  condition  of  reciproc- 
ity, from  the  requisite  of  pre\dous  authorization  by  the 
government  in  order  to  engage  in  business  in  Argentina,  as 
as  required  by  article  287  of  the  code;  law  number  8875  of 
February  23,  1912,  known  as  the  law  of  debentures,  making 
substantial  changes  in  the  power  of  corporations  to  issue 
bonds;  law  number  5125  of  September  19,  1907,  amended 
by  law  number  6788  of  October  21,  1909,  obUging  corpora- 
tions to  submit  their  balance  sheet  to  the  Department  of 
Justice  at  stated  intervals  or  a  general  inspection. 

Bolivia. 

The  code  of  commerce  enacted  on  November  12,  1834, 
was  inspired  by  the  Spanish  code  of  1829.  It  contains  no 
provisions  for  maritime  commerce;  moreover,  it  does  not 
provide  for  insurance,  except  in  cases  of  transportation 
of  goods,  nor  for  current  accounts  and  checks. 

The  principal  laws  that  modify  or  supplement  the  com- 
mercial code  are  the  following:  that  of  November  5,  1840, 
granting  absolute  hberty  in  the  stipulation  of  interest  on 
loans,  and  establishing,  in  the  absence  of  express  agreement 
of  the  parties,  6%  per  annum  as  legal  interest;  the  consti- 
tution modified  the  code  by  prescribing  that  foreigners 
have  the  same  civil  rights  as  Bohvians ;  the  law  of  August  8, 
1842,  which  provides  that  all  commercial  cases  must  be 
submitted  to  the  commercial  courts,  even  when  the  mer- 
chants are  not  matriculated;  that  of  May  10,  1850,  provid- 
ing that  all  merchants  must  be  registered  even  though  they 


INTRODUCTORY   AND    GENERAL  MATTERS  17 

have  not  the  capital  specified  in  article  9  of  the  commercial 
code;  that  of  July  9,  1858,  abolishing  the  conciliation  pro- 
cedure to  avoid  litigation  in  commercial  matters;  that  of 
February  6,  1863,  suppressing  the  commercial  courts;  that 
of  September  3,  1890,  providing  rules  for  banks  of  issue. 

Brazil. 

Inasmuch  as  Brazil  was  a  Portuguese  colony,  the  source  of 
its  law  is  to  be  found  in  Portugal,  which,  during  the  Roman 
and  Visigothic  domination,  followed  the  same  fate  as  the  rest 
of  the  Peninsula ;  the  Roman  law,  in  the  forms  that  it  had  in 
the  Breviary  of  Alaric,  in  the  Fuero  Juzgo,  and  even  in  the 
Siete  Partidas,  was  considered  in  Portugal  as  subsidiary 
legislation.  Moreover,  the  influence  of  canon  law  was  as 
important  in  Portugal  as  it  was  in  Spain,  together  with  the 
local  charters  or  foraes  which  appear  to  have  underlain  the 
system  of  law  of  those  times,  when  every  community  had  to 
guard  its  own  safety  both  from  political  troubles  at  home  and 
from  conquerors  abroad.  At  the  end  of  the  fourteenth  or  at 
the  beginning  of  the  fifteenth  century  the  first  compilation  of 
laws  under  the  name  of  Lihro  das  Lets  Antiguas  was  issued. 
In  1436  the  Ordenaqoes  de  Don  Duarte  and  in  1447  the 
Ordenanqoes  Alfonsinas  completed  the  earliest  Portuguese 
law.  In  1505  King  Manuel  ordered  a  revision  of  the  Alfon- 
sinas, including  the  subsequent  law,  and  the  ensuing  compila- 
tion was  called  by  the  name  of  that  king.  When  the  Portu- 
guese kingdom  was  united  with  that  of  Spain  in  1580,  king 
Phihp  II,  made  a  new  revision  of  the  laws  of  Portugal  and  in 
1603  issued  a  new  compilation  known  by  the  name  of 
Ordenqoes  Philippinas  or,  more  commonly,  Codigo  Philip- 
pino.  This  compilation  has  remained  the  foundation  of 
the  law  of  Brazil  since  its  independence,  for  it  was  adopted  on 
October  20,  1823,  as  one  of  the  laws  of  the  empire,  and  with 
other  laws  afterwards  enacted,  was  in  operation  until 
January  1, 1917,  when  the  new  civil  code  went  into  operation. 

In  the  matter  of  commercial  law  on  June  25,  1850,  Em- 
peror D.  Pedro  II  promulgated  the  commercial  code  of  the 
Brazilian  Empire;  it  was  divided  into  three  parts:  1,  Mari- 


18  LATIN-AMERICAN   COMMERCIAL   LAW 

time  Commerce;  2,  Commerce  in  General;  3,  Bankruptcy; 
and  a  title  with  another  enumeration  of  articles  contains 
procedural  rules  for  the  administration  of  justice  in  commer- 
cial cases.  The  codes  which  contributed  to  the  formation  of 
the  Brazilian  code  were  the  Portuguese  of  1833,  the  Spanish 
of  1829,  the  Dutch  of  1838  and  the  French  of  1810. 

LAWS  WHICH  HAVE   AMENDED    OR  SUPPLEMENTED    THE   CODE 
OF    COMMERCE 

Owing  to  the  modern  necessities  of  commerce,  the  Brazilian 
commercial  code  has  experienced  many  important  and 
partial  amendments  or  additions,  and  in  fact  a  new  draft  has 
been  prepared  which  has  not  been  enacted  by  Congress.  The 
principal  supplementary  laws  are:  Decree  No.  9549  of 
January  23,  1886,  governing  civil  and  commercial  procediu'e; 
decree  No.  2044  of  December  3,  1908,  on  bills  of  exchange 
and  promissory  notes;  decree  No.  434  of  July  4,  1891,  govern- 
ing stock  companies;  decree  177  A  of  September  15,  1893, 
relating  to  obligations  of  stock  companies  (debentures) ;  law 
No.  3129  of  October  14,  1882,  on  patents  and  its  regulation  in 
decree  No.  8820  of  October  30,  1882;  decree  No.  916  of 
October  24,  1890,  establishing  a  register  of  commercial  firm 
names;  decree  No.  9210  of  December  15,  1911,  regulating 
the  Junta  Commercial  or  chamber  of  conmierce;  decree 
No.  6651  of  September  19,  1907,  regulating  pawn  shops  in 
the  Federal  District;  decree  No.  149  B  of  July  29,  1893,  on 
instruments  to  bearer;  law  No.  973  of  January  2,  1903, 
creating  a  voluntary  register  of  securities,  documents  and 
other  papers  and  its  regulation  by  decree  No.  4775  of 
February  16,  1903;  law  No.  496  of  August  1,  1898,  and  Law 
No.  2577  of  January  17,  1912,  relate  to  copyright;  decrees 
Nos.  8248  and  8249  of  September  22,  1910,  containing  the 
regulation  of  merchandise  brokers  and  creating  the  brokers' 
exchange;  decree  No.  354  of  December  16,  1895,  reorganizing 
the  body  of  pubhc  security  brokers  and  its  regulation  in 
decree  No.  2475  of  March  13,  1897;  decree  No.  4985  of 
October  3,  1903,  in  reference  to  the  validity  of  transactions 


INTRODUCTORY   AND   GENERAL  MATTERS  19 

outside  the  stock  exchange;  decree  No.  4270  of  December  10, 
1901,  governing  the  functions  of  domestic  and  foreign 
insurance  companies;  decree  No.  123  of  November  11,  1892, 
governing  navigation  between  the  ports  of  the  Republic; 
and  decree  No.  4968  of  May  24,  1872,  containing  the  consular 
regulations. 

Chile. 

After  the  independence  of  Chile  was  declared  on  Sep- 
tember 18,  1810,  a  number  of  laws  were  promulgated. 
But  as  their  consultation  and  their  enforcement  were  diffi- 
cult, a  commercial  code  was  ultimately  drafted  and  enacted 
which  went  into  operation  on  January  1,  1867.  It  contains  a 
preliminary  title  and  four  books:  1,  concerning  merchants 
and  commercial  agents;  2,  concerning  contracts  and  mercan- 
tile obligations  in  general;  3,  concerning  maritime  commerce, 
and  4,  concerning  bankruptcy.  The  influence  of  the  Spanish 
and  French  commercial  codes  is  apparent  throughout.  It 
gained  in  its  time  the  approval  of  scientific  codifiers,  and  was 
taken  as  a  model  by  other  countries  of  America,  especially  by 
Colombia  and  Guatemala. 

LAWS  WHICH  AMEND  OR  SUPPLEMENT  THE  COMMERCIAL  CODE 

The  law  of  August  1,  1866,  contains  the  regulations  of  the 
commercial  registry;  the  law  of  September  1,  1866,  that  of 
brokers;  on  June  23,  1868,  imprisonment  for  debts  of  a  merely 
civil  character  was  abolished,  except  when  debtors  are 
guardians;  on  September  6,  1878,  article  452  of  the  code  was 
amended,  providing  that  the  assignor  of  shares  of  stock  is 
bound  to  contribute  to  the  payment  of  the  debts  of  the 
company  up  to  the  amount  he  owed  on  the  price  of  the  trans- 
ferred shares,  provided  such  debts  existed  prior  to  the  pub- 
hcation  of  the  transfer,  and  it  also  prescribes  that  a  special 
register  of  registered  shares  must  be  kept.  The  law  of  Sep- 
tember 12,  1877,  provides  rules  for  the  appointment  of 
inspectors  of  limited  companies.  Articles  1350,  1412,  1457, 
1459,  1460,  1461,  1463,  1489,   1528  and  1533,  referring  to 


20  LATIN-AMERICAN    COMMERCIAL    LAW 

bankruptcy,  were  amended  by  the  law  of  January  11,  1879; 
paragraphs  one  of  article  355  and  two  of  article  440  were 
Ukewise  amended  by  law  1020  of  January  31,  1898;  the  law 
of  November  19,  1904,  regulated  the  operation  of  national 
and  foreign  insurance  companies;  finally  the  code  of  civil 
procedure,  published  on  August  29,  1902,  and  in  force  since 
March  1,  1903,  has  repealed,  supplemented  or  amended  a 
great  number  of  the  provisions  of  Book  IV  relating  to  bank- 
ruptcy. 

Colombia. 

The  first  code  of  commerce  was  enacted  on  June  1,  1853, 
for  the  republic  of  Nueva  Granada,  and  it  governed  in  its 
departments  up  to  the  adoption  of  the  federal  system,  in 
which  every  one  of  the  former  departments,  converted  into 
states,  had  power  to  issue  their  own  codes;  the  state  of 
Panama,  exercising  said  power,  published  on  October  6,  1869, 
the  code  of  commerce  on  land,  which,  after  the  readoption  of 
the  central  system  of  government,  became  the  commercial 
code  of  the  nation  according  to  law  57  of  1887.  The  same 
law  provided  that  the  maritime  law^  of  March  10,  1873,  was 
also  to  be  generally  observed  in  the  Republic.  These  codes 
went  into  effect  on  July  15,  1887.  The  code  of  commerce 
on  land  has  a  preliminary  title  and  two  books;  Book  I  refers 
to  merchants  and  commercial  agents,  and  Book  II,  to  con- 
tracts and  commercial  obligations  in  general. 

The  sources  of  this  code  were  the  Spanish,  the  French  and 
the  Chilean  codes. 

LAWS  WHICH  AMEND  OR  SUPPLEMENT  THE  COMMERCIAL  CODE 

Law  62  of  1887  contains  certain  prohibitions  for  railroad 
constructors;  law  153  of  1887  deals  with  bank-notes  in 
circulation;  law  27  of  1888  gives  power  to  the  government  to 
supervise  stock  corporations  and  repeals  articles  553  and  556 
of  the  code;  law  124  of  1888  deals  with  the  inscription  in  the 
registry  and  the  governmental  authorization  of  foreign 
corporations;  law  65  of  1890  refers  to  commercial  books;  law 


INTRODUCTORY    AND    GENERAL   MATTERS  21 

77  of  1890  grants  liberty  to  corporations  to  fix  the  rate  of 
interest,  discounts  and  commissions;  law  111  of  1890  author- 
izes the  government  to  create  chambers  of  commerce;  law  24 
of  1890  amends  articles  552  and  582  of  the  code  relating  to 
commercial  companies;  law  46  of  1898  governs  the  circula- 
tion of  bank-notes;  laws  2  and  37  of  1906  impose  certain 
obligations  on  foreign  corporations;  law  4  of  1907  regulates 
the  industry  of  transportation;  law  40  of  1907  obliges  foreign 
corporations  to  comply  with  certain  requisites  relating  to  the 
administration  of  justice. 

Laws  of  May  24,  1856;  56  of  1867;  84  of  1877;  35  of  1875; 
59  of  1876;  18,  4,  37,  738  and  899  of  1907;  328  of  1910;  649  of 
1910;  167  of  1912;  decrees  290,  374,  493,  929  of  1912  and  934 
of  1915  all  relate  to  river  navigation. 

Costa  Rica. 

The  first  four  books  of  the  commercial  code  of  Costa  Rica 
were  issued  in  January,  1850,  and  the  fifth  was  enacted  in 
1853.  This  code  is  almost  a  copy  of  the  Spanish  commercial 
code  of  1829,  as  is  indicated  by  its  name:  ''Spanish  Code  of 
Commerce,  as  amended  by  a  commission  of  the  Supreme 
Government  of  Costa  Rica  in  order  to  assist  the  commerce 
of  the  Republic." 

The  code  has  had  many  important  amendments,  the 
principal  ones  of  which  arose  out  of  the  enactment  of  a  new 
civil  code  on  January  1,  1888,  relating  to  merchant  minors,  to 
married  women  and  to  foreigners;  the  law  of  September  11, 
1892,  on  commercial  and  industrial  trade-marks;  the  laws  of 
October  15,  1901,  changing  the  conditions  for  being  consid- 
ered a  merchant;  of  June  21,  1901,  relating  to  mercantile 
registry;  of  July  5, 1901,  relating  to  bookkeeping;  of  Novem- 
ber 26  and  29,  1909,  on  transportation;  of  November  25,  1902, 
relating  to  bills  of  exchange;  of  November  24,  1909,  on  com- 
mercial associations.  The  law  of  July  23,  1901,  relates  to  the 
sale  or  transfer  of  a  mercantile  establishment.  Articles  941 
to  1117  of  the  code,  on  bankruptcy,  have  been  repealed  and 
the  provisions  now  in  force  in  their  stead  are  titles  VII  and 
VIII,  Book  III  of  the  civil  code,  title  IX,  Book  I  of  the  code 


22  LATIN- AMERICAN    COMMERCIAL    LAW 

of  civil  procedure  and  law  of  the  14th  and  the  15th  of 
October,  1901 ,  on  bankruptcy.  Articles  1 1 18  to  1 169,  govern- 
ing mercantile  courts,  have  been  repealed  with  the  abolition 
of  these  courts.  The  law  of  February  3, 1915,  and  its  regula- 
tion of  April  4,  1915,  govern  warehouses. 

Cuba. 

The  Spanish  commercial  code  which  has  been  in  force 
in  the  island  since  May  1,  1886,  experienced  important 
alterations  after  the  independence  of  the  island. 

Article  1  of  the  Military  Order  400  of  1900,  made  inscrip- 
tion in  the  commercial  registry  an  essential  requisite  for  being 
considered  a  merchant;  it  contains  new  regulations  for 
commercial  registry,  and  a  resolution  of  the  Secretary  of 
Justice  of  August  7, 1901,  explained  the  meaning  of  article  9 
of  Order  400.  Order  34,  Chapter  VIII  of  1902  refers  to  land 
occupied  by  railways,  easements  enjoyed  by  them  and  regis- 
tration. During  the  Spanish  regime  the  books  of  merchants 
were  subject  to  stamp  duties;  these  were  abolished  by  the 
Treasury  Department  of  the  United  States  on  June  10,  1899. 
Military  Order  79  of  1900  reestablished  the  commercial 
brokers  and  Order  166  of  1901  governs  the  bonds  of  brokers 
and  the  reestablishment  of  their  college  or  board;  on  August 
9,  1902,  the  regulations  for  the  college  or  board  of  brokers  in 
Havana  were  issued.  By  Military  Order  No.  103  of  Alarch  6, 
1900,  notaries  may  substitute  for  brokers  in  attesting,  and 
can  also  make  translations.  An  instruction  of  December  1, 
1893,  as  amended  by  law  of  September  27,  1902,  levies  a  tax 
upon  insurance  corporations.  Order  No.  34  of  1902,  article 
4,  chapters  IX,  XV  and  XVII  repealed  article  184  and 
following,  and  the  part  of  930  which  refers  to  railways.  The 
same  Order  and  Order  number  117  of  1902  now  govern  the 
contract  of  transportation  by  railway.  Fire  insurance 
companies  must  give  a  bond  of  $75,000  and  life  insurance 
companies  of  $25,000,  according  to  Order  181  of  1899;  and 
surety  companies  must  deposit  a  bond  of  $25,000,  according 
to  Orders  97  of  1899  and  27  of  September,  1902.  Order  416  of 
October  9,  1900,  relates  to  the  drawing  of  checks  by  those 


INTRODUCTORY   AND    GENERAL   MATTERS  23 

who  are  unable  to  sign.  Decree  of  October  25,  1909,  refers 
to  the  obligation  of  banks  and  mercantile  companies  to 
inscribe  in  the  Department  of  Justice,  setting  forth  certain 
details  of  their  business.  A  decree  of  the  military  governor  of 
the  island  of  November  13,  1900,  levies  an  income  tax  of  8% 
on  the  net  profits  of  banks  and  commercial  stock  corpora- 
tions, except  mining  companies  and  savings  banks,  6%  on 
railway  and  navigation  public  service  companies,  and  2%  on 
insurance  corporations,  except  those  of  mutual  character 
that  do  not  distribute  profits.  The  order  of  May  8,  1900, 
order  276  of  July  5, 1904,  and  circular  number  31  of  Septem- 
ber 30,  1909,  refer  to  navigation.  The  War  Department  of 
the  United  States  on  June  22,  1901,  published  new  custom- 
house ordinances,  and  orders  122  and  155  of  1902  refer  to 
sanitation  and  quarantine. 

Ecuador. 

The  first  code  of  commerce  of  Ecuador  was  enacted  by  the 
Congress  on  April  27,  1878,  but  was  not  promulgated  until 
March  1,  1882.  It  was  amended  by  law  on  April  21  and  25, 
1884,  and  on  July  30,  1906,  the  Executive,  by  virtue  of 
authority  vested  in  him,  published  a  new  and  amended 
edition  which  went  into  effect  on  October  25,  1906.  The 
Spanish,  French  and  Venezuelan  codes  are  the  main  source 
of  the  commercial  code  of  Ecuador. 

The  law  of  November  5,  1898,  governs  banks;  that  of 
August  25,  1892,  relates  to  foreigners,  their  status,  rights  and 
duties.  On  January  1,  1902,  the  law  regulating  custom- 
houses, issued  on  October  14,  1901,  went  into  effect.  The 
law  of  October  5,  1909,  governs  foreign  corporations  doing 
business  in  Ecuador. 

Guatemala. 

The  code  of  commerce  of  Guatemala  was  published  July 
20,  1897,  and  went  into  effect  on  September  15  of  that  year. 
The  Spanish  and  Chilean  codes  entered  into  its  composition; 
it  is  divided  into  four  books  Uke  the  Spanish  code. 

The  principal  laws  that  amend  or  supplement  the  code  are 


24  LATIN-AMERICAN    COMMERCIAL    LAW 

the  following:  Decree  No.  208  of  April  9,  1878,  adds  a  title  to 
the  code  dealing  with  brokers  and  auctioneers,  and  a  regula- 
tion accompanying  said  decree  was  issued  the  same  day; 
regulations  governing  commission  agents  were  issued  May 
26,  1902;  a  decree  of  April  30,  1906,  pubHshed  October  18  of 
the  same  year  relates  to  carriers;  a  decree  of  January  28, 
published  April  15,  1903,  governs  foreign  companies;  a  law  of 
January  28,  1903,  deals  with  cooperative  companies;  a  pro- 
vision of  July  7,  1903,  relates  to  stock  corporations;  a  provi- 
sion of  January  29,  1907,  governs  public  ser\dce  companies;  a 
decree  of  December  12,  1877,  amends  articles  689  and  690  of 
the  code  of  commerce  in  regard  to  banks;  a  law  of  June  25, 
1903,  governs  banks  and  banking;  a  provision  of  June  19, 
1903,  governs  reports  that  must  be  rendered  by  banks  and 
brokers;  a  provision  of  December  22,  1903,  relates  to  the 
meetings  of  shareholders  of  banks;  a  law  of  February  26, 1894, 
establishes  the  chamber  of  commerce  and  a  law  of  July  17, 
1892,  regulates  the  consular  service. 

Haiti. 

The  code  of  commerce  was  promulgated  March  28,  1826, 
and  went  into  effect  July  1,  1827.  It  is  identical  with  the 
French  commercial  code. 

The  most  important  laws  that  have  amended  the  code  are: 
the  law  of  October  9,  1830,  as  amended  by  that  of  September 
25,  1863,  on  mercantile  jurisdictions;  a  decree  of  August  12, 
1843,  on  nationality  and  navigation  of  merchant  ships;  those 
of  July  16,  1857,  amending  articles  61,  626  and  645  of  the 
code  of  commerce,  and  of  IMay  28  of  the  same  year  re- 
establishing the  commercial  courts;  decrees  of  February  6 
and  March  26,  1858,  on  stock  exchanges. 

Honduras. 

On  August  27,  1880,  the  first  commercial  code  was  pro- 
ijiulgated;  it  went  into  operation  on  January  1,  1881,  and  on 
September  15,  1898,  a  new  code  was  enacted  which  has  been 
in  effect  since  February  1,  1899. 

On  May  7,  1902,  a  law  w^as  published  on  trade-marks  and 


INTRODUCTORY    AND    GENERAL   MATTERS  25 

industrial  drawings;  on  February  8,  1906,  the  law  in  regard 
to  foreigners  went  into  effect  which,  with  the  decrees  of 
March  6,  1866,  on  the  rights  and  privileges  of  foreigners,  and 
that  of  April  10,  1895,  on  the  status  of  ahens,  govern  the 
matter  of  aliens  in  Honduras. 

Mexico. 

The  Ordenanzas  de  Bilbao  were  in  force  in  Mexico  as  in 
all  the  other  colonies  of  Spain;  but  it  must  be  understood 
that  they  were  merely  subsidiary  to  the  orders  and  decrees 
issued  by  the  Consulate  of  Mexico,  as  that  Consulate  an- 
swered an  inquiry  by  the  Viceroy  in  1785.  Later  their 
enforcement  was  made  compulsory  by  orders  of  February  22, 
1796,  and  April  27,  1801. 

After  the  independence  of  Mexico  the  Ordenanzas  con- 
tinued in  force  until  1854,  in  which  year  the  code  of  commerce, 
named  after  the  minister  who  authorized  its  publication, 
Codigo  de  Lares,  went  into  operation.  Its  draft  was  inspired 
by  the  Spanish  code  of  1829  and  by  the  French  code,  and 
it  was  considered  a  monument  of  Mexican  legislation.  The 
political  hatred  against  the  dictatorship  of  Santa  Anna 
induced  the  Congress  indiscriminately  to  nullify  all  laws 
issued  by  him,  including  the  above  mentioned  code,  and 
the  old  Ordenanzas  de  Bilbao,  entirely  inadequate  to  the 
times,  thus  remained  in  effect  until  1884.  In  the  meantime 
the  commercial  development  of  the  country  had  reached 
such  a  degree  through  the  establishment  of  banks  and  the 
construction  of  the  main  railway  lines,  that  the  necessity 
of  new  and  definite  principles  was  felt  in  commercial  affairs. 
The  constitution  was  amended  in  order  to  enable  the  Con- 
gress to  frame  a  general  mercantile  law  and  a  general  bank- 
ing law  for  the  whole  country. 

The  commercial  code  of  April  15,  1884,  was  thereupon 
promulgated;  but  owing  to  the  haste  with  which  it  was 
drawn,  it  was  subject  to  much  criticism  and  was  soon  re- 
placed by  the  present  code  of  iSeptember  15,  1889. 

One  of  the  most  interesting  features  of  Mexican  history 
from  the  legal,  economic  and  political  viewpoints,  is  the 


26  LATIN-AMERICAN   COMMERCIAL   LAW 

struggle  between  the  banks  and  the  Government  and  the 
events  which  led  to  the  adoption  of  the  present  banking 
law  with  its  peculiar  characteristics.  The  following  laws 
have  been  passed  supplementing  or  amending  the  code:  the 
law  of  December  11,  1885,  and  its  regulation  of  December 
20,  1885,  on  the  commercial  registry;  that  of  February  16, 
1900,  on  general  deposit  warehouses;  that  of  December  16, 
1892,  on  insurance  companies,  which  went  into  operation 
January  1,  1893;  a  decree  of  December  12,  1893,  authorizing 
the  Government  to  dispense  with  the  fulfillment  of  certain 
legal  requisites  by  marine  insurance  companies,  and  a 
corresponding  circular  of  the  Minister  of  Finance  of  Jan- 
uary 30,  1894;  law  of  June  1,  1906,  relating  to  the  stamp 
tax;  law  of  December  15,  1881,  which  governs  railways  and 
its  regulation  of  July  1,  1883;  laws  of  March  11,  1842, 
granting  foreigners  the  right  to  possess  lands  and  real  estate 
in  Mexico,  and  the  law  of  May  28,  1886,  which  governs  the 
matters  of  foreigners  and  naturalization. 

The  new  political  constitution  of  1917  changed  many 
of  the  principles  which  the  law  theretofore  had  maintained; 
Article  27  provides  that  the  nation  possess  direct  dominion 
of  mineral  fuels,  petroleum  and  hydrocarbons,  sohd,  liquid 
or  gaseous;  that  only  Mexicans  by  birth  or  naturalization 
and  Mexican  companies  have  the  right  to  acquire  owner- 
ship in  lands,  waters  and  their  appurtenances,  or  to  obtain 
concessions  to  develop  mines,  waters  or  mineral  fuels  in 
the  republic  of  Mexico.  The  nation  may  grant  the  same 
right  to  foreigners,  provided  they  agree  before  the  depart- 
ment of  Foreign  Affairs  to  be  considered  Mexicans  in  respect 
to  such  property,  and  accordingly,  not  to  invoke  the  pro- 
tection of  their  Governments  in  respect  to  the  same,  under 
penalty  in  case  of  breach,  of  forfeiture  to  the  nation  of 
property  so  acquired.  Within  a  zone  of  100  kilometers 
from  the  frontiers  and  of  50  kilometers  from  the  sea  coast, 
no  foreigner  shall,  under  any  condition,  acquire  direct 
ownership  of  lands  and  waters.  Commercial  stock  com- 
panies cannot  acquire,  hold,  or  administer  rural  properties 
except  in  so  far  as  it  is  necessary  for  their  estabhshment,  at 


INTRODUCTORY    AND    GENERAL   MATTERS  27 

the  discretion  of  the  Executive.  All  contracts  and  con- 
cessions made  by  former  governments  from  and  after  the 
year  1876  which  shall  have  resulted  in  the  monopoly  of 
lands,  waters  and  natural  resources  of  the  nation  by  single 
individuals  or  coiporations  are  declared  subject  to  revision 
and  the  Executive  is  authorized  to  declare  null  and  void 
those  which  seriously  prejudice  the  public  interest.  Some 
of  these  provisions  impair  the  vested  rights  of  foreigners, 
and  have  therefore  given  rise  to  international  difficulties. 
By  decree  of  April  13,  1918,  the  Executive  established  a 
duty  of  10%  ad  valorem  on  the  exportation  of  petroleum 
and  its  products;  the  law  of  February  12,  1834,  established 
consular  agencies  and  the  regulations  of  September  16,  1871, 
govern  the  consular  service;  the  law  of  November  26,  1859, 
contains  the  rules  of  Mexican  law  relating  to  commercial 
agents  in  the  territory  of  the  Republic;  general  custom- 
house ordinances  were  issued  June  12,  1891;  the  law  of 
November  29,  1897,  as  amended  by  the  law  of  June  4,  1902, 
authorizes  stock  corporations,  limited  partnerships,  rail- 
ways, mining  and  pubhc  works  companies  to  issue  bonds 
or  securities.  ^*^ 

Nicaragua. 

Pursuant  to  the  law  of  March  9,  1868,  the  government 
appointed  a  commission  to  draw  up  a  commercial  code 
which  was  approved  by  Congress  on  February  1,  1869,  and 
went  into  effect  on  March  22  of  the  same  year.  The  code 
follows  essentially  that  of  Spain.  Regarding  foreigners 
the  code  has  been  supplemented  by  the  law  of  October  3, 
1894,  and  regarding  patents  by  that  of  October  14,   1899. 

Panama. 

In  discussing  Colombia,  mention  was  made  of  Panama, 

1'  On  April  9,  1917,  President  Carranza  issued  a  law  regulating  fainil}'  rela- 
tions in  Mexico,  and  in  article  270  he  parts  with  the  old  system  of  legal  partner- 
ship in  case  of  matrimony,  and  establishes  instead,  that  husband  and  wife  shall 
retain  their  respective  property  and  the  right  to  administer  it,  and  tlui  products 
of  the  property  and  accessions  thf^eto  shall  not  be  communal  but  shall  belong 
exclusively  to  the  person  who  owns  the  property. 


28  LATIN-AMERICAN    COMMERCIAL    LAW 

which  was  formerly  a  department  or  province  of  that  re- 
public. The  Colombian  code  of  commerce  originated  in 
the  former  State  of  Panama  and  it  was  in  force  in  that 
country  from  its  independence  in  1903  until  the  1st  of  July, 
1917,  when  the  new  code  of  commerce  prepared  by  Dr.  Luis 
Anderson  of  San  Jose,  Costa  Rica,  went  into  force.  This 
code  was  carefully  and  scientifically  drafted  and  contains 
the  most  advanced  principles  of  commercial  law.  It  con- 
tains a  preliminary  title  and  three  books.  Book  I  deals 
with  merchants,  their  capacity  and  obligations,  commercial 
enterprises  and  commercial  institutions  and  contracts;  book 
II  relates  to  maritime  commerce;  and  book  III  deals  with 
bankruptcy  and  statute  of  limitation. 

Paraguay. 

By  virtue  of  decrees  of  the  Paraguayan  Congress  of 
October  5,  1903,  the  Argentine  commercial  code  was  adopted 
in  its  entirety  as  the  law  of  Paraguay  with  all  the  amend- 
ments thereof  since  October  5,  1889,  the  date  of  its  enact- 
ment. 

The  only  railway  company  in  Paraguay  seems  to  be  "The 
Paraguay  Central  Railway  Co."  which,  with  the  consent 
of  the  Government  has  adopted  regulations  which  repeal 
articles  162,  187  and  204  of  the  commercial  code,  referring 
to  the  liability  of  carriers.  By  law  of  December  8,  1906, 
every  check  must  bear  a  stamp  of  20  centimos. 

Peru. 

On  June  15,  1853,  the  Ordenanzas  de  Bilhoa  were  repealed 
by  the  adoption  of  the  first  commercial  code,  copied  from 
the  Spanish  code  of  1829;  and  on  February  3,  1902,  the 
present  code  of  commerce  was  promulgated.  Its  authors 
were  inspired  mostly  by  the  corresponding  Spanish  code  of 
1885,  adding,  however,  a  title  on  auctioneers  and  another 
on  current  accounts,  taken  from  the  Argentine  code;  they 
provided  that  emancipated  minors  may  engage  in  business; 
and  the  title  relating  to  bills  of  exchange  was  replaced  by 
that  of  the  Italian  law. 


INTRODUCTORY   AND    GENERAL   MATTERS  29 

The  code,  furthermore,  has  been  amended  or  supplemented 
in  certain  particulars  by  the  following  laws  and  decrees :  that 
of  October  8,  1888,  concerning  mercantile  pledges;  of 
December  14,  1888,  concerning  checks;  of  January  2,  1889, 
establishing  mortgage  loans;  of  April  19,  1902,  regulating  the 
mercantile  registry;  of  March  2,  1888,  and  August  29,  1898, 
regulating  the  commercial  exchange  of  Lima;  of  January 

28,  1869,  January  2,  1896,  and  of  November  9,  1897,  on 
patents;  of  October  2,  1860,  regulating  brokers;  of  November 

29,  1907,  governing  mortgage  bonds;  of  December  21,  1895, 
relating  to  companies  that  engage  in  aleatory  contracts,  such 
as  contracts  of  insurance,  life  rent,  gambling  or  any  other 
contract,  the  effect  of  which  depends  upon  an  uncertain 
event,  and  the  corresponding  decrees  of  June  23,  1897, 
November  9,  1897,  and  November  20,  1901;  the  consular 
regulations  of  1897;  the  law  of  November  8,  1907,  on  the 
provisioning  of  vessels;  and  that  of  September  28,  1896,  on 
summary  execution  of  judgment. 

San  Salvador. 

The  first  commercial  code  of  Salvador  was  promulgated 
December  1,  1855,  together  with  another  called  Enjuicia- 
miento  para  las  causas  de  comercio.  The  first  was  taken  from 
the  Spanish  code  of  1829  and  the  second  from  the  Spanish 
law  of  July  24,  1830.  They  were  found  inadequate  and,  after 
many  substantial  amendments,  a  new  code  was  finally 
published  May  1,  1882,  in  the  elaboration  of  which  the 
former  code  was  taken  into  consideration;  and  this  may 
account  for  the  fact  that  it  became  necessary  to  adopt 
radical  reforms.  These  were  made  in  the  new  commercial 
code,  now  in  force  since  March  17,  1904.  The  commission 
charged  with  the  framing  of  this  code  was  inspired  by  the 
codes  of  Spain  (1885),  Chile,  Italy  and  Portugal  and  intro- 
duced notable  changes  in  the  commercial  law  of  the  country. 

After  the  promulgation  of  the  code  a  few  important 
amendments  were  made:  the  law  of  March  14,  1905,  ex- 
plained in  detail  articles  IS,  53,  243,  paragraph  III,  685 
and  694;  the  law  of  May  5,  1906,  amended  articles  2,  73,  250, 


30  LATIN-AMERICAN    COMMERCIAL   LAW 

paragraph  II,  252,  and  806  to  810,  inclusive,  and  decrees 
of  April  30,  1907,  amended  paragraphs  4,  5  and  7  of  article 
243. 

Santo  Domingo. 

The  disturbed  condition  of  the  country  was  reflected  in 
the  commercial  law  until  June  5,  1884,  when  the  French  code, 
having  been  translated  by  a  commission,  was  declared  the 
law  of  the  Republic. 

Since  1884  fees  for  industrial  and  commercial  licenses  have 
been  in  operation,  enforced  by  the  decree  of  May  10,  1884, 
law  number  1818  of  1879,  and  the  decree  of  July  2,  1883. 
The  consular  law,  number  468  of  1857,  has  been  amended  by 
decree  number  876  of  1865.  The  law  of  February  17,  1899, 
provided  for  taxes  on  alcoholic  liquors  in  the  city  of  Santo 
Domingo,  and  on  December  10,  1905,  that  tax  was  extended 
to  the  entire  Republic. 

Uruguay. 

The  fact  that  the  author  of  the  commercial  code  of 
Argentina  was  an  Uruguayan,  Dr.  Eduardo  Acevedo,  con- 
tributed to  its  adoption  as  the  code  of  Uruguay  on  May  26, 
1865,  with  certain  amendments  in  regard  to  legal  majority, 
fixed  at  21  for  merchants.  It  coordinated  commercial  and 
civil  procedure  and  changed  more  than  250  articles  of  the 
Argentine  code.  Furthermore,  the  new  code  was  submitted, 
primarily  for  the  revision  of  the  section  on  bankruptcy, 
to  a  committee,  and  on  December  31,  1878,  the  fourth  book 
was  repealed  and  substituted  by  a  new  one.  The  code  had 
already  been  modified  by  the  law  of  notaries  of  December  3, 
1878,  which  constituted  an  addition  to  title  XV  of  book  II. 
By  law  of  June  1, 1892,  on  stock  corporations,  the  preventive 
settlement  between  a  debtor  and  his  creditors  was  intro- 
duced; a  new  law  of  October  2,  1900,  again  changed  book  IV 
of  the  code  relating  to  bankruptcy,  and  finally  by  law  of 
January  25,  1916,  the  matter  of  bankruptcy  was  radically 
changed.  Other  laws  modifying  or  supplementing  the  code 
of  Uruguay  are  those  of  June  2,   1893,  on  liquidation  of 


INTRODUCTORY   AND    GENERAL   MATTERS  31 

limited  companies;  of  July  17,  1909,  and  of  November  13, 
1885  on  patents;  the  law  of  January  9,  1912,  on  navigation 
between  the  ports  of  the  Republic;  the  law  of  May  21,  1906, 
on  the  consular  service  and  consular  tariffs;  and  the  law  of 
December  20,  1879,  on  warrants.  The  by-laws  of  the 
"Centra  Comercial  "  inscribed  in  the  pubhc  Registry  of  Com- 
merce on  June  6,  1888,  with  authorization  from  the  govern- 
ment, contain  important  rules  of  a  general  character  in 
relation  to  the  function  of  the  chamber  of  commerce  and  to 
exchange  brokers. 

Venezuela. 

A  commission  appointed  by  the  merchants  of  Caracas  in 
1860  prepared  a  project  for  a  commercial  code,  which  was 
approved  by  the  Government  and  went  into  operation 
February  15,  1862.  On  August  8,  1863,  some  slight  amend- 
ments were  made.  This  code  was  repealed  by  the  adoption  of 
a  new  one  on  April  27,  1873,  in  the  elaboration  of  which  the 
codes  of  Spain  (1829),  France  and  Italy  were  consulted. 
Another  code  was  later  enacted,  having  as  its  basis  the 
former  code  of  1873,  the  German  code  of  1900  and  the  Italian 
code  of  1882. 

Other  laws  of  importance  are:  the  banking  law  of  June  16, 
1910,  the  law  of  trade-marks  of  May  18,  1877,  the  law  regu- 
lating the  consular  service  of  June  25,  1910,  the  law  of  June 
10,  1898,  regulating  the  postal  service  and  that  of  June  3, 
1899,  regulating  the  telegraphic  service. 


CHAPTER   II 

COMMERCE    IN    GENERAL 

Spain. — Lastres,  Francisco:  Los  actos  de  comercio  y  la  jurisdicci6n  mercan- 
til.    Madrid,  1888. 

Zurita  Nieto,  Benito :  Los  actos  de  comercio  considerados  en  si  mismos  y  en 
relaci6n  con  los  comerciantes  (estudio  de  legislaci6n  mercantil  comparada); 
tomo  I.    Madrid,  1899. 

Brazil. — Descartes  de  Magalhaes:  Nogao  economico-juridica  do  commercio. 
Classifigagao  dos  actos  de  commercio.    Bahia,  1915. 

Chile. — Alonso,  Jose:  Comentario  del  titulo  preliminar  y  del  titulo  primero 
del  c6digo  de  comercio.    Santiago,  1886. 

Ugarte  Zenteno,  Francisco:  De  los  actos  de  comercio  en  su  relaci6n  con  la 
competencia  de  jurisdicci6n.    Santiago,  1886. 

Venezuela. — Perez,  Nestor  Luis:  Tratado  general  de  I03  actos  de  comer- 
cio. .  .  .  Maracaibo,  1908.    2  v. 

The  definition  of  commerce. 

It  was  observed  in  the  previous  chapter  that  commerce 
has  been  the  subject-matter  of  special  codes  in  all  the  Latin- 
American  countries.  These  codes  govern  commercial  acts 
and  contracts,  as  well  as  the  rights  and  duties  of  merchants ; 
hence  it  is  very  important  to  distinguish  when  a  contract  or 
an  act  is  commercial  or  non-commercial  and  when  a  person 
may  be  considered  a  merchant.  The  law  of  the  United 
States  does  not  make  this  distinction,  except  in  cases  of 
bankruptcy. 

There  are  three  definitions  of  commerce,  depending  upon 
the  point  of  view : 

1st.  Economists  consider  the  objective  or  economic  side  of 
commerce.  Among  their  many  definitions  we  may  select 
that  given  by  Cangiailo:  ''Acts  facilitating  the  transmission 
of  goods  to  the  consumer,  changing  their  place,  accumulating 
them  and  accomphshing  all  other  acts  incidental  thereto  are 
called  commerce." 

2d.  Jurists,  on  their  part,  direct  attention  to  the  subjec- 
tive element  in  commerce,  and  define  it  in  the  manner  of 

32 


COMMERCE    IN    GENERAL  33 

Pardessus:  ''The  various  negotiations,  the  object  of  which  is 
to  effect  or  to  assist  in  effecting  changes  of  natural  or  indus- 
trial products  with  a  view  to  deriving  a  profit  therefrom." 

There  is  in  every  commercial  act  a  legal  element  which 
involves  the  rights  and  powers,  the  duties  and  liabilities  of 
the  parties  involved  in  it ;  but  this  element  alone  is  not  enough 
to  distinguish  commerce  from  other  legal  transactions,  nor 
is  it  enough  to  say  that  the  object  of  commerce  is  to  effect 
exchanges,  because  one  of  the  characteristics  of  commerce, 
which  serves  to  distinguish  it  from  merely  civil  acts,  is  the 
function  of  intermediation  between  producer  and  consumer. 

Vidari  gives  a  definition  which  combines  the  legal  with 
the  economic  element,  regarding  commerce  as  a  "group  of 
acts  of  mediation  between  producer  and  consumer,  under- 
taken habitually  and  with  a  view  to  speculating,  or  to  pro- 
mote or  increase  the  circulation  of  wealth  in  order  to  make 
supply  and  demand  easier  and  quicker." 

In  our  opinion,  however,  this  definition  of  commerce  is  not 
complete  for  a  legal  conception  of  the  word.  Modern  ideas 
concerning  commerce  are  now  clear  enough  to  allow  us  to 
add  a  new  element  to  that  definition,  an  element  which  ex- 
plains the  variations  found  in  the  enumeration  of  commercial 
acts  in  the  different  codes,  a  circumstance  responsible  for 
the  general  opinion,  shared  by  Lyon-Caen,  that  the  law- 
makers have  not  had  any  specific  plan  in  view  in  making  the 
enumerations. 

The  circulation  of  wealth  is  one  of  the  most  important 
factors  in  the  welfare  of  a  community;  so  important  that  a 
prominent  French  economist  has  said  that  all  economic 
troubles  are  problems  of  circulation.  This  circumstance 
reveals  that  law-makers  have,  consciously  or  unconsciously, 
arrived  at  the  conclusion  that  everything  relating  to  com- 
merce is  not  so  much  a  matter  of  private  as  of  public  interest 
and  the  merchant,  although  moved  by  his  personal  interest, 
is  performing  a  public  function  and  is  in  some  respects  a 
public  functionary.  This  new  element  in  the  definition  of 
commerce,  social  function  and  publicity,  explains  many 
details  of  commercial  law,  for  example,  the  obligation  of 


34  LATIN-AMERICAN    COMMERCIAL    LAW 

merchants  to  matriculate  and  register  and  to  keep  books  and 
records  with  a  strict  observance  of  certain  rules,  the  formal- 
ities of  commercial  contracts,  the  modern  ideas  concerning 
bills  of  exchange,  and  the  provisions  referring  to  bank- 
ruptcy and  procedure;  and  it  explains  also  that  variety  in  the 
enumeration  of  commercial  acts  in  the  different  countries, 
which,  at  first  glance,  appears  bewildering,  but  which  is 
merely  the  result  of  the  different  ways  in  which  the  circula- 
tion of  wealth  affects  each  community,  the  pecuhar  obstacles 
presented,  and  the  special  manner  in  which  circulation  is  to 
be  promoted,  as  viewed  by  the  national  law-makers.  With 
this  in  mind,  we  can  understand  that  the  different  lists  of 
commercial  acts  in  each  country  are  not  the  consequence  of 
any  lack  of  scientific  plan,  but  the  necessary  effect  of  the 
application  of  the  same  scientific  principle  to  different  nat- 
ural or  social  circumstances. 

3d.  We  may  now  define  commerce  as  the  social  function 
of  mediation  between  producer  and  consumer,  which,  exer- 
cised habitually  and  with  a  view  to  speculation,  serves  to 
promote  or  increase  the  circulation  of  wealth. 

In  this  definition  we  find  three  elements — the  social,  com- 
merce being  not  an  undefined  group  of  acts,  but  a  social 
function;  the  economic,  consisting  in  exchanges  which  pro- 
duce the  circulation  of  wealth  or  promote  or  increase  it;  and 
finally,  the  legal,  consisting  in  the  relation  created  between 
the  producer  and  the  mediator  or  trader  on  the  one  hand, 
and  the  mediator  or  trader  and  the  consumer,  on  the  other 
hand.  As  the  final  result  of  this  mediation  is  the  profit  or 
loss  reahzed  by  the  mediator,  we  include  the  idea  of  liberty 
and  private  enterprise  as  the  only  way  to  differentiate  com- 
merce from  the  collectivistic  conception  of  it,  which,  em- 
phasizing its  social  aspect,  makes  it  a  governmental  func- 
tion. 

Commercial  acts. 

If  the  interchange  of  merchandise  is  the  ultimate  aim  of 
commerce,  all  other  acts  considered  commercial  may  be 
called  so  simply  because  they  facihtate  it,  although  there  are 


COMMERCE    IN    GENERAL 


35 


acts  which,  beginning  only  as  a  means  to  aid  commerce, 
later  become  commercial,  notwithstanding  that  the  purpose 
of  the  parties  was  not  commercial,  as,  for  example,  bills  of 
exchange  and,  frequently,  the  contract  of  transportation; 
but  with  the  exception  of  a  few  cases,  we  may  uphold  the 
principle  that  all  acts  which  do  not  involve  mediation  in  the 
interchange  of  merchandise  or  products,  are  only  commercial 
if  they  help  that  interchange.  With  this  explanation  we  are 
in  a  better  position  to  understand  the  following  table  of 
commercial  acts: — 


(Purchase  and  sale  for  resale  with  the 
purpose  of  making  profit  from  the  difference 
in  cost  and  selling  price. 


COMMERCIAL   ACTS 


AUXILIARIES 


1.  The   object  of  which  isf^^^.i^^^  ^„j  ^^ 
to  overcome  the  obstacles  of    transportation, 
space.  [ 

2.  The  object  of  which  [  all  contracts 

is  to    overcome   obstacles  \  in  which  credit 
of  time.  [  is  involved. 


3.  The  object  of  which  is  to 
overcome  at  the  same  time 
obstacles  of  space  and  of 
time. 


bills  of  exchange 
and  documents 
payable  to  order 
or  to  bearer. 


4.  The  object  of  which 
is  security  against  uncer- 
tainty in  business. 


5.  The  object  of  which 
is  to  overcome  obstacles 
arising  from  limitation  of 
individual  means. 


insurance  contracts 
against  every  kind 
of  accident  on  land 
and  sea,  or  cases  of 
gross  average  or  par- 
tial damages,  pledges, 
_  mortgages,  or  surety. 

partnerships  and  cor- 
porations, contracts 
with  brokers,  agents, 
factors  and  commer- 
cial clerks,  stock  ex- 
change or  hiring  of 
services. 


36  LATIN-AMERICAN    COMMERCIAL    LAW 

We  state  in  this  table  that  all  contracts  in  which  credit  is 
used  have  as  their  object  the  effort  to  overcome  the  obstacle 
of  time,  and  this  may  be  briefly  explained.  A  merchant  who 
borrows  money  does  so  because  he  desires  at  the  present  time 
something  which  he  feels  sure  he  will  be  able  to  have  in  the 
near  future,  and  he  wishes  to  avail  himself  of  an  opportunity 
of  to-day;  credit,  therefore,  overcomes  an  obstacle  of  time. 
Bills  of  exchange  are  in  many  cases  now,  and  always  were  in 
former  times,  instruments  which  prove  the  existence  of  a 
previous  contract  of  exchange  of  money,  but  at  the  same 
time  they  are  instruments  of  credit  and  circulation;  for  this 
reason  we  classify  them  among  acts  which  serve  to  overcome 
at  once  time  and  space,  as  do  bank-notes,  drafts,  checks,  and 
certain  other  documents  of  similar  character  which  may  be 
transmitted  from  place  to  place  to  pay  debts,  balance 
accounts,  and  facilitate  circulation. 

To  illustrate  this  point  we  may  cite  certain  examples.  An 
artist  buys  canvas  and  colors,  and  after  painting  a  picture 
sells  the  canvas  and  colors,  obtaining  a  great  profit  in  the 
difference  of  price  at  which  he  bought  and  at  which  he  sells 
them.  Yet  this  is  not  a  commercial  act  on  the  part  of  the 
painter,  for  the  painter  is  not  a  mediator;  his  act  involves 
merely  production,  not  circulation,  the  canvas  and  colors 
having  been  for  him  merely  a  necessary  implement  for  his 
creative  art.  The  physician  in  the  country  who  sells  to  his 
chents  the  medicine  he  buys  from  the  druggist,  does  not 
undertake  a  commercial  act,  for  the  medicine  is  only  an 
accessory  in  the  exercise  of  his  profession.  The  pharmacist 
who  confines  himself  to  the  filling  of  medical  prescriptions  is 
not  performing  any  commercial  act;  but  if  he  sells  patent 
medicines  or  chemicals,  he  may  be  considered  a  merchant. 
(Paris,  April  15,  1837,  Dalloz,  Repertoire  de  jurisprudence  de 
Commerce,  105.)  A  tanner  who  sells  the  wool  of  the  hide  he 
dresses,  is  not  a  merchant,  for  his  occupation  is  not  to 
mediate  between  the  seller  of  wool  and  the  wool  miller;  the 
tanner  is  devoted  to  production,  for  he  sells  that  which  he 
produces  and  the  by-products  of  his  industry. 

The  contractors  of  works  are  not  merchants  even  though 


COMMERCE    IN   GENERAL  37 

they  supply  the  materials.^  The  purchase  of  real  estate 
is  not  a  commercial  act.-  The  purchase  of  materials  for  the 
construction  of  a  building  is  not  a  commercial  act  for  the 
purchaser,  but  is  commercial  for  the  seller.^  GambHng  in  a 
lottery  is  not  commercial.^  A  person  who,  executing  a  con- 
tract, goes  to  a  forest  to  cut  timber  for  some  one  else  does  not 
perform  a  commercial  act.^  Purchase  and  sale  of  cattle  has 
been  held  in  Colombia  to  be  a  civil  industry.*^  The  purchase 
of  furniture  and  utensils  for  use  in  a  commercial  house  is 
not  a  commercial  act.'^ 

The  codes  of  Argentina,^  Chile, ^  Colombia,  ^°  Ecuador, ^^ 
Guatemala, ^^  Haiti, ^'^  Honduras, ^^  Mexico,^'  Panama, ^'''  San 
Salvador,^'  Santo  Domingo, ^^  Uruguay, ^^  and  Venezuela-" 
contain  a  list  of  commercial  acts;  but  those  of  the  other 
Latin-American  countries  and  of  Spain  have  no  such  list. 
In  BoHvia,  however,  the  law  of  August  8,  1842,  gives  a  brief 
enumeration  of  acts  which  must  be  considered  as  com- 
mercial.^^ 

Examining  the  provisions  of  the  Spanish  commercial  code 
in  order  to  learn  which  acts  are  considered  mercantile,  we 
may  reduce  them  to  the  following  list: 

1.  Purchase   and  sale   of   corporate  merchandise,  stocks 

1  Tribunal  de  Jujuy,  Argentina,  Boletin  Oficial  de  Jujuy,  Nos.  Ill  and  112. 

'  Corte  de  Bucaramanga,  Colombia,  March  18,  1891,  vol.  V,  p.  1581,  2. 
However,  if  this  purchase  of  real  estate  is  made  with  a  view  to  selling  it  with  a 
profit  it  is  a  commercial  act. 

^  Cartajena,  Colombia,  Dist.  Jud.  de  Bolivar,  April  28,  1897,  Gaceta  Judicial, 
vol.  X,  p.  924. 

''  Panama,  October  1,  1892,  Registro  Judicial  de  Panama,  vol.  VI,  p.  37. 

*  Panama,  June  14,  1897,  ibid,  vol.  X,  p.  128. 

*  Popayan,  March  6,  1895,  Repertoria  Judicial,  No.  341,  3.  We  do  not 
think  that  this  decision  can  be  supported  according  to  legal  principles  and 
the  provisions  of  article  20,  paragraph  I  of  the  commercial  code  of  Columbia. 

^  Costa  Rica,  Canosa  v.  Castille,  Casacion,  September  8,  1899.  Corle  de 
Casadon  Senlendas,  1899,  p.  258. 

«  Art.  8.  »  Aft.  3.  "  Art.  20. 

"  Art.  3.  12  Art.  3.  "  Art.  621. 

'      "  Art.  3.  "  Art.  75.  "  Art.  2. 

"  Art.  3.  '8  Arts.  632,  633.  "  Art.  7. 

»>  Art.  2. 

^^  Articlas  of  codes  will  be  cited  by  their  number  after  the  country  whose 
code  is  cited. 

4C5174 


38  LATIN-AMERICAN    COMMERCIAL    LAW 

and  bonds,  state  and  provincial  securities,  incorporeal  rights, 
real  estate,  choses  in  action  and  negotiable  instruments, 
undertaken  with  the  purpose  of  mercantile  speculation  or 
profit. 

2.  The  purchase  and  sale  of  vessels. 

3.  Money  exchange,  bills  of  exchange,  drafts,  promissory- 
notes  payable  to  order  or  to  bearer  or  checks  or  letters  of 
credit  issued  by  one  merchant  to  another  for  mercantile 
purposes. 

4.  Agency  or  contracts  between  a  principal  and  his  clerk 
or  his  factor  or  broker  when  they  have  a  mercantile  purpose. 

5.  Overland  transportation  of  merchandise  or  of  any 
article  if  the  carrier  is  habitually  engaged  in  transportation 
or  in  carrying  maritime  freight. 

6.  Deposit  when  made  as  a  consequence  of  a  mercantile 
transaction,  or  when  made  in  general  warehouses. 

7.  Insurance  when  the  insured  pays  a  single  or  a  periodical 
and  fixed  premium  as  a  consideration  therefor. 

8.  Security,  pledge  and  mortgage  when  they  guarantee  a 
commercial  obligation. 

9.  Loans  for  commercial  purposes. 

10.  Commercial  partnerships,  corporations  and  joint  ad- 
venture. 

11.  Accounts  current  for  mercantile  purposes. 

12.  Quasi-contracts  in  connection  with  the  ownership  of 
vessels  or  common  average,  stranding  or  fortuitous  ship- 
wreck. 

The  acts  listed  in  this  enumeration  are  substantially  the 
same  as  those  which  the  other  codes  consider  as  commercial. 
Nevertheless,  the  code  of  Mexico  declares  that  the  sale  of 
products  of  a  farm,  made  by  the  owner  or  cultivator  thereof 
is  a  commercial  act,  a  provision  which  cannot  be  reconciled 
with  the  principles  generally  accepted. 

As  some  of  the  codes  contain  a  list  of  commercial  acts  and 
all  of  them  deal  at  length  with  each  of  these  acts,  it  has  not* 
been  considered  necessary  to  enumerate  those  that  are  not 
commercial;  nevertheless  the  codes  of  Colombia, ^^  Mexico,-^ 

22  Art.  22.  "  Alt.  77. 


COMMERCE    IN    GENERAL  39 

and  Venezuela  -*  make  such  an  enumeration,  and  as  the  list 
given  by  the  Colombian  code  may  serve  as  an  illustration  of 
the  general  rules  established  above,  it  may  be  quoted: 
''The  following  are  not  commercial  acts: 
"1.  The  purchase  of  objects  destined  for  the  domestic 
consumption  of  the  buyer,  or  the  sale  of  the  excess  of  his 
stock. 

"  2.  The  purchase  of  articles  that  serve  for  the  elaboration 
of  artistic  works  or  the  sale  of  products  of  a  civil  industry. 

"  3.  Purchases  made  by  public  officers  or  employees  of 
objects  destined  for  the  public  service. 

"4.  Sales  made  by  farmers  or  cattle-raisers  of  the  fruits  of 
their  farms  or  of  their  flocks." 

As  the  nature  of  the  transaction  depends  in  many  cases 
upon  the  purpose  of  the  parties  to  it,  the  same  act  may  fre- 
quently have  a  different  character,  commercial  for  one  of  the 
parties  and  civil  or  non-commercial  for  the  other.  The  con- 
sequences of  this  difference  bring  about  differences  in  the 
rights  and  obhgations  of  the  parties.  The  commercial  code 
of  Mexico  is  in  this  respect  more  precise  than  others  in 
stating,  in  Article  1050: 

"When,  according  to  the  aforesaid  articles  4,  75,  and 
76,  of  the  two  parties  entering  into  a  contract,  one 
engages  in  a  commercial  act  and  the  other  only  in  a  civil 
one  and  this  contract  gives  rise  to  a  judicial  litigation, 
it  shall  be  governed  by  the  precepts  of  this  book,  if  the 
party  who  undertook  the  commercial  act  is  the  defend- 
ant; on  the  contrary,  when  the  defendant  is  the  party 
who  undertook  the  civil  act,  the  suit  shall  be  carried  on 
according  to  the  rules  of  the  civil  law." 
The  codes  of,  Argentina,"  Chile, -^  Colombia, ^^  Ecuador,-^ 
Guatemala,-^  Haiti, ^°   Honduras, ^^   San   Salvador,^^   Santo 
Domingo ^^  Uruguay, ^^  and  Venezuela  ^^  provide  in  a  general 
way  that  the  code  of  commerce  is  applicable  to  merchants 


"  Arts.  4,  5,  6. 

"  Art.  6. 

M  Art.  1. 

27  Art.  1. 

28  Art.  1. 

29  Art.  1. 

»» Art.  620. 

"Art.  1. 

"  Art.  1. 

"Art.  631. 

"  Art.  6. 

"  Art.  1. 

40  LATIN- AMERICAN    COMMERCIAL    LAW 

and  even  to  non-merchants  who  engage  in  commercial 
acts. 

Argentina  ^^  and  Nicaragua  "  differ  from  the  other  coun- 
tries in  prescribing  that  ''Business,  the  subject-matter 
or  the  purpose  of  which  is  commercial,  or  in  which  at  least 
one  of  the  parties  to  the  contract  is  a  merchant,  shall  be 
governed  by  the  law  and  the  jurisdiction  of  commerce." 

In  Brazil  ^^  and  Panama  ^^  when  an  act  is  commercial 
for  one  of  the  parties,  all  the  contracting  parties  are  subject 
to  the  commercial  law  with  regard  to  the  consequences  and 
effects  of  such  act. 

If  there  is  any  doubt  in  reference  to  the  character  of  an  act, 
the  rule  is  that  it  must  be  regarded  as  a  civil  act,  because  the 
commercial  law  is  special  and  strictly  construed. 

Conflict  of  law. 

As  the  laws  of  all  countries  do  not  agree  in  the  matter  of 
classification  of  commercial  acts,  conflicts  may  arise.  Two 
systems  have  been  proposed  for  settling  the  difficulty. 

The  first  proposes  that  the  law  which  decides  upon  the 
validity  of  the  act,  that  is,  the  law  of  the  place  where  the 
contract  was  made,  is  the  one  that  must  determine  its 
classification  as  civil  or  commercial,  and  the  application  of 
this  principle  serves  to  establish  whether  any  special  evidence 
for  commercial  acts  must  be  admitted  in  a  given  case.  In 
matters  referring  to  the  jurisdiction  of  commercial  courts  ^^ 
the  laws  of  the  country  in  which  the  suit  is  brought  are 
determinative.  ^  ^ 

The  other  system  provides  that  in  all  conflicting  cases  the 
determining  law  is  that  of  the  place  where  the  suit  arises. 

The  latter  solution  in  our  opinion  is  the  best.  Commerce  is 
a  social  function,  and  the  public  interest  in  every  country  is 
involved  in  the  classification  of  acts  as  commercial  or  non- 

»'  Art.  7.  "  Art.  12. 

38  Art.  10  of  Decree  No.  737  of  Nov.  25,  1850.  ^^  Art.  4. 

^  See  the  chapter  on  procedure. 

*i  Asser  et  Rivier,  Elements  de  droit  international  prive,  Paragraphs  91  and 
92;  Holtzendorff,  Encyclopedic  der  Rechtsivissenschaft,  article  written  by  M. 
de  Bar,  entitled  Internationales  Privatrecht  (4th  edition,  p.  698). 


COMMERCE    IN    GENERAL  41 

commercial.  Due  to  this  fact,  classifications  vary  in  the 
different  countries.  If  in  certain  points  foreign  law  must  be 
consulted,  that  is  due  to  some  special  reason;  for  example, 
the  purchase  of  real  estate  for  resale  is  non-commercial  in 
Santo  Domingo  but  may  be  commercial  in  Cuba;  if  a  contest 
arises  in  Santo  Domingo  in  reference  to  purchase  of  real 
estate  made  in  Cuba,  the  existence  of  the  contract  may  be 
proved  by  the  means  provided  by  the  Cuban  commercial  law, 
because  the  law  of  the  place  where  the  contract  is  made 
governs  the  formalities  of  the  acts;  ^^  but  its  classification  as 
civil  or  commercial,  affecting  the  jurisdiction  of  the  courts  in 
the  case  must  be  governed  by  the  law  of  Santo  Domingo. 

^^  Lyon-Caen,  TraiU  de  droit  commercial,  I,  pp.  192,  195. 


CHAPTER  III 
Commercial  Law  in  Federal  Countries 
constitutional  law 

Argentina 

Alcorta,  Amancio:  Las  garantias  constitucionales.  Buenos  Aires,  1897. 
2dcd. 

Alberdi,  Juan  Bautista:  Organizacion  de  la  confederacion  argentina.  .  .  . 
Nueva  edici6n  con  un  estudio  preliminar  sobre  las  ideas  politicas  de  Alberdi 
por  Adolf o  Posada.  .  .  .  Buenos  Aires  (1913).    2  v. 

Araya,  Perfecto:  Comentario  a  la  constitucion  de  la  nacion  Argentina  .  .  . 
con  un  prologo  del  Dr.  Joaquin  Lajarza.    Buenos  Aires,  1908-1911.    2  v. 

Avellaneda,  Nicolds:  Estudios  sobre  las  leyes  de  tierras  publicas.  Buenos 
Aires,  1865.    Reprinted  in  1915. 

Bague,  Santiago:  Influencia  de  Alberdi  en  la  organizaci6n  politica  del 
Estado  Argentino.    Buenos  Aires,  1915. 

Barranquero,  Julidn:  Espiritu  y  pr^ctica  de  la  constituci6n  argentina.  2d  ed. 
Buenos  Aires,  1889. 

Brown,  Rome  G. :  Laws  and  regulations  regarding  the  use  of  water  in  Pan- 
American  countries.    New  York  Evening  Post.    Job  print.    1916. 

Bunge,  C.  O.:  El  federalismo  argentino.    Buenos  Aires,  1897. 

Digesto  de  leyes,  decretos  y  resoluciones  relativas  a  tierras  publicas,  colo 
nizacion,  inmigraci6n,  agricultura  y  comercio.    Buenos  Aires,  1901. 

Dolvanich,  Horacio:  Apuntes  de  legislaci6n  de  minas.    Buenos  Aires,  1911. 

Estrada,  Jose  Manuel :  Curso  de  derecho  constitucional  federal  y  administra- 
tivo.    Buenos  Aires,  1895. 

Same:  Curso  de  derecho  constitucional.    Buenos  Aires,  1901-1902.    3  v. 

Funci6n  constitucional  de  los  ministros,  por  I.  Ruiz  Moreno,  R.  Wimart, 
N.  Pinero,  E.  de  Vedia,  J.  A.  Gonzalez  Calder6n,  R.  A.  Orgaz,  V.  C.  Callo  y 
J.  N.  Matienzo.    Pr61ogo  de  Rodolfo  Rivarola.    Buenos  Aires,  1911. 

Gancedo,  Alejandro:  Reformas  a  la  constituci6n  nacional.  Buenos  Aires, 
1909.    2v. 

Garcia  Merou,  Martin:  Juan  Bautista  Alberdi  (Ensayo  critico).  Buenos 
Aires.     1890. 

Gil,  Antonio  Luis:  Recurso  de  inconstitucionalidad  e  inaplicabUidad  de  la 
ley.    Buenos  Aires  (1878). 

Giustiniani,  Jose:  Cuadro  sin6ptico  de  las  intervenciones  del  gobierno 
federal  en  las  provincias.    1853-1909.    Buenos  Aires,  1910. 

G6mez  Langenheim,  Antonio:  CoIonizaci6n  en  la  Repiiblica  Argentina. 
Buenos  Aires,  1906. 

Gonzdlez,  Joaquin  V.:  Manual  de  la  constituci6n  argentina,  escrito  para 
servir  de  texto  de  instrucci6n  civica  en  los  establecimientos  de  instrucci6n 
secundaria  .  .  .  7th  ed.    Buenos  Aires,  1915. 

42 


CONSTITUTIONAL    LAW  43 

GonzAlez  Calder6n,  Juan  A.:  La  funcion  judicial  en  la  constituci6n  argen- 
tina.    Buenos  Aires,  191L 

Same:  El  poder  de  declarar  la  inconstitucionalidad  de  las  leyes.  Buenos 
Aires,  1914. 

Same:  Poder  legislative  en  los  estatutos,  reglamentos  y  constituciones  de  la 
nacion  y  las  provincias,  organizacion  y  funcionamiento.     Buenos  Aires,  1909. 

Same:  Derecho  constitutional  argentino.  Historia,  teoria  y  jurisprudencia 
de  la  constitucion.    Buenos  Aires,  1917-1918.    2  v. 

Gonzdlez,  Meliton:  Estudio  de  la  legislacion  vigente  sobre  tierras  publicas 
nacionales  de  la  Republica  Argentina,  presentado  en  julio  de  1891  al  exmo. 
gobierno  nacional.    Buenos  Aires,  1894. 

Goyena,  J. :  Digesto  rural  y  agrario,  recopilaci6n  de  leyes,  decretos,  fallos  de 
las  cortes  federal  y  provinciales,  1810  a  1891.    Buenos  Aires,  1892.    3  v. 

Hoskold,  Henrj'^  Davis:  Official  report  upon  the  mines,  mining,  metallurgy 
and  mining  laws,  etc.,  etc.,  of  the  Argentine  Republic.  Buenos  Aires, 
1904. 

Malarino,  Joaquin  E. :  Las  municipalidades  y  el  dominio  eminente.  Buenos 
Aires,  1914. 

Same:  Legislacion  minera  o  jurisdiccion  y  procedimiento  federal.  Buenos 
Aires,  1912. 

Matienzo,  Jose  Xicolds:  Derecho  constitucional.  Apuntes  taquigrdficos 
tornados  en  la  catedra  .  .  .  por  Juan  Isaac  Cooke.    La  Plata,  1915-1916.    2  v. 

Same :  El  gobierno  representativo  federal  de  la  Republica  Argentina.  Buenos 
Aires,  1910. 

Mont&s  de  Oca,  M.  A. :  Lecciones  de  derecho  constitucional.  Notas  tomadas 
por  Alcides  Calandrelli.    Buenos  Aires,  1902-1903.    2  v. 

Same:  Cuestiones  constitucionales.    Buenos  Aires,  1899. 

Na6n,  Romulo  S. :  Argentine  constitutional  ideas.  Address  delivered  before 
the  American  Bar  Association  at  the  annual  meeting  held  in  Washington,  D. 
C,  on  Oct.  22d,  1914.    Washington,  1914. 

Pereyra,  Carlos:  El  pensamiento  politico  de  Alberdi.    Madrid  (1918). 

Quesada,  Sixto  J.:  Bancos  hipotecarios  y  cajas  de  ahorros.  Buenos  Aires, 
1887. 

Same:  Las  finanzas  de  la  Republica  Argentina.    Buenos  Aires,  1892. 

Ramos,  Juan  P.:  El  poder  ejecutivo  en  los  estatutos,  reglamentos  y  con- 
stituciones de  la  naci6n  y  las  provincias,  su  reglamentaci<5n  y  funcionamiento. 
Buenos  Aires,  1912. 

Ramos  Mejla,  Francisco:  El  federalismo  Argentino.  Buenos  Aires,  1889. 
Reprinted  with  an  introduction  by  Nicolds  Coronado  in  1915. 

Rivarola,  Rodolfo:  Del  regimen  federativo  al  unitario;  estudio  sobre  la 
organizaci6n  politica  de  la  Argentina.    Buenos  Aires,  1908. 

Rodriguez,  Enrique:  Proyecto  de  codigo  de  mineria  para  la  Repiiblica  Ar- 
gentina.   Con  notas.    Buenos  Aires,  1885. 

Rodriguez  del  Busto,  Antonio:  El  sistema  de  gobierno  dual  de  Argentina  y 
sus  origenes.  F*recedido  por  Cuestiones  pollticas  ibero-americanas.  Buenos 
Aires,  1906. 

Romero,  Miguel:  El  parlamento,  derecho,  jurisprudencia,  historia.  Buenos 
Aires,  1902.    2  v. 

Sarmiento,  Domingo  Faustino:  Comentarios  de  la  constituc'6n  de  la  con- 


44  LATIN-AMERICAN   COMMERCIAL   LAW 

federaci6n  Arjentina  con  numerosos  documentos  ilustrativos  del  texto.  San- 
tiago de  Chile,  1853. 

Scares,  Carlos  F. :  Economla  y  finanzas  de  la  Naci6n  Argentina,  1903-1916. 
Buenos  Aires,  1916. 

Solveyra,  J.  J. :  Banco  de  la  Naci6n  Argentina.  Origen  y  desarrollo,  1891- 
1910.    Buenos  Aires,  1910. 

Taussac,  Georges:  Constituci6n  de  la  Republica  Argentina.    Toulouse,  1904. 

Urrutia,  Manuel  Alberto:  Intervenci6n  del  gobierno  federal  en  las  prov- 
incias  .  .  .  Recopilaci6n  de  sus  antecedentes.     Buenos  Aires,   1904.     2  v. 

Varela,  Luis  Vicente:  Estudios  sobre  la  constituci6n  nacional  argentina. 
Buenos  Aires,  1896. 

Vedia,  Augustin  de:  Constituci6n  argentina.    Buenos  Aires,  1907. 

Same :  La  intervenci6n  del  gobierno  federal  en  las  provincias.  Buenos  Aires, 
1904. 

Same:  El  Banco  Nacional.  Historia  financiera  de  la  repiiblica  Argentina. 
Buenos  Aires,  1890.    v.  I,  1811-1854. 

Zeballos,  Estanislao  S.:  The  rise  and  growth  of  the  Argentine  constitution; 
being  a  lecture  delivered  to  the  St.  Andrew's  debating  society  ...  on  Satur- 
day, Sept.  29th,  1906.    Buenos  Aires,  1907. 

Brazil 

Barbalho,  U.  C.  Joao:  Constitu^ao  federal  brasileira.    Rio  de  Janeiro,  1902. 

Barbosa,  Ruy :  Os  actos  inconstitucionaes  do  congreso  e  do  executivo  ante  a 
justiga  federal.    Capital  federal  (Rio  de  Janeiro),  1893. 

Same:  Amnistia  inversa.  Caso  de  teratologia  juridica.  2d  ed.  Rio  de 
Janeiro,  1896. 

Bastos,  Filinto  Justiniano  Ferreira:  Manual  de  direito  publico  e  de  direito 
constitucional  brasileiro  de  conformidade  com  o  programa  da  facultad  de 
direito  da  Bahia.    Bahia,  1914. 

Brazil:  Preferential  tariff  on  American  products  (U.  S.  Bureau  of  Manufac- 
tures.   Tariff  series) .    Washington,  1908. 

Carvalho  de  Mendonga,  Manuel  Ignacio:  O  poder  judicial  no  Brazil.  Curi- 
tyba,  1899. 

Same:  Rios  e  aguas  correntes  em  sus  relagoes  juridicas.     Curityba,  1909. 

Cavalcanti,  Amaro:  Regimen  federativo  e  a  Republica  Brazileira.  Rio  de 
Janeiro,  1900. 

Same:  Responsabilidade  civil  do  Estado.    Rio  de  Janeiro,  1905. 

Same:  O  meio  circulante  nacional.    Rio  de  Janeiro,  1893.    2  v.,  in  1. 

Coelho,  Henrique:  O  poder  legislative  e  o  poder  executivo  no  direito  publico 
brazileiro.    Sao  Paulo,  1905. 

Domingues  Vianna,  Paulo:  Constitugao  federal  e  constitugoes  dos  estados. 
Rio  de  Janeiro,  1911.    2  v. 

Ferreira,  Francisco  Ignacio:  Repertorio  juridico  do  minero,  consolidacao 
alphabetica  e  chronologica  de  todas  as  disposigoes  sobre  minas  comprendiendo 
a  legislagao  antiga  e  moderna  de  Portugal  e  do  Brazil.  Rio  de  Janeiro, 
1884. 

Fonseca,  Annibal  Freire  de:  Do  poder  executivo  na  Republica  brasileira. 
Rio  de  Janeiro,  1916. 

Frank  R.  Rutter:  Tariff  systems  of  South  American  countries  (Bureau  of 


CONSTITUTIONAL   LAW  45 

Foreign  and  Domestic  Commerce.  Department  of  Commerce).  Washington, 
1916. 

Freire,  Felisbello  de  Oliveira:  As  constitugoes  dos  estados  e  a  constitugao 
federal.    Rio  de  Janeiro,  1898. 

Same:  Historia  constitucional  da  Republica  dos  Estados  Unidos  do  Brasil. 
Rio  de  Janeiro,  1894.    3  v. 

Interven^ao  nos  estados.     Rio  de  Janeiro.     Impr.  Nacional,  1913.     5  v. 

Lessa,  Pedro:  Opoder  judicial.    Rio  de  Janeiro.    1915. 

Maximiliano,  Carlos.  Comentario  d,  constitugao  brasileira.  Rio  de  Janeiro, 
1918. 

Milton,  Aristides  Augusto :  A  constitugao  do  Brazil,  noticia  historica,  texto  y 
commentario,  2d  ed.,  cor.  e  augm.    Rio  de  Janeiro,  1898. 

Nogueira  Almeida,  J.  L.  de:  Podem  os  estados  e  os  municipios  comtrahir 
emprestitos  externos?    Sao  Paulo,  1904. 

Octavio  Langgaard  de  Menezes,  Rodrigo:  Constitugaoes  federaes.  Con- 
fronto  entre  a  cons  tit  ugao  federal  dos  Estados  Unidos  do  Brazil  com  as  con- 
stitugoes  da  Republica  Argentina  e  dos  Estados  Unidos  da  America  do  Norte 
e  da  Suissa.    Rio  de  Janeiro,  1897. 

Same:  Do  dominio  da  uniao  e  dos  estados  segundo  a  constitugao  federal.  Rio 
de  Janeiro,  1897. 

Same  and  Domingues  Vianna,  Paulo:  Elementos  de  direito  publico  e  con- 
stitucional brasileiro.    Rio  de  Janeiro,  1913. 

Oliveira  Lima,  Manuel  de:  The  evolution  of  Brazil,  compared  with  that  of 
Spanish  and  Anglo-Saxon  America  .  .  .  with  introduction  and  notes  by  Prey 
Alvin  Martin.    Stanford  University,  Cal.,  The  University.    1914. 

Orosimbo,  Paulo:  Hepertorio  synthetico  da  legislacao  postal  brasileira. 
Sao  Paulo,  1898. 

Pandid  Calogeras,  Joao:  As  minas  do  Brasil  e  sua  legislagao.  Rio  de  Janeiro, 
1904-1905.    3v. 

Pimenta  Bueno,  Jos6  Antonio:  Direito  publico  brazileiro  o  analyse  da 
constitugao  do  imperio.    Rio  de  Janeiro,  1857. 

Sa  Albuquerque,  Joao  de:  Desapropiagao  por  utilidade  publica.  Rio  de 
Janeiro  (1910?). 

Same:  Nova  consolidagao  das  leis  alfandegas  e  mesas  de  reudas  da  Republica. 
Rio  de  Janeiro,  1915. 

Soriano  de  Souza,  Jos^:  Principios  geraes  de  direito  publico  e  constitucional 
brasileiro.    Rio  de  Janeiro,  1913. 

Varela,  Alfredo:  Direito  constitucional  brazileiro,  reformas  das  institugoea 
nacionaes.     2d  ed.    Rio  de  Janeiro,  1902. 

Vasconcellos,  J.  M.  de  P.:  Lei  das  terras.    Rio  de  Janeiro  (1872). 

Viveiros  de  Castro,  Augusto  Olympio :  Tratado  dos  impostos  (estudo  theorico 
pratico).    Rio  de  Janeiro,  1910. 

Walmsley,  Oswald:  Guide  to  the  mining  laws  of  the  world.    London,  1894. 

Mexico 

Castillo,  Juan:  Teoria  del  recur.so  de  amparo,  instrucciones  para  su  ejercicio. 
Mexico,  1901. 

Castillo  Velasco,  Jos6  Maria  del:  Apuntamientos  para  el  estudio  (1(>1  derecho 
constitucional  mexicano.    Mexico,  1871. 


46  LATIN-AMERICAN   COMMERCIAL   LAW 

Castillo  Velasco,  Federico  M.  del:  Manual  sobre  procedencia  y  substanciar 
ci6n  de  los  juicios  de  amparo.    2d  ed.    Mexico,  1899. 

Department  of  State:  Tariff  law  of  Mexico.    Washington,  D.  C,  1885. 

Dictamen  de  la  comisi6n  nombrada  per  el  primer  congreso  nacional  de  indus- 
triales.    Me.xico,  1917. 

Esteva  Ruiz,  Roberto  A:  El  derecho  publico  intemacional  en  Mexico. 
Diario  de  Jurisprvdencia,  v.  24,  p.  64. 

Gam  boa,  Jose  M.:  Leyes  constitucionales  de  Mexico  durante  el  siglo  XIX. 
Mexico,  1901. 

Gamboa,  Francisco  Javier:  Comentario  de  la  ordenanza  de  minerla.  Nueva 
edici6n  corregida  por  el  Lie.    Jose  Olmedo  y  Lama.    Mexico,  1874. 

Hall,  Frederic:  The  law  of  Mexico;  a  compilation  and  treatise  relating  to 
real  property,  mines,  water  rights,  personal  rights,  contracts  and  inheritances. 
San  Francisco,  1885. 

Halleck,  H.  W.:  A  collection  of  mining  laws  of  Spain  and  Mexico.  San 
Francisco,  Cal.    1859. 

Iglesias,  Jose  Maria:  Estudio  constitucional  sobre  las  facultades  de  la  Corte 
de  Justicia.    Mexico,  1874. 

Kerr,  Robert  Joseph :  A  handbook  of  Mexican  law.  Being  an  abridgment  of 
the  principal  Mexican  codes.    Chicago,  1909. 

Labastida:  Leyes  federales  sobre  administraci6n  fiscal.    Mexico,  1899. 

Same:  Coleccion  de  leyes  y  decretos,  reglamentos,  circulares,  6rdenes  y 
acuerdos  relativos  a  la  desamortizaci6n  de  los  bienes  de  corporaciones  civiles  y 
religiosas  y  a  la  nacionalizaci6n  de  las  que  administraron  las  liltimas.  Mexico, 
1893. 

Lozano,  Antonio  de  J.:  Agenda  constitucional  mexicana.    Mexico,  1901. 

Lozano,  Jose  Maria:  Tratado  de  los  derechos  del  hombre.     Mexico,  1876. 

Macedo,  Pablo  and  Pardo,  Jr.,  Emilio:  Compendio  de  los  derechos  y  obli- 
gaciones  del  hombre  y  del  ciudadano.    Mexico,  1875. 

Manzanilla,  Januario:  Lecciones  de  derecho  constitucional  mexicano. 
Merida,  1882. 

Mejia,  Miguel:  Errores  constitucionales.  Las  arbitrariedades  judiciales  y  el 
juicio  de  amparo.    Mexico,  1886. 

Mining  laws  of  the  United  States  of  Mexico,  4th  ed.  Mexico,  1901.  (Eng- 
lish and  Spanish.) 

Montiel  y  Duarte,  Isidro:  Estudio  constitucional  sobre  la  soberania  de  los 
Estados  de  la  Repiiblica  Mexicana  y  sobre  los  juicios  de  amparo.  Mexico, 
1874. 

Moreno  Cora,  SUvestre:  Tratado  del  juicio  de  amparo  conforme  a  las  sen- 
tencias  de  los  tribunales  federales.    Mexico,  1902. 

Martinez  Baca,  Eduardo:  Resena  hist6rica  de  la  legislaci6n  minera  en 
Mexico.    Me.xico,  1901. 

Orozco  Wistano,  Luis:  Legislaci6n  y  jurisprudencia  sobre  terrenos  baldios. 
Mexico,  1895.    2  v. 

Pallares,  Jacinto:  Inteligencia  del  artlculo  16  de  la  constituci6n  de  1857. 
Mexico,  1882. 

Rabasa,  Emilio:  El  artlculo  14,  estudio  constitucional.    Mexico,  1906  (?). 

Same:  La  constituci6n  y  la  dictadura.  Estudio  sobre  la  organizaci6n 
polltica  de  Mexico.    Mexico,  1912. 


CONSTITUTIONAL   LAW  47 

Same:  El  juicio  constitucional ;  Origenes,  teoria,  extensi6n.  Paris-Mexico, 
1919. 

Reynolds,  Mathew  G.  .  .  Spanish  and  Mexican  land  laws,  New  Spain  and 
Mexico.    St.  Louis,  Mo.,  1895. 

Reyes,  Rodolfo:  i  Los  derechos  que  la  secci6n  1**  de  la  constituci6n  proclama 
como  derechos  del  hombre  corresponden  unicamente  al  individuo  fisicamente 
considerado,  o  corresponden  tambien  a  los  seres  morales  formados  por  la 
asociaci6n  de  individuos?  Mexico.  Diario  de  Jurisprudencia.  v.  4,  p. 
472. 

Same:  Reformas  al  juicio  de  amparo.  Memoria  presentada  al  Colegio  de 
Abogados.  Mexico.  lb.,  v.  8,  p.  742.  Memorias  on  the  same  theme  were 
presented  by  Antonio  Diaz  Soto  y  Gama.  lb.,  v.  9,  p.  8,  and  Antonio  Ramos 
Pedrueza,  p.  216. 

Same:  Contribuci6n  al  estudio  de  la  evoluci6n  del  derecho  constitucional  en 
Mexico.    lb.,  v.  24,  p.  598. 

Rockwell,  John  A. :  A  compilation  of  Spanish  and  Mexican  laws  in  relation  to 
mines,  and  titles  to  real  estate.  V.  I,  containing  a  translation  of  the  mining 
ordinances  of  New  Spain,  Gamboa's  mining  ordinances,  the  laws  in  relation  to 
mines  of  gold,  silver  and  quicksilver  contained  in  the  Novisima  Recopilaci6n 
de  las  Indias  [Sic].    New  York,  1851. 

Rodriguez,  Ram6n:  Derecho  constitucional  escrito  para  servir  de  texto  a  los 
alumnos  del  colegio  militar,  2d  ed.    Mexico,  1875. 

Ruiz,  Eduardo:  Curso  de  derecho  constitucional  y  administrativo.  Mexico, 
1888. 

Ruiz  Sandoval,  Manuel:  Manual  de  procedimientos  en  el  juicio  de  amparo, 
2d  ed.  Mexico,  1896. 

Semanario  Judicial  de  la  federacion.  Publicaci6n  fundada  por  decreto  del 
Congreso  de  8  de  octubre  de  1870.  Contiene  las  resoluciones  emanadas  del 
poder  judicial  federal  y  pedimentos  y  dictdmenes  del  Ministerio  publico  fed- 
eral.    Mexico,  since  1870. 

Sierra,  Justo:  Amparo  en  negocios  judiciales  por  inexacta  aplicaci6n  de  la 
ley.    El  Derecho,  Mexico,  1896,  p.  673. 

Simonds,  Louis  C.  B.  A. :  Patent  law  of  the  United  Mexican  States.  Mexico, 
1904. 

The  Mexican  constitution  of  1917  compared  with  the  constitution  of  1857, 
translated  and  arranged  by  H.  N.  Branch,  LL.  B.,  with  a  foreword  by  L.  S. 
Rowe,  Ph.  D.,  LL.  D.  American  Academy  of  political  and  social  science. 
Philadelphia,  1917. 

Torre,  Juan  de  la:  Constituci6n  federal  de  1857,  sus  adiciones  y  reformas  y 
leyes  orgdnicas  anotadas,  concordadas  y  explicadas.    Mexico,  1901. 

Same:  Gula  para  el  estudio  del  derecho  constitucional  mexicano.  Mexico, 
1886. 

Vallarta,  Ignacio  L.,  presidents  de  la  Suprema  corte  de  justicia  de  la  Naci6n. 
Votos,  1872-1883.    4  v. 

Vallarta,  Ignacio  L.;  Martinez  de  Castro,  Antonio;  Guzmdn,  Le<5n;  Lun- 
castcr  Jones,  Alfonso  and  Sanchez  Gavito,  Indalccio:  Inteligencia  del  articulo 
14  de  la  constituci6n.    M6xico,  1879. 

Vdzquez,  Andres  Clemente:  Los  derechos  y  deljcres  polfticos,  sogiin  la  Icgis- 
laci6n  de  las  repiiblicas  americanas.    Estudio  comparativo  de  la  constitiici6n 


48  LATIN-AMERICAN    COMMERCIAL    LAW 

federal  de  Mexico  con  las  constituciones  de  los  demds  paises  del  miindo. 
Mexico,  1880. 

Vdzquez,  Juan  M.:  Curso  de  derecho  publico.    Mexico,  1879. 

Vega,  Fernando:  iPueden  declararse  denunciables  los  criaderos  de  carb6n  de 
piedra  en  todas  sus  variedades,  asl  como  los  manantiales  de  petr61eo,  existan  o 
no  en  terrenos  de  propiedad  particular?  Consulta  que  la  Secretaria  de  Fomento 
por  acuerdo  del  senor  Presidente  de  la  Repiiblica,  hizo  a  la  Academia  Mexicana 
de  Jurisprudencia  y  Legislaci6n.    Mexico.    lb.,  v.  6,  p.  78. 

Opinions  on  the  same  subject  given  by  Emilio  Pardo,  Jr.,  and  Francisco 
B^istegui.  Id.,  p.  176;  Isidro  Rojas,  p.  310;  Genaro  Raigosa,  p.  384;  Manuel 
Ferndndez  Guerra,  p.  493;  Alfredo  Mateos  Cardena,  p.  518;  Luis  Menxez, 
p.  559;  Miguel  Mejia,  p.  583;  Victor  Moya  y  Zorrilla,  p.  639;  Augustin  Ver- 
dugo,  p.  655;  Luis  Requena,  687;  and  Roberto  A.  Esteba  Ruiz,  p.  733. 

Vega,  Fernando:  Cuestiones  mineras.  La  servidumbre  legal  de  desagtie  de 
las  minas  establecida  por  Carlos  III  estd  reconocida  por  la  ley  minera  vigente 
en  la  republica.    Mexico,  1900. 

Vega,  Fernando :  La  nueva  ley  de  amparo  de  garantlas  individuales.  Mexico, 
1883. 

Veldsco,  Emilio:  Naturaleza  jurldica  de  las  concesiones  de  tierras  hechas  en 
los  territorios  nacionales  conforme  a  la  ley  de  colonizaci6n.    lb.,  p.  329. 

Velasco  Rus,  Luis  and  Ortega  y  Espinosa,  Manuel :  Lecciones  elementales  de 
derecho  constitucional.    Mexico,  1883. 

Vera  Estanol,  Jorge:  La  unificaci6n  de  la  legislaci6n  civil  dentro  del  sistema 
federativo.    Rev.  de  Leg.  y  Jur.    Mexico,  1897.    2nd  semester,  p.  213. 

Same:  La  servidumbre  minera  de  desagtie.    Mexico,  1900. 

Verdugo,  Agustin:  I A  quien  pertenecla  el  dominio  de  las  minas  en  la  ^poca 
colonial?  I A  quidn  pertenece  hoy?  iEn  qu^  sentido  pueden  constituir  pro- 
piedad privada?    lb.,  p.  4. 

Zarco,  Francisco:  Historia  del  congreso  extraordinario  constituyente  de 
1856  y  1857.    Mexico,  1857.    2  v. 

The  South  American  countries  may  be  divided  into  two 
groups:  1.  Those  having  a  federal  form  of  government;  2. 
Those  having  the  unitary  form.  The  federal  republics  are 
Argentina,  Brazil,  Mexico  and  Venezuela. 

From  the  standpoint  of  business  and  commercial  law  this 
distinction  is  important;  because,  while  in  countries  having 
the  unitary  system,  all  the  laws  emanate  from  a  single 
central  legislature,  in  countries  having  the  federal  system, 
the  law  in  certain  matters  is  enacted  by  the  national  con- 
gress, and  in  other  matters  by  the  state  legislatures,  depend- 
ing upon  the  constitutional  division  of  power,  and  it  is 
necessary  for  the  business  man  to  know  whether  he  is  to  look 
to  the  federal  or  to  the  local  authorities  in  a  particular  case. 

The  general  principle  governing  this  matter  is  that,  as  in 


CONSTITUTIONAL    LAW  49 

the  United  States,  the  states  are  presumed  to  possess  all 
sovereign  powers  not  expressly  delegated  to  the  federal 
government  by  the  constitution. 

Argentina. 

In  Argentina,  the  states  or  provinces  retain  all  the  powers 
not  delegated  by  the  constitution  to  the  federal  government, 
and  also  those  which  they  expressly  reserved  by  special 
agreements  at  the  time  of  their  coming  into  the  Union.  ^ 

Brazil. 

The  constitution  of  Brazil  is  not  so  definite  and  precise, 
as  it  provides  that  the  states  shall  in  general  exercise  any 
power  or  right  not  denied  to  them  by  a  provision,  expressed 
or  implied,  in  the  constitution.  The  word  'implied"  gives 
rise  to  different  interpretations  which  may  impair  the  sover- 
eignty of  the  states,  and  leaves  uncertain  the  line  of  demar- 
cation between  the  central  and  local  governmental  authority.^ 

Mexico. 

The  Mexican  constitution  is  very  concise  and  clear  on  this 
important  matter,  because  it  establishes  without  any  condi- 
tions or  ambiguity,  that  the  powers  not  expressly  granted  by 
it  to  the  federal  authorities  are  understood  to  be  reserved  to 
the  states.^ 

Venezuela. 

In  Venezuela,  all  powers  not  granted  expressly  to  the 
national  government  reside  in  the  states.'* 

COMMERCE    AND  TAXING    POWER 

The  State,  in  Latin-America  as  in  other  civilized  parts  of 
the  world,  has  the  power  of  eminent  domain  over  real 

»  Const.  Art.  104.  ^  Const.  Art.  G5-2. 

'  Constitution  of  1857,  Art.  117.  Identical  with  article  124  of  the  constitu- 
tion published  by  Carranza  on  January  31,  1917.  See  English  translation  by 
Branch  published  os  a  supplement  to  the  Annals  of  the  Academy  of  Political 
and  Social  Science,  1918. 

*  Const.  Art.  106. 


60  LATIN-AMEKICAN    COMMERCIAL   LAW 

property  and,  except  as  constitutionally  restricted,  an 
unlimited  taxing  power. 

Even  though  the  federation  in  Latin-America,  historically 
considered,  is  only  a  fiction,  because  there  never  were  sover- 
eign states  which  entered  into  a  federal  pact,  the  fiction  has 
been  carried  out  to  its  logical  consequences,  and  each  of  the 
states  or  provinces  (as  the  .Argentine  constitution  with 
greater  propriety  calls  them)  is  considered  as  ha\T.ng  reserved 
its  power  of  eminent  domain,  in  the  absence  of  any  contrary 
provision  in  the  federal  constitution.  This  is  the  basis  for 
the  rule  in  the  matter  of  taxation  that  the  right  and  power  to 
impose  direct  taxes  upon  real  estate  is  vested  in  the  states  or 
provinces  while  the  federation  or  nation  may  impose  indirect 
taxes  only. 

This  theory  is  not  expressly  established  in  the  constitution 
of  Argentina  and  Mexico,^  but  it  is  in  Brazil  ^  and  in  Vene- 
zuela." 

As  commerce  with  foreign  countries  affects  international 
relations,  it  is  always  a  matter  for  the  national  government  to 
enact  the  laws  governing  such  commerce  and  to  regulate  the 
amount  of  taxes  and  duties  to  be  levied  upon  imports  or 
exports.^ 

Argentina. 

In  Argentina  as  in  the  other  countries  now  under  consid- 
eration all  custom  houses  are  national  and  are  governed  by 
tariff  laws  enacted  by  Congress;  moreover,  with  a  \aew  to 
prevent  any  hindrance  to  foreign  commerce  on  the  part  of 

*  The  Carranzista  constitution  of  Mexico  departs  from  this  theory,  estab- 
lishing in  article  27:  "The  ownership  of  lands  and  waters  comprised  within 
the  limits  of  the  national  territory  is  vested  originally  in  the  nation."  This  is 
an  historic  truth  which  has  been  overshadowed  by  the  fiction  of  the  federation, 
and  the  consequence  of  its  recognition  is  that  the  federation  may  impose 
direct  taxes  on  real  estate  in  Mexico. 

«  Const.  Art.  9.  '  Const.  Art.  27. 

^  The  anomalous  situation  created  by  the  power  of  local  authorities  in 
Latin- America  to  impose  taxes  and  license  fees  on  commercial  travellers  and 
their  samples  is  now  in  process  of  adjustment  and  improvement  by  the  con- 
clusion of  treaties  between  the  United  States  and  various  countries  of  Latin- 
Anierica,  providing  for  a  single  fee  or  tax  payable  at  the  port  of  entry. 


CONSTITUTIONAL   LAW  51 

the  provinces,  it  is  provided  that  the  circulation  in  the 
interior  of  the  repubhc  of  articles,  goods,  and  merchandise  of 
all  classes  introduced  into  the  country  through  the  national 
custom  houses,  shall  be  free  from  duties.  Articles  of  national 
or  foreign  production  or  manufacture,  and  cattle  of  all  kinds, 
when  passing  from  the  territory  of  one  province  into  the 
territory  of  another,  are  exempt  from  transit  duties.  The 
same  freedom  is  enjoyed  by  the  vehicles,  ships,  or  animals 
used  for  their  transportation,  and  no  other  duty,  under  any 
name,  may  be  levied  upon  said  articles  and  vehicles  because 
of  the  mere  fact  of  their  transit  through  the  country.^ 

By  virtue  of  these  principles,  the  national  congress  has  sole 
power  to  legislate  with  respect  to  custom  houses  and  foreign 
commerce  and  to  establish  import  duties,  which,  as  well  as 
the  valuation  on  which  they  are  to  be  based,  must  be  uniform 
throughout  the  whole  nation.  The  national  congress  may 
likewise  lay  export  duties.  ^"^ 

The  national  congress  also  has  power  to  make  rules  for  the 
free  navigation  of  the  rivers  in  the  interior  of  the  country; 
to  declare  as  ports  of  entry  those  deemed  fit  for  that  purpose; 
to  estabhsh  or  abolish  custom  houses  (except  that  the 
custom  houses  for  foreign  commerce  existing  in  each  state 
at  the  time  of  its  coming  into  the  Union,  cannot  be  abol- 
ished); and  likewise  to  regulate  commerce  with  foreign 
countries,  by  land  and  sea,  and  that  of  the  states  among 
themselves.  ^^ 

Furthermore,  the  federal  congress  is  given  power  to  enact 
civil,  commercial,  penal,  and  mining  codes,  reserving  to  the 
provincial  courts,  however,  jurisdiction  of  all  cases  relating 
to  these  matters  when  the  parties  or  the  subject-matter  are 
otherwise  within  provincial  jurisdiction.  Similarly,  these 
codes  are  enforced  in  the  federal  courts  when  the  parties  or 
the  subject-matter  are  otherwise  within  federal  jurisdiction. 
The  rules  of  procedure  in  the  provincial  courts  are  within  the 
control  of  the  provinces.  The  federal  congress  exclusively 
is  empowered  to  enact  legislation  on   bankruptcy,  count- 

9  Const.  Arts.  9  to  11.  "  Const.  Art.  ')7. 

**  Const.  Art.  67,  sections  9  and  12. 


52  LATIN-AMERICAN    COMMERCIAL    LAW 

erfeiting  of  money,  and  forgery  of  national  public  docu- 
ments. 

The  Congress  is  likewise  authorized  to  provide  for  all 
matters  conducive  to  the  prosperity  of  the  country  generally, 
the  progress  and  welfare  of  the  provinces,  and  the  enhghten- 
ment  of  the  people,  by  promoting  industrial  enterprises; 
foreign  immigration;  the  construction  of  railroads  and 
navigable  canals;  the  settlement  of  the  pubhc  lands;  the 
introduction  and  estabUshment  of  new  industries;  the 
importation  of  foreign  capital;  the  exploration  of  interior 
rivers;  the  granting  of  proprietary  privileges,  for  a  limited 
time;  and  rewards  and  other  privileges. ^- 

The  federal  government  must  defray  the  expenses  of  the 
nation  with  the  funds  of  the  national  treasury',  derived  from 
the  proceeds  of  import  and  export  duties;  from  the  sale  or 
lease  of  federal  public  lands;  from  the  postal  service;  from 
taxes  levied  by  the  federal  Congress,  equitable  and  in  propor- 
tion to  the  population;  and  from  moneys  obtained  through 

12  Const.  Art.  67,  section  11.  See  laws  No.  816,  of  October  10,  1876,  on 
postal  service;  No.  7503/^  of  October  7,  1875,  on  telegraphic  service;  No.  4930  of 
November,  1905,  on  postal  and  telegraphic  tariffs;  the  parcel  post  convention 
between  Argentina  and  the  United  States  was  signed  on  March  12,  1915. 
No.  2873  of  November  24,  1891,  on  railways,  and  its  regulating  decree  of 
September  10,  1894;  also  law  of  September  30,  1907;  No.  4712  of  September  29, 
1905,  organizing  the  consular  service;  No.  4280  of  January  4,  1904,  on  consular 
tariffs;  No.  4934  of  December  20,  1905,  on  patents;  No.  3975  of  November  23, 
1900,  on  trade-marks  and  cattle  brands;  the  law  of  October  19,  1876,  and  its 
regulation  of  March  4,  1880,  on  immigration;  Law  No.  3952  of  October  6,  1900, 
which  gives  private  persons  the  right  to  sue  the  government  civilly;  Law  No. 
7029  of  1910  on  the  protection  of  the  state  against  undesirable  immigration; 
a  new  law  of  August  2,  1919,  establishing  several  requisites  for  persons  entering 
Argentina  has  just  come  into  force;  law  No.  4167  of  January  8,  1903,  and  its 
regulations  of  Nov.  8,  1906,  on  public  lands;  law  of  Oct.  4,  1906,  on  the  exploita- 
tion of  forests;  the  Rural  Code  for  the  national  territories  adopted  by  law 
No.  3088  of  August  11,  1894,  and  amended  by  law  No.  7071  of  Sept.  13,  1910; 
Law  No.  6546  of  1910;  Law  No.  845  of  July  13,  1877,  adopted  the  decimal 
metric  system  of  weights  and  measures.  Law  No.  4661  of  August  31,  1905, 
imposes  Sunday  rest  in  certain  states;  No.  5291  of  September  30,  1907,  re- 
stricts work  of  women  and  children  in  factories;  Law  No.  9688  governs  em- 
ployer's liability  in  cases  of  accidents;  Law  No.  4475  of  September  26,  1904, 
approved  the  sanitary  convention  signed  at  Rio  de  Janeiro  on  June  12, 1904,  by 
Argentina,  Brazil,  Paraguay  and  Uruguay;  Law  No.  1672  of  Aug.  25,  1885, 
governs  extradition  in  the  absence  of  treaty. 


CONSTITUTIONAL    LAW  53 

loans  and  financial  operations  authorized  by  Congress  for 

urgent  national  necessities  and  for  works  of  national  public 
utility.  13 

The  provinces,  on  the  other  hand,  may  conclude,  with  the 
consent  of  the  federal  Congress,  inter-provincial  treaties  for 
purposes  of  economic  interest  and  pubUc  utihty;  and  they 
may  promote  by  means  of  protective  laws  and  with  their  own 
resources,  industrial  progress,  immigration,  the  construction 
of  railways  and  navigable  canals,  the  settlement  of  the 
provincial  pubhc  lands,  the  introduction  of  foreign  capital, 
and  the  exploration  of  their  rivers,  i"* 

An  examination  of  the  budgets  of  the  Argentine  provinces 
discloses  that  the  revenues  are  derived  in  a  general  way  from 
taxes  on  the  following  items:  stamped  paper,  stamp  taxes, 
certificates,  agricultural  products,  marks  and  brands  for 
cattle,  promissory  notes,  licenses,  direct  taxes,  scholarships, 
fines  imposed  by  administrative  or  judicial  authorities,  va- 
cant inheritances,  slaughter  houses,  weights  and  measures, 
and  federal  subsidies  for  education.  Every  one  of  the  prov- 
inces has,  furthermore,  special  taxes,  according  to  the 
character  of  their  industries  and  resources,  as,  for  instance, 
Santa  F^,  upon  quebracho;  Cordoba,  on  irrigation;  Entre 
Rios,  licences  for  the  use  of  threshing  machines  and  cattle 
raising;  Tucuman  and  Salta,  on  sugar  and  chemical  analysis; 
Mendoza,  on  wines;  San  Juan,  on  pastures;  Rioja,  on  mines; 
Buenos  Aires,  on  quarries,  etc. 

From  an  opinion  given  by  the  Attorney  General  of  Argen- 
tina to  the  government  it  is  apparent  that  the  provinces  do 
not  always  confine  themselves  to  the  limits  of  their  power  of 
taxation,  and  often  trench  upon  the  ground  of  the  federation, 
imposing  duties  which  directly  or  indirectly  affect  foreign 
commerce.  1^ 

i»  Const.  Art.  4.  "  Const.  Art.  107. 

1^  The  tax  levied  by  the  municipality  of  the  Capital  of  the  Republic  of  .S.50 
each  per  head  of  cattle,  introduced  in  said  capital  for  veterinarian  inspection 
as  a  differential  tax  which  does  not  burden  the  animals  slaughtered  within 
the  municipality,  is  a  real  tax  levied  on  the  transit  of  goods,  and  therefore  at 
variance  with  articles  10  and  11  of  the  national  constitution.  Case  DXLVI 
Compania  Sansineva  v.  Munidpalidad  de  la  Capital,  Federal  Court  of  Appeals, 


54  LATIN-AMERICAN    COMMERCIAL    LAW 

Brazil. 

In  Brazil,  the  federal  government  has  the  exclusive 
power  to  establish  duties  on  imports  from  foreign  coun- 
tries, and  dues  on  the  entry,  departure  and  stay  of  ves- 
sels; but  the  coasting  trade  in  national  products  is  free  of 
duties,  as  is  foreign  merchandise  which  has  already  paid  an 
import  duty.^^  The  federal  government  is  forbidden  to 
give  preference  to  the  ports  of  any  state  against  those  of 
others. 

The  states  alone  are  competent  to  impose  taxes  on  ex- 
ports of  merchandise  produced  in  their  own  territory. 
It  is  lawful  for  a  state  to  levy  duties  on  imports  of  for- 
eign goods  only  when  said  goods  are  intended  for  con- 
sumption within  its  boundaries;  but  it  must  in  such  case 
turn  over  to  the  federal  treasury  the  amount  of  duties  col- 
lected.^" 

The  states  as  well  as  the  Union  are  forbidden  to  impose 
duties  on  the  products  of  a  state  or  of  a  foreign  country,  while 
in  transit  through  the  territory  of  another  state,  or  from  one 
state  to  another;  nor  can  duties  be  levied  on  the  vehicles  or 
vessels  in  which  they  are  transported. 

The  Union  as  well  as  the  states  are  authorized  to  create, 
cumulatively  or  otherwise,  any  sources  of  revenue,  pro\'ided 
they  are  not  in  contradiction  with  the  pro\'isions  above  set 
forth.  i» 

Under  the  Brazilian  constitution  of  1889,  the  federal  Con- 
gress alone  is  competent  to  regulate  international  commerce 
and  that  of  the  states  with  each  other  and  with  the  city  of 
Rio  de  Janeiro,  estabUsh  custom  houses,  create  or  abolish 
warehouses,  and  legislate  with  respect  to  the  navigation  of 
rivers  running  through  more  than  one  state  or  extending 
into  a  foreign  territory.  ^^ 

The  national  Congress  is  invested  with  the  exclusive  power 
to  legislate  with  reference  to  the  civil,   commercial    and 

December  30,  1903,  Juan  R.  Serii,  Fallos  de  la  Exma.  Camara  Federal  de  Apel. 
de  la  Capital,  Vol.  VII,  p.  102. 

"  Arts.  7,  8.  "  Art.  9. 

18  Arts.  11,  12.  "Art.  34. 


CONSTITUTIONAL    LAW  55 

criminal  laws  of  the  republic  and  the  rules  of  procedure  in  the 
federal  courts.-"  The  national  Congress  is  also  invested  with 
power,  but  not  exclusive,  to  encourage,  within  Brazil,  the 
development  of  letters,  the  arts  and  sciences,  as  well  as  immi- 
gration, agriculture,  industry  and  commerce,  provided  that 
the  privileges  granted  for  such  purposes  do  not  interfere  with 
the  action  of  the  state  governments.-^ 

The  only  restriction  upon  the  Union  in  the  matter  of  the 
levying  of  taxes  over  which  it  has  jurisdiction  is  to  be  found 
in  article  8  which  provides  that  any  taxes  levied  by  it  shall 
be  uniform  in  all  the  .states. 

A  distinction  is  made  between  direct  --  and  indirect  taxes. 
The  latter  are  imposed  upon  certain  acts  of  production, 
consumption  or  circulation  of  wealth  regardless  of  the  person 
who  pays  the  tax;  the  former  are  levied  directly  upon  a 
certain  person,  and  they  burden  wealth  itself. 

Certain  federal  taxes  in  Brazil  are  direct,  such  as  those 
referring  to  patents  and  licenses;  others  are  indirect,  such  as 
stamp  taxes  on  certain  acts  and  contracts,  according  to 
decree  number  3564,  of  January  22,  1900,  and  those  on  im- 
portations, exportations  and  others  collected  by  the  custom 
houses. 

The  states  may  collect  direct  taxes,  such  as  the  territorial 
licenses,  industries  and  professions,  incomes  and  poll-taxes; 
and  indirect  taxes,  such  as  those  on  exports,  in  the  case  of 
article  9  of  the  constitution,  and  all  taxes  on  acts  or  contracts, 
whether  civil  or  commercial. 

The  municipalities  can,  as  a  rule,  impose  all  taxes  that  the 
constitution  does  not  reserve  to  the  Union,  unless  otherwise 
provided  by  the  state  constitution.  Some  of  the  states, 
.\mazonas,-^  Rio  Grande  do  Sul,^'*  Bahia,^^  and  Minas 
Geraes,-®  reserv^e  the  tenth  part  of  taxes  upon  land  and  urban 
real  estate  to  the  municipalities.     As  a  rule  the  municipal 

20  Art.  34.  "  Art.  35. 

22  These  words  are  not  used  in  the  United  States  constitutional  sen.se  of 
"direct"  and  "indirect,"  but  in  the  usual  economic  sen.se. 

"  State  Const.  Art.  23.  '4  gt^te  Const.  Art.  24. 

«  State  Const.  Art.  109.  »  State  Const.  Art.  76. 


56  LATIN- AMERICAN    COMMERCIAL    LAW 

revenues  are  derived  from  the  following  sources:  industries 
and  professions  (in  concurrence  with  the  states),  merchandise 
offered  for  sale  in  fairs  or  public  markets,  cattle  raising, 
slaughter  houses,  funeral  services,  tolls,  street  pavements, 
vehicles,  etc.  In  the  state  of  Maranhao  ^^  the  municipalities 
can  only  impose  taxes  on  industries  and  professions  by  means 
of  additional  taxes  not  exceeding  the  amount  levied  by  the 
state. 

The  constitution  of  the  state  of  Rio  de  Janeiro  ^^  forbids 
the  municipaUties  to  levy  taxes  on  industries  and  professions 
as  long  as  the  financial  difficulties  of  the  state  may  last;  in 
the  meantime  the  state  pays  back  to  the  municipahties  20% 
of  the  net  product  of  such  taxes  le\'ied  by  it. 

The  states  impose  stamp  taxes  upon  all  transactions 
occurring  within  their  respective  jurisdictions  and  on  domes- 
tic business  and  they  may  also  levy  taxes  on  their  postal 
and  telegraphic  services.-^ 

The  federal  congress  has  exclusive  power  to  levy  taxes  on 
federal  postal  and  telegraphic  services,''''  but  the  states  may 
levy  a  tax  on  their  own  postal  and  telegraphic  ser\dces  within 
the  limits  of  their  respective  territory."  The  state  of  Rio 
Grande  do  Sul  has,  since  1899,  been  authorized  by  its  legisla- 
ture to  establish  a  postal  service,  but  thus  far  has  not  exer- 
cised the  power. 

The  states  have  the  power  to  establish  telegraphic  lines 
between  different  points  of  their  own  territories  and  between 
those  points  and  places  in  other  states  which  are  not  pro- 
vided with  a  federal  telegraphic  service,  it  being  understood, 
however,  that  the  Union  may  acquire  the  ownership  thereof 
when  required  by  the  general  public  interest. ^^ 

The  right  of  the  Union  and  of  the  states  to  legislate  in 
regard  to  railways  and  the  navigation  of  internal  waters  is  to 
be  regulated  by  a  federal  law.^^ 

The  railway  service  in  Brazil  may  be  divided  into  four 

^  Law  of  May  24,  1893.  ^  State  Const.  Arts.  42,  51. 

»9  State  Const.  Art.  94.  ^  Const.  Art.  7. 

31  Const.  Art.  9,  par.  1,  No.  2,  par.  4.  ^-  Art.  9,  section  4. 
33  Art.  13. 


CONSTITUTIONAL   LAW  57 

classes:  that  of  the  Union,  that  of  the  states,  that  of  the 
municipahties,  and  that  of  private  industry.  The  laws  re- 
ferring to  railways  are  many,  the  most  important  being 
No.  1664  of  October  27,  1855,  on  expropriation  for  the  con- 
struction of  railroad  lines;  No.  1930  of  April  26,  1857,  on 
their  conservation  and  policy;  Law  2450  of  September  24, 
1873,  on  railways;  No.  5561  of  February  28,  1874,  and  No. 
6995  of  1878,  on  concessions  and  guaranty  of  interest;  No. 
7959  of  December  29,  1880,  on  concessions;  No.  109  of 
October  14,  1892,  regulating  the  jurisdiction  of  the  federal 
government  and  the  state  to  grant  railway  concessions;  No. 
6787  of  December  19,  1907,  and  No.  9076  of  November  3, 
1911,  on  supervision. 

Mexico. 

Article  124  of  the  Mexican  constitution  of  1857  provided  : 
"From  the  first  of  June,  1858,  the  alcahalas  and  interior 
customs  shall  be  abolished  in  the  whole  republic." 

Under  the  name  of  alcahalas  was  meant  a  duty  paid  on 
merchandise  entering  a  town,  except  when  in  transit.  This 
was  a  gTeat  hindrance  to  commerce  because  of  the  formalities 
which  the  law  required  in  order  to  avoid  smuggling,  and  it 
was  also  a  great  burden  upon  the  people,  because  the  duty 
on  the  same  merchandise  often  had  to  be  paid  in  several 
different  towns.  This  state  of  affairs  was  intended  to  be 
changed  by  article  124  of  the  constitution;  but  owing  to  the 
disturbed  condition  of  the  country  at  that  time,  the  con- 
stitution was  frequently  amended  and  the  period  for  the 
suppression  of  the  alcabala  and  interior  customs  extended  up 
to  the  first  of  May,  1896,  on  which  date  a  law  was  passed 
by  the  Congress  amending  article  124  as  follows:  ''The 
Federal  Government  shall  have  exclusive  power  to  le\'y 
duties  on  merchandise  imported,  exported  or  passing  in 
transit  through  the  national  territory,  as  well  as  to  regulate 
at  all  times,  and  if  necessary  to  forbid  for  the  sake  of  public 
safety  or  for  police  reasons,  the  circulation  in  the  interior  of 
the  RepubHc  of  all  kinds  of  goods,  regardless  of  their  origin ; 
but  the  Federal  Government  shall  have  no  power  to  estab- 


58  LATIN-AMERICAN    COMMERCIAL    LAW 

lish  or  decree  in  the  Federal  District  and  Territories  the 
taxes  and  laws  to  which  Clauses  VI  and  VII  of  Article  III 
refer.3* 

Article  III  just  referred  to  provides: 

1.  No  state  shall  have  power  to:  Coin  money,  issue 
paper  money,  stamps  or  stamped  paper; 

2.  levy  taxes  on  persons  or  property  passing  through 
its  territory; 

3.  prohibit  or  tax,  directly  or  indirectly,  the  entry  into 
its  territory,  or  the  withdrawal  therefrom,  of  any 
merchandise,  foreign  or  domestic; 

4.  burden  the  circulation  or  consumption  of  domestic 
or  foreign  merchandise  with  taxes  or  duties  to  be  col- 
lected by  local  custom  houses  or  subject  the  said 
merchandise  to  inspection  or  require  it  to  be  accom- 
panied by  documents; 

5.  enact  or  maintain  in  force  laws  or  fiscal  regulations 
discriminating,  by  taxation  or  otherwise,  between 
merchandise,  foreign  or  domestic,  on  account  of  its 
origin,  whether  this  discrimination  be  established  with 
regard  to  similar  local  products  or  to  similar  products  of 
foreign    origin; 

6.  issue  bonds  of  the  public  debt  payable  in  foreign 
coin  or  outside  the  Federal  territory;  contract  loans, 
directly  or  indirectly,  with  any  foreign  government; 
assume  any  obligation  in  favor  of  any  foreign  corpora- 
tion or  individual,  requiring  the  issuance  of  certificates 
or  bonds  payable  to  bearer  or  negotiable  by  endorse- 
ment."^^ 

Article  112  of  the  same  Constitution  provides:  ''No  state 
shall  without  the  consent  of  the  Congress: 

"1.  Establish  tonnage  dues  or  other  port  charges  or  im- 
pose taxes  or  other  duties  upon  imports  or  exports.  "^^ 

'■*  Article  131  of  the  Carranzista  constitution  is  identical  with  Art.  124  of 
the  constitution  of  1857. 

'^  Article  1 17  of  the  new  constitution  is  ideijtical  with  article  1 1 1  of  the 
constitution  of  1857  in  the  matter  of  taxes. 

''  Identical  with  article  118  of  the  new  constitution. 


CONSTITUTIONAL   LAW  59 

The  most  important  items  of  the  federal  budget  are  import 
and  export  duties  in  the  maritime  or  boundary  custom 
houses,  the  stamp  taxes  upon  all  contracts,  bills  of  exchange, 
promissory  notes,  checks,  receipts,  and  petroleum,  which  has 
become  one  of  the  most  valuable  sources  of  income  of  the 
government,  taxes  on  tonnage,  lighthouses,  warehouses 
in  the  ports,  according  to  the  tariff  of  March  1,  1887,  and 
decree  of  August  1, 1888,  etc.  The  law  of  stamp  tax  amended 
by  decree  of  July  1,  1917,  levies  a  tax  of  60%  upon  all 
taxes  imposed  by  states.  This  in  our  opinion  is  unconstitu- 
tional. Direct  taxes  also  produce  a  considerable  revenue  to 
the  government,  principally  the  duties  on  wool  and  cotton 
mills,  alcohol,  inheritances,  patents,  mines,  and  the  proceeds 
of  the  sale  of  public  lands. 

The  state  budget  is  composed  of  direct  taxes,  the  most 
important  of  which  are  taxes  on  farms  and  houses,  profes- 
sions, licenses,  inheritances  and  fines  imposed  by  state  judicial 
authorities.  The  municipal  budget  is  also  formed  by  direct 
taxes  on  licenses  for  peddlars  and  tradesmen,  for  theatres 
and  public  entertainments,  and  for  funeral  services,  and 
certain  indirect  taxes,  such  as  those  imposed  for  the  slaugh- 
tering of  animals,  lotteries,  etc.  Beside  this  the  municipali- 
ties receive  the  proceeds  of  fines  imposed  by  administrative 
or  municipal  judicial  authorities,  and  those  derived  from 
the  sale  of  strayed  animals  or  lost  objects,  etc. 

The  federal  Congress  is  invested  with  power  to  promulgate 
the  commercial  and  mining  codes  which  shall  be  binding 
throughout  the  whole  republic, — the  commercial  code  in- 
cluding banking  law.^^ 

The  Constitution  further  invests  Congress  with  the  power 
to  enact  laws  on  citizenship  ^^  and  colonization  or  land  settle- 
ment;^^ to  enact  laws  on  the  general  means  of  communication 
and  on  post  roads  and  post  offices;  '^°  to  determine  the  waters 

"  Art.  72,  amended  by  law  of  December  14,  1883. 

"  The  matter  of  citizenship  is  governed  by  articles  1 1  and  29  of  the  law  of 
May  28,  1886. 

'9  Colonization  is  governed  by  the  law  of  December  15,  1883,  and  its  regula- 
tion of  July  17,  1889. 

*°  The  general  ways  of  communication  are  governed  by  the  law  of  June  5, 


60  LATIN-AMERICAN   COMMERCIAL   LAW 

subject  to  the  federal  jurisdiction  and  to  enact  laws  as  to  their 
use  and  development;  to  establish  mints,  regulate  the  value 
and  kinds  of  the  national  coin,  fix  the  value  of  foreign  moneys 
and  adopt  a  general  system  of  weights  and  measures. ^^ 

Article  85  of  the  1857  constitution  gives  the  executive  the 
power  to  grant  exclusive  privileges  for  a  limited  time,  and 
according  to  special  laws,  to  discoverers,  inventors,  or 
improvers  in  any  branch  of  industry. ^^ 

Venezuela. 

The  states  of  the  Venezuelan  federation  have  bound 
themselves  to  reserve  to  the  federal  government  jurisdiction 
over  and  the  power  to  regulate  oversea  and  inland  naviga- 
tion, wharves,  and  national  roads;  but  the  government  is  not 
allowed  by  means  of  taxes  or  franchises  to  restrict  inland 
navigation  unless,  by  the  building  of  artificial  works,  e.  g., 
dams,  locks,  etc.,  federal  work  should  be  necessary.  National 
roads  are  those  passing  through  and  beyond  one  state  or 
territory  or  the  Federal  District.  The  states  have  Hkewise 
bound  themselves  not  to  estabhsh  custom  houses — which  are 
reserved  to  the  national  government  alone — ^and  not  to 
impose  taxes  upon  products  destined  for  exportation;  not  to 
estabhsh  duties  on  hve-stock,  products,  goods  or  any  other 
national  or  foreign  merchandise  before  it  is  offered  to  the 
consumer;  not  to  prohibit  the  consumption  or  transit  of 

1888,  and  June  6,  1894,  and  by  the  general  railway  law  of  Dec.  16,  1881 ;  and 
regulations  of  July  1,  1883,  amended  by  law  of  Oct.  1,  1894.  The  law  of 
Dec.  14,  1910,  relates  to  the  use  of  waters.  The  Post  Office  service  is  governed 
by  the  postal  code  of  Oct.  23,  1894,  in  force  since  Jan.  1,  1895,  the  decree  of 
Jan.  26,  1899,  and  the  regulation  of  the  same  date. 

"  Const.  Art.  72,  sections  21  to  23,  is  equivalent  to  corresponding  paragraphs 
of  article  89  of  the  new  constitution.  The  law  regulating  the  monetary  system 
of  Mexico  was  that  of  March  25,  1905,  which  has  not  been  repealed  in  spite  of 
the  great  disturbances  in  the  monetary  system  during  the  revolution.  Decree 
of  May  24,  1905,  estabUshes  the  equivalence  of  the  Mexican  peso  with  foreign 
coins;  on  November  13,  1918,  a  decree  changed  the  alloy  of  the  silver  coins. 

«  This  is  identical  with  paragraph  15  of  article  89  of  the  new  constitution. 
The  law  of  August  25,  1903,  and  its  regulation  of  September  24,  of  the  same 
year  govern  the  matter  of  patents  and  exclusive  privileges  to  inventors  or 
improvers  in  any  branch  of  industry.  The  law  of  August  25,  1903,  and  its 
regulation  of  September  24,  1903,  relates  to  trade-marks. 


CONSTITUTIONAL   LAW  61 

live-stock,  or  industrial  or  other  products  of  other  states,  or 
to  burden  said  consumption  with  greater  or  smaller  taxes 
than  are  paid  on  similar  products  in  the  respective  localities; 
and  not  to  levy  taxes,  the  collection  of  which  requires  the 
cooperation  of  the  fiscal  administration  of  the  nation.  To 
every  state  is  reserved  the  right  to  dispose  of  its  natural 
products  in  the  manner  established  by  the  constitution." 

The  states  bind  themselves  also  to  confine  the  sources  of 
their  budget  to  the  following: 

1.  The  proceeds  of  the  duties,  called  territorial  taxes, 
levied  in  all  the  custom-houses  of  the  republic; 

2.  the  total  amount  of  the  duty  on  mines,  public 
lands  and  salt  pits; 

3.  the  portion  of  the  duty  levied  upon  alcohol  estab- 
lished by  law; 

4.  the  amount  of  the  duties  imposed  on  the  exploita- 
tion of  their  natural  products; 

5.  the  yield  of  the  stamped  paper  according  to  law. 
No  duties  can  be  levied  upon  exports.  ^^ 

The  power  to  legislate  with  respect  to  and  to  administer 
post  offices,  the  telegraphic  service  and  telephones,  resides  in 
the  federal  government. 

The  powers  of  the  federal  Congress  in  relation  to  domestic 
commerce  are: 

1.  To  establish  the  national  taxes  and  to  authorize 
their    levy; 

2.  to  enact  the  national  codes  and  laws  according  to 
the  constitution; 

3.  to  regulate  the  type,  value,  alloy,  weight,  and  coin- 
age of  the  national  coin,  gold  being  the  monetary  stand- 
ard; and  to  provide  for  the  admission  of  foreign  coins; 

4.  to  grant  concessions  for  the  construction  of  general 
means  of  communication; 

5.  to  regulate  and  make  uniform  all  weights  and 
measures  of  the  nation  in  accordance  with  the  decimal 
metric  system. "^^ 

"  Art.  19— sections,  9,  10,  11,  12,  13,  14.  **  Art.  117. 

«  Art.  58. 


62  LATIN-AMERICAN    COMMERCIAL    LAW 

The  Executive  has  power  to  regulate  the  postal,  tele- 
graphic and  telephonic  service,  whether  public  or  private, 
granting  or  suppressing  federal  stations  and  offices  as 
required  by  public  utility.  ^^ 

Neither  the  legislative,  executive,  or  any  other  power  or 
authority  in  the  republic  can  in  any  case  or  for  any  reason, 
issue  fiat  money,  or  declare  bank  notes  and  other  evidence  of 
value  represented  by  paper  to  be  legal  tender.  The  coinage 
of  moneys,  either  of  silver  or  nickel,  cannot  be  ordered  with- 
out previous  authorization  of  the  national  Congress  given 
through  the  same  procedure  established  for  the  enactment  of 
law.^^  The  law  of  May  18,  1877,  governs  trade  and  indus- 
trial marks  and  the  law  of  May  25, 1882,  governs  patents. 

BANKS 

Argentina. 

The  federal  government  has  power  to  establish  in  the 
Capital  a  national  bank,  with  branches  in  the  states,  and 
with  the  privilege  of  issuing  bank  notes. ^  The  only  prohi- 
bition upon  the  states  in  regard  to  banks,  is  that  they  cannot 
issue  bank  notes,  except  with  the  consent  of  the  federal 
Congress.  ^^ 

Brazil. 

The  federal  Congress  has  the  exclusive  power  to  create 
banks  of  issue,  to  legislate  with  regard  to  such  issue,  and  to 
levy  taxes  on  it.^°  The  liberty  of  the  states  to  create  and 
legislate  with  regard  to  other  kinds  of  banking  institutions 
is  implied.    This  matter  of  banking  is  governed  by  laws  of 

«  Art.  79,  par.  10.  «  Art.  119.  «  Art.  67,  section  5. 

"  Art.  108.  Law  No.  4507  of  Sept.  29,  1904,  organizing  the  Banco  de  la 
Nacidn,  decree  of  Dec.  9,  1904,  as  amended  by  decree  of  Sept.  26,  1905,  regu- 
lating the  bank;  law  No.  1804  of  Sept.  14,  1886,  organizing  the  Banco  Hipole- 
cario  Nacional  and  its  regulating  decree  of  Dec.  18,  1886. 

^  Art.  34,  section  8.  The  law  of  June  20,  1913,  regulates  the  banking  system 
of  the  republic.  Law  of  Dec.  22,  1906,  decree  of  Dec.  31,  1910;  Law  of  Dec.  29, 
1906,  creating  the  Caixa  de  Conversao;  Law  of  Nov.  28,  1907,  authorizes  the 
establishment  of  agricultural  banks. 


CONSTITUTIONAL   LAW  63 

Nov.  24,  1888,  March  8,  1890,  decree  233  of  1896,  Law  of 
Dec.  31,  1896,  Law  of  Dec.  22,  1906,  decree  of  Dec.  31, 
1910,  Law  of  Dec.  29,  1906,  creating  the  Caixa  de  Conversao, 
and  law  of  Nov.  28,  1907,  authorizing  the  estabhshment  of 
agricultural   banks. 

Mexico. 

In  Mexico  the  federal  Congress  was  authorized  to  legislate 
in  regard  to  banks  by  the  amendment  to  section  X,  article 
72  of  the  Constitution,  hereinbefore  mentioned,  and  the 
Congress,  using  this  faculty,  reserved  to  the  federal  govern- 
ment the  power  to  grant  concessions  for  the  establishment  of 
banks  of  every  kind.^^ 

Venezuela. 

We  have  aheady  observed  that  neither  the  legislative  nor 
the  executive,  nor  any  other  authority  may  in  any  case  and 
under  any  consideration  issue  paper. money,  or  declare,  as 
legal  tender,  bank  notes  or  any  other  evidence  of  value 
represented  by  paper.  ^^ 

PUBLIC   LANDS   AND    MINES 

Argentina. 

The  constitution  makes  a  distinction  between  national 
and  provincial  lands;  the  federal  Congress  can  provide  for  the 
use,  sale  and  disposition  of  the  former  '^^  whereas  the  provinces 
have  jurisdiction  over  the  latter.^^ 

Although  in  regard  to  mines,  the  constitution  gives  power 
to  the  federal  Congress  to  enact  the  code  which  is  to  regulate 

^1  The  banking  law  of  Mexico  is  that  of  March  19,  1897,  as  amended  by  law 
of  1908. 

Article  28  of  the  new  constitution  provides  that  there  shall  be  no  private  or 
governmental  monopolies  of  any  kind  whatsoever  in  the  United  States  of 
Mexico  .  .  .  excepting  those  relating  to  coinage  of  money,  j)ostal,  tc^legraphic 
or  radiotelegraphic  services,  the  issuance  of  bills  by  a  single  banking  institution 
to  be  (!ontrolled  by  th(;  federal  government.  .  .  . 

62  Art.  119.  "  Art.  07,  section  4.  "  Art.  107. 


64  LATIN-AMERICAN    COMMERCIAL   LAW 

rights  in  them,  the  mines  themselves  belong  to  the  Union  or 
to  the  provinces,  according  to  the  location  of  the  mine.^^ 

The  mining  code  of  Argentina  was  promulgated  on  Decem- 
ber 8,  1866,  and  went  into  operation  on  May  1,  1887.  It 
divides  mines  into  four  classes: 

1.  those  to  which  the  soil  is  an  accessory,  which  belong 
to  the  state  and  can  only  be  exploited  by  virtue  of  a 
concession  granted  by  competent  authority.  To  this 
class  the  following  substances  belong:  gold,  silver, 
mercury,  copper,  iron,  lead,  tin,  zinc,  nickel,  cobalt, 
bismuth,  manganese  and  antimony,  as  well  as  coal, 
Ugnite,  anthracite,  bituminous,  mineral  oils,  arsenic 
and  precious  stones; 

2.  those  which,  on  account  of  their  importance,  are 
preferably  granted  to  the  owner  of  the  soil,  and  those 
which  by  the  condition  of  their  stratification  are  des- 
tined to  common  utilization  as  placers,  dross-heaps, 
borates,   salpetre,   salt-pits,  etc.; 

3.  those  belonging  exclusively  to  the  owner  of  the 
soil,  as  of  materials  for  construction; 

4.  those  belonging  to  the  nation  or  province  accord- 
ing to  their  location. 

Brazil. 

The  federal  Congress  has  exclusive  power  to  enact  laws 
regarding  lands  and  mines  belonging  to  the  Union.  ^^  Con- 
gress can  also  subject  to  special  legislation  those  parts  of  the 
territory  of  the  Republic  needed  for  the  establishment  of 
arsenals  or  other  establishments  or  institutions  for  federal 
use.^^  The  mines  and  vacant  lands  situated  in  the  states  are 
within  the  control  of  the  states;  ^^  but  the  Union  has  the 

'*  Const.  Art.  67,  section  11  and  Art.  7  of  the  Code  of  Mines. 

^8  Art.  34,  section  29. 

"  Art.  34,  section  31. 

^  At  the  time  of  the  Empire  there  were  doubts  and  controversy  on  mines  and 
mineral  waters  but  there  is  no  doubt  now  that  they  belong  to  the  owner  of  the 
soil;  neither  the  former  provinces  nor  present  states  have  any  rights  in  mines 
and  mineral  waters.  Decision  of  the  Supremo  Triunal,  No.  2027  of  Nov.  8, 
1911,  App.  civ. 


CONSTITUTIONAL    LAW  65 

privilege  to  occupy  that  portion  of  the  territory  which  may 
be  necessary  for  the  defense  of  the  frontier,  fortifications, 
mihtary  construction  and  federal  railways.  National 
property  which  may  not  be  necessary  for  the  service  of  the 
Union  shall  pass  to  the  dominion  of  the  states  in  whose 
territory  it  may  be  situated. ^^ 

Mexico. 

The  federal  Congress  has  power  to  make  rules  for  the 
occupation  and  sale  of  public  lands  and  establish  the  price 
thereof.^"  This  principle  has  developed  the  theory  that  the 
Union  alone  has  power  to  lease,  sell  or  dispose  of  the  public 
lands." 

The  amendment  to  section  X,  article  72,  of  the  Constitu- 
tion of  December  14,  1883,  gives  Congress  the  power  to 
legislate  in  the  matter  of  mines;  and  here  also  the  law  ^^  has 
provided  that  they  belong  directly  to  the  nation.  As  there 
is,  however,  no  express  constitutional  renunciation  by  the 
states  of  such  direct  ownership,  the  constitutionahty  of  this 
law  may  be  open  to  question.^^ 

59  Art.  64.  ««  Art.  72,  section  24. 

"  Law  of  March  26,  1894,  and  its  regulation  of  the  5th  of  June  of  the  same 
year,  governs  the  matter  of  public  lands  (Terrenos  Baldxos)  and  the  procedure 
to  obtain  land  concessions. 

Article  27  of  the  new  constitution  provides:  The  ownership  of  lands  and 
waters  comprised  within  the  limits  of  the  national  territory  is  vested  originally 
in  the  nation  which  has  had  and  has  the  right  to  transmit  titles  thereof  to 
private  persons,  thereby  constituting  private  property. 

*2  Art.  1  of  the  Mining  Law. 

"'  The  mining  law  was  promulgated  on  November  25,  1909,  and  went  into 
effect  January  1,  1910.  The  regulating  decree  of  this  law  was  promulgated  on 
Dec.  16,  1910.  According  to  the  provisions  of  this  law,  mines  belong  to  the 
nation  or  to  the  owner  of  the  soil  as  is  provided  for  in  Arts.  1  and  2  which  we 
quote:  "The  following  properties  belong  directly  to  the  nation  and  are  subject 
to  the  provisions  of  this  law: 

"1.  The  formations  of  all  inorganic  substances  which  may  constitute 
deposits  in  the  form  of  veins,  beds,  or  masses  of  any  kind,  whose  composition 
may  be  different  from  that  of  the  surrounding  rocks,  such  as  those  containing 
gold,  platinum,  silver,  copper,  iron,  zinc,  and  bismuth,  including  those  which 
contain  sulphur,  arsenic  and  tellurium,  rock-salt  and  precious  stones; 

"2.  The  gold  and  platinvun  placers." 

Article  2:  The  following  are  the  exclusive  property  of  the  owner  of  the  soil: 


66  LATIN-AMERICAN    COMMERCIAL   LAW 

Venezuela. 

The  federal  Congress  has  power  to  pass  upon  titles  or 
concessions  to  mines  and  sales  or  conveyances  of  pubhc 
lands  or  any  other  national  property.^^ 

"1.  The  beds  or  deposits  of  mineral  fuel,  in  all  their  form  and  varieties. 

"2.  The  beds  or  deposits  of  bituminous  substances. 

"3.  The  beds  or  deposits  of  salts  which  may  crop  out  on  the  siuface. 

"4.  The  surface  or  underground  springs  of  water  which  are  subject  to  the 
provisions  of  the  common  law  and  the  special  laws  relating  to  waters,  but 
without  prejudice  to  the  provisions  of  Article  9. 

"5.  The  bog  and  flat-iron,  steam-tin  and  ochres." 

These  provisions  have  been  radically  changed  in  the  new  constitution,  which 
provides  in  article  27  that:  "In  the  Nation  is  vested  the  masses  or  beds  con- 
stituting deposits  whose  nature  is  different  from  the  components  of  the  soil, 
such  as  minerals  from  which  metals  and  metaloids  used  for  industrial  purposes 
are  extracted;  beds  of  precious  stones,  rock-salt  and  salt  lakes  formed  directly 
by  marine  waters,  products  derived  from  the  decomposition  of  rocks,  when 
their  exploitation  requires  imderground  work;  phosphates  which  may  be  used 
for  fertilizers;  solid  mineral  fuels;  petroleum  and  all  hydrocarbons,  solid, 
liquid  or  gaseous.  By  decree  of  April  13,  1917,  a  tax  of  lO^?'  ad  valorem  on  the 
exportation  of  mineral  oil  and  its  products  was  laid.  By  law  of  Jime  29, 
1919,  the  mining  industry  was  subjected  to  three  kinds  of  taxes: 

(a)  on  the  ownership  of  the  mines; 

(6)  on  the  mineral  production; 

(c)  on  the  smelting,  coining  and  assay  of  metals. 

The  decrees  of  Carranza  in  relation  to  mineral  fuels,  which  have  aroused 
great  opposition,  have  concentrated  interest  around  the  legal  condition  of  the 
owners  of  the  soil  in  places  where  those  mineral  fuels  exist.  In  order  to  have  a 
proper  understanding  of  the  question  it  is  necessary  to  take  into  consideration 
the  following  legal  provisions:  Royal  order  of  Pliilip  II  of  January  10,  1559, 
appropriating  the  mines  of  gold,  silver  and  quicksilver  to  the  crown  and  Royal 
treasury  and  the  gromids  of  that  resolution;  Royal  order  of  November  28  and 
decision  of  the  Council  of  December  26,  1789,  declaring  that  the  mines  of  coal 
belong  to  the  owner  of  the  soil  where  they  are  found; 

Royal  decree  of  August  18  and  resolution  of  the  Council  of  September  15, 
1790,  submitting  the  coal  mines  to  the  exploration  and  right  of  claim  by  any 
explorer,  and  granting  a  right  of  preference  to  the  owner  of  the  soil  and  an 
indemnity  in  case  the  mine  is  granted  to  its  discoverer  or  the  person  who 
asked  for  it;  Resolution  of  the  Council  of  State  of  August  5,  1793,  submitting 
the  coal  mines  to  expropriation  when  for  reasons  of  public  interest  it  was  neces- 
sary, provided  previous  and  proper  compensation  was  paid  to  such  owner. 
Art.  22,  title  6,  of  the  Reales  Ordinanzas  de  Minena  of  January  15,  1784;  Mining 
law  of  November  25,  1909;  Decree  of  Carranza  of  February  19,  1918;  Circular 
of  March  11,  1918;  decrees  of  May  IS,  Jime  31,  August  9,  and  August  13,  1918. 
A  bill  has  been  introduced  in  the  Congress  regulating  article  27  of  the  new 
constitution  in  relation  to  the  mineral  fuels,  but  it  has  not  yet  been  passed. 

^^  Law  of  Jime  26,  1915,  regulates  in  Venezuela  the  matter  of  public  lands, 


CONSTITUTIONAL   LAW  67 

and  law  of  June  26,  1915,  and  its  regulations  of  March  8,  1916,  govern  the 
matter  of  mines.  According  to  articles  8  and  9  of  this  law  the  administration 
of  mines  is  vested  in  the  federal  government  and  the  right  to  exploit  them  may 
be  acquired  by  concessions  granted  by  the  federal  executive.  Article  10  pro- 
vides that  titles  and  contracts  referring  to  mines  require  the  approval  of  the 
national  congress,  but  article  3  provides  that  mines  of  coal,  naphtha,  petroleum, 
asphalt,  and  tar  which  do  not  belong  to  individuals  or  corporations  are  in- 
alienable and  the  federal  executive  must  administer  them  directly,  or  by  means 
of  contracts  for  their  exploitation  under  the  regulations  dictated  by  the  execu- 
tive. 


CHAPTER   IV 

MERCHANTS 

Brazil. — Bento  de  Faria,  Antonio :  Das  marcas  de  fabrica  e  de  commercio  e 
do  nome  commercial.    Rio  de  Janeiro,  1906. 

Carvalho  de  Mendonga,  Jos6  Xavier:  Das  firmas  ou  razoes  commerciales. 
Deer,  n  916  de  24  de  outubro  de  1890. 

Martins,  Samuel:  Successoes  commerciaes.    Recife,  1914. 

Nogueira  Almeida,  J.  L.  de,  e  Fischer.  Jr.  G. :  Marcas  industriaes  e  nome 
commercial.    Sao  Paulo,  1910.    2  v. 

Ouro  Preto,  Affonso  Celso  de  Assis  Figueiredo,  Visconde  de  .  .  .  Marcas 
industriaes  e  nome  commercial;  lei  n  3346  de  14  de  outubro  de  1887  e  regula- 
mento  n.  9828  de  31  a  decembro  de  1887  .  .  .  Rio  de  Janeiro,  1888. 

Mexico. — Mercado,  Manuel :  Capacidad  de  los  menores  comerciantes.  Rev. 
de  Leg.  y  Jur.    Mexico,  1895.    2nd  sems. 

From  the  point  of  view  of  legal  science  the  distinction 
between  merchants  and  non-merchants  is  indispensable, 
designed  as  it  is  to  distinguish  a  group  of  persons  who  per- 
form a  certain  social  function.  From  a  practical  point  of 
view  the  distinction  has  important  legal  consequences;  for 
upon  merchants  as  a  class  the  law,  in  civil  law  countries, 
imposes  special  duties.  For  example,  a  merchant  is  bound  to 
keep  books  in  the  form  established  by  law,  usually  involving 
the  taking  of  inventories  and  balance  sheets  at  stated  periods, 
and  the  keeping  of  letter-press  books  and  correspondence 
files ;  he  must  record  in  the  public  commercial  registry  where 
he  resides,  certain  financial  facts  connected  with  his  business 
or  changes  therein,  e.  g.,  his  matrimonial  contracts;  he  must 
give  immediate  notice  of  insolvency  and  state  his  liabilities. 
His  transactions  are  presumed  to  be  commercial  in  the  ab- 
sence of  proof  to  the  contrary ;  he  is  privileged  to  be  named  a 
member  of  a  chamber  of  commerce,  and  to  be  elected  to  the 
commercial  courts  in  countries  where  that  institution  exists. 
Furthermore,  there  are  contracts  whose  classification  as 
commercial  or  "civil"  depends  upon  the  character  of  the 

68 


MERCHANTS  69 

parties  thereto,  as  agency,  commission,  brokerage,  trans- 
portation, etc. 

A  mercantile  person  may  be  an  individual  or  an  association 
of  individuals,  comprising  corporations  and  partnerships. 
Mercantile  persons  are  also  classified  into : 

(a)  principals,  who  trade  on  their  own  account;  and 
(5)  auxiliaries,  who  trade  for  others,  such  as  brokers, 
agents,  captains  of  vessels,  pilots,  etc. 
Argentina,  Panama,^  and  Uruguay  ^  do  not  consider  a 
person  who  trades  for  others  as  a  merchant. 

Systems  of  defining  merchants. 

The  Latin-American  codes  in  defining  merchants  follow 
different  systems,  namely: 

1.  The  French  or  subjective  system.  This  system  takes 
into  consideration  only  the  qualifications  of  the  subject 
of  commerce,  i.  e.,  the  merchant  himself.  According  to 
this  system  merchants  are: 

(a)  those  who,  having  legal  capacity  to  trade,  cus- 
tomarily devote  themselves  thereto; 

(6)  commercial  or  industrial  associations  formed  in 
accordance  with  commercial  law.^ 

2.  The  Munzinger  system  (erroneously  named  Swiss, 
for  Switzerland  makes  no  distinction  between  mer- 
chants and  non-merchants)  originated  in  the  draft  of 
a  conmiercial  code  for  Switzerland,  prepared  in  1864, 

1  Argentina,  1,  Panama,  28.  ^  Art.  1. 

'  Spain,  1;  Argentina,  2;  Brazil,  1  and  4;  Chile,  7;  Colombia,  9;  Costa  Rica, 
law  of  Octobers,  1901;  Ecuador,  2;  Guatemala,  5;  Haiti,  1;  Honduras  7;  Mex- 
ico, 3;  Panama,  28;  Peru,  1;  San  Salvador,  4;  Santo  Domingo,  1;  Venezuela,  10. 

All  the  circumstances  of  the  case  must  be  taken  into  consideration  to  deter- 
mine whether  a  person  is  a  merchant.  Spain  Sup-Trib.,  April  25,  1896, 
Gaceta  of  May  11,  1896. 

The  habitual  performance  of  acts  governed  by  the  commercial  code  or  of  an 
analogous  nature  determines  the  qualifications  of  a  merchant.  Spain  (Sup- 
Trib.,  July  8,  1907,  Gaceta  of  October  23,  1908. 

In  contracts  which  are  commercial  for  one  of  the  parties  and  civil  for  the 
other,  the  law  applicable  is  that  corresponding  to  the  character  of  the  defend- 
ant's act.  Cartagena  (Colombia),  decision  of  April  28,  1897,  Gaceta  Jud.  of 
District  of  Bolivar,  vol.  10,  p.  924. 


70  LATIN-AMERICAN    COMMERCIAL    LAW 

by  Munzinger.  This  system  has  also  been  called  ob- 
jective. It  defines  a  merchant  as  one  who  has  been 
inscribed  or  should  be  inscribed  in  the  commercial 
registry.  Its  author  explains  that  with  this  definition  it 
is  unnecessary  to  inquire  whether  a  person  inscribed  in 
the  registry  should  be  inscribed  or  not.  The  fact  of  his 
inscription  is  conclusive  and  dispenses  with  further 
investigation.  The  code  of  Brazil  followed  this  system 
in  its  Art.  9;  but  owing  to  the  fact  that  when  a  person 
was  classified  as  a  merchant  he  became  subject  to  the 
jurisdiction  of  the  commercial  courts,  which,  composed 
of  merchants,  were  more  expeditious  in  their  proceed- 
ings than  the  civil  courts,  it  became  a  valuable  privilege 
to  be  a  merchant.  Many  acts  of  civil  character  were 
commercialized  by  subsequent  statutes,  and  finally 
decree  number  916  of  October  24,  1890,  established  the 
registry  of  firms,  with  an  optional  character.  The 
sphere  of  operation  of  mercantile  law  was  thus  widened 
and  the  definition  of  a  merchant  in  Brazil  is  no  longer 
objective. 

3.  The  combined  system.  This  system  defines  a  mer- 
chant as  a  person  who,  having  legal  capacity  to  trade, 
has  matriculated  **  himself  as  a  merchant,  carries  on 
commercial  transactions  and  engages  in  commerce  as  an 
habitual  occupation.^ 

Habitual  occupation  in  commerce. 

We  have  seen  that  habitually  engaging  in  business  is  one 

*  Cf.  infra,  Chapter  VI. 

5  Bolivia,  1;  Nicaragua,  1;  Uruguay,  1  and  32. 

Article  1  of  the  supreme  decree  of  Bolivia  of  August  8,  1842,  provides  that  all 
commercial  acts  must  be  submitted  to  the  commercial  courts  even  though  the 
merchants  involved  therein  are  not  matriculated,  nor  possess  the  capital  re- 
quired therefor  by  the  commercial  code.  The  supreme  decree  of  February  14, 
1843,  abolished  the  commercial  courts  and  thereafter  all  cases  involving  com- 
mercial acts  were  within  the  jurisdiction  of  the  civil  courts. 

After  an  opinion  rendered  by  a  commercial  judge  the  government  of  Uruguay 
on  July  27,  1867,  decided  that  the  inscription  in  the  malricula  of  merchants  was 
not  an  indispensable  requisite  for  a  person  to  be  legally  considered  a  merchant. 
Uruguay  thus  approaches  the  first  system. 


MERCHANTS  71 

of  the  tests  for  classifying  a  person  as  a  merchant.  Most 
of  the  codes  do  not  estabhsh  any  presumption  in  this  respect, 
leaving  the  point  to  be  decided  by  the  court  according  to  the 
evidence  of  each  individual  case. 

The  codes  of  Spain,"  Colombia,''  Guatemala,^  Panama  and 
Peru,^  provide  that  there  is  a  legal  presumption  of  habitual 
occupation  in  commerce  when  a  person  has  an  establishment 
for  making  purchases  and  sales,  or  when  he  announces  to  the 
public  by  means  of  circulars,  papers,  placards  or  permanent 
signs  in  public  places,  that  he  has  an  establishment  for 
carrying  on  any  transactions  that  the  code  of  commerce 
classifies  as  commercial  acts;  and  actually  engages  in  said 
occupation. 

In  Brazil,^"  and  Uruguay, ^^  a  person  is  regarded  as  a  mer- 
chant from  the  date  of  his  inscription  in  the  matricula. 

Capacity. 

We  find  three  systems  in  Latin-America  in  reference  to 
the  capacity  of  merchants: 

1st,  capacity  is  governed  by  civil  law;  ^^ 
2d,  commercial  capacity  for  persons  not  under  paren- 
tal authority  is  attained  at  twenty-one  years,  differing 
thus  from  that  established  by  the  civil  code;  ^^ 

3d,  no  special  mention  is  made  of  the  capacity  of 
merchants  and  therefore  the  rules  of  the  civil  code  must 
be  followed.  ^^ 

MINORS 

Minors  may  engage  in  business  when  they  have  received 
parental  authorization  therefor  in  legal  form.  With  this 
authorization  and  with  the  distinctions  and  qualifications 
presently  to  be  noted  they  may  in  general  engage  in  com- 

«  Art.  3.  ">  Art.  18.  «  Art.  17. 

9  Panama,  29;  Peru,  3.  i»  Art.  9.  "  Art.  39. 

^"^  Argentina,  9;  Bolivia,  2;  Brazil,  1;  Colombia,  11;  Costa  Rica,  3;  Ecuador, 
6;  Guatemala,  7;  Mexico,  5;  Nicaragua,  2;  Panama,  12;  Uruguay,  8. 
1'  Spain,  4;  Peru,  4. 
"  Chile,  Haiti,  Honduras,  San  Salvado,  Santo  Domingo,  Venezuela. 


72  LATIN-AMERICAN    COMMERCIAL   LAW 

mercial  acts  or  deal  with  their  property,  provided  the  instru- 
ment granting  the  parental  authorization  has  been  duly 
registered.  ^^ 

This  authorization  to  trade  may  be  given  when  the  minor 
has  reached  the  age  of  21  in  Spain,  ^'^  Peru,^^  and  Costa  Rica,^* 
and  the  age  of  18  in  Argentina,  ^^  Brazil,  ^^  Guatemala,  ^^ 
Haiti,"  Santo  Domingo,^^  and  Uruguay.^'* 

Other  commercial  codes  are  silent  on  this  point  probably 
because  the  rules  of  the  civil  code  are  applicable. 

Form  of  authorization. 

In  the  Latin- American  codes  we  find  four  systems: 

1st,  that  of  the  codes  which  require  an  express  author- 
ization in  wTiting;  ^^ 

2d,  that  of  the  codes  in  which  the  authorization 
may  be  either  expressed  and  in  writing  or  implied 
and  proved  by  means  of  acts  which  make  it  pre- 
sumptive; ^^ 

3d,  that  of  Brazil,-^  Panama  and  Uruguay,^  which 
admit  a  tacit  authorization  only  when  the  father 
associates  himself  in  business  with  his  son,  the  latter 
being  over  21  years  of  age  in  Brazil,  and  over  18  in  Uru- 
guay; 

4th,  that  of  the  other  codes  which  apply  to  this 
matter  the  provisions  of  the  civil  law. 

Powers  of  minors  who  have  been  authorized  to  trade. 

In  examining  the  powers  and  privileges  which  authoriza- 
tion confers  on  merchant  minors  we  find  five  systems: 

1*  Spain,  4;  Argentina,  10;  Brazil,  1;  Chile,  9;  Colombia,  15;  Costa  Rica,  4; 
Ecuador,  9;  Guatemala,  8  and  9;  Haiti,  2;  Honduras,  9;  Mexico,  6;  Panama, 
14;  Peru,  5;  San  Salvador,  6;  Santo  Domingo,  2;  Uruguay,  9;  Venezuela,  11. 

'^  Art.  4.  In  Cuba,  after  the  law  of  June  19,  1916,  majority  is  fixed  at  21  years 
of  age. 

"  Art.  4.  18  Art.  4.  "  Art.  10. 

«>  Art.  1.  21  Art.  7.  «  Art.  2. 

23  Art.  2.  2«  Art.  9. 

25  Guatemala,  9;  Haiti,  2;  Mexico,  6;  Santo  Domingo,  2;  and  Venezuela,  11. 

28  Argentina,  12;  Ecuador,  9.       27  ^rt.  1. 

28  Panama,  14;  Uruguay,  11. 


MERCHANTS  73 

1.  that  of  the  codes  which  invest  the  minor  with  the 
same  powers  as  a  person  of  full  age,  capable  of  under- 
taking acts  of  administration  or  management,  selling 
and  mortgaging  his  property  and  appearing  in  court  in 
person  or  by  proxy  ;-^ 

2.  that  which  allows  a  minor  to  mortgage  his  real 
estate,  to  appear  in  court,  and  to  undertake  acts  of 
administration ;  ^° 

3.  that  which  allows  him  to  mortgage  his  real  estate 
and  to  perform  acts  of  administration;  ^^ 

4.  that  which  allows  him  to  appear  in  court  and  to 
perform  acts  of  administration;  ^^ 

5.  that  which  is  silent  on  the  matter,  it  being  governed 
by  the  provisions  of  the  civil  code.^^ 

A  minor  in  Chile,  ^^  Ecuador,  ^^  Honduras ^^  and  San 
Salvador  ^^  need  not  be  authorized  or  emancipado  in  order  to 
trade  with  his  personal  capital  (peculio)  and  to  bind  it  to 
cover  obhgations  arising  out  of  his  transactions. 

The  codes  of  Spain, ^^  Panama,  Peru,^^  and  Venezuela  "*'' 
declare  that  minors  who  have  not  reached  the  age  at  which 

29  Brazil,  25,  decrees  No.  169  A  of  January  19,  1890;  Art.  2,  and  No.  370  of 
May  2,  1890;  Art.  120;  Mexico,  7;  Panama,  13  and  14. 

By  acts  of  management  or  administration  is  meant  every  transaction  not 
involving  the  alienation  of  real  estate.  The  words  ado  de  administracidn,  are 
opposed  to  actos  de  dominio  or  actos  de  disposicion,  which  imply  the  alienation 
or  mortgaging  of  real  estate,  or  of  personal  property  when  the  management 
of  the  business  or  the  usual  expenses  do  not  require  such  alienation. 

Powers  of  emancipated  minors  are  the  same  as  those  of  persons  of  legal  age. 
Cuba,  Tribunal  Supremo,  decision  of  August  2,  1904,  Gaceta  of  October  14, 
1904. 

30  Chile,  9,  18;  Ecuador,  10;  Guatemala,  11,  15. 

"  Argentina,  19;  Colombia,  15;  Costa  Rica,  6;  Haiti,  6;  Santo  Domingo,  6. 

'2  Honduras,  18. 

3'  A  mmor  in  Bolivia,  when  authorized  to  do  business,  may  appear  in  court, 
enter  into  contracts  and  administer  his  real  estate,  but  may  not  dispose  of  it. 
Art.  248  c.  c.  Decision  of  the  Corte  Suprema  of  Dec.  24,  1892.  Gaceta  Judicial, 
No.  633,  p.  8. 

"  Art.  10.  36  Art.  11.  's  Art.  10. 

3'  Art.  7. 

A  minor  is  emancipado  when  his  father  or  mother  under  whose  authority  he 
has  been,  waives  said  authority  by  giving  him  absolute  liberty  to  dispose  of 
his  person  and  property,  or  when  he  marries. 

3«  Art.  5.  3*  Panama,  15;  Peru,  5.  «» Art.  13. 


74  LATIN-AMERICAN    COMMERCIAL   LAW 

they  may  be  emancipated,  as  well  as  persons  not  having 
legal  capacity  may  continue,  by  means  of  a  legal  representa- 
tive, the  trade  of  their  parents  or  predecessors  in  interest. 
This  power  is  not  given  in  other  codes.  The  Spanish  code  of 
1829  did  not  contain  such  authorization  and  when  a  minor  or 
incompetent  person  inherited  a  commercial  enterprise  his 
guardians  had  to  dispose  of  it.^^ 

MARRIED   WOMEN 

Legal  partnership  and  property  in  relation  to  marriage. 

It  has  been  considered  that  the  unity  which  must  prevail 
in  family  relations,  requires  that  only  one  of  the  spouses  have 
the  representation  of  the  common  interest.  The  force  of 
tradition  has  invested  the  husband,  as  the  head  of  the  family, 
with  this  representation  and  has  incapacitated  the  wife,  an 
incapacity  which,  though  of  different  origin  than  that  of  a 
minor,  produces  analogous  effects. 

Most  of  the  codes  of  Latin-America  provide  that  by  the 
mere  fact  of  matrimony,  in  the  absence  of  any  special  ante- 
nuptial agreement  or  marriage  settlement  to  the  contrary,  a 
partnership  is  formed  by  the  operation  of  the  law;  that  is,  a 
legal  partnership,  the  management  of  the  wife's  property 
being  vested  in  the  husband."*^ 

This,  the  most  common  system  of  matrimonial  property 

*i  A  minor  less  than  18  years  of  age  cannot  engage  in  commerce  in  Brazil, 
not  even  through  or  with  the  concurrence  of  his  father  or  guardian.  Car- 
valho  de  Mendonga  op.  cit.,  vol.  2,  par.  27,  Art.  386  c.  c. 

*-  The  only  codes  that  have  departed  from  the  traditional  legal  partnership 
are  those  of  Costa  Rica,  76  c.  c,  Honduras,  169  c.  c.  and  Panama,  1,163  c.c. 
In  Mexico,  Carranza  by  decree  of  April  16,  1917,  established  new  provisions 
for  the  government  of  family  relations  in  the  Federal  District  and  Federal 
Territories.  Art.  270  of  said  decree  declares  that  the  consorts  shall  retain  the 
ownership  and  administration  of  their  respective  property;  hence  the  proceeds 
of  and  accessions  to  said  property  are  not  common.  Article  44,  however,  de- 
clares that  the  wife  cannot  establish  a  commercial  enterprise  without  her 
husband's  permission,  mdess  the  latter  has  abandoned  her  or  has  no  property 
of  his  own  and  is  incapacitated  to  work.  Moreover,  husband  and  wife,  if  of 
legal  age,  have  full  power  to  manage  their  property  and  to  dispose  of  it,  with- 
out the  husband  requiring  the  consent  of  the  wife,  or  the  latter,  the  authoriza- 
tion of  her  husband,  not  even  to  appear  in  court.    Arts.  45,  46. 


MERCHANTS  75 

arrangement,  is  known  as  the  system  of  legal  partnership 
{sociedad  legal)  J^  Besides  the  husband's  management  of  the 
partnership  property,  one  of  its  distinguishing  characteristics 
is  that  on  the  dissolution  of  the  marriage  the  respective 
spouses  or  their  representatives  receive  back  the  amount 
originally  contributed  to  the  partnership,  plus  half  of  the 
increase  or  profits.  This  matter  is  often  of  vital  interest  to 
creditors.  Matrimonial  property  may  be  divided  into  the 
following  classes: 

(a)  property  which  forms  the  fund  or  capital  of  the 

legal  partnership; 

(6)  property    which    belongs    to    the   husband,    the 

proceeds  of  which  go  to  the  partnership; 

(c)  property  belonging  to  the  wife,  the  proceeds  of 
which  go  to  the  partnership; 

(d)  property  belonging  exclusively  to  the  husband; 

(e)  paraphernalia  or  property  belonging  exclusively 
to  the  wife; 

(/)  dowry  or  property  of  the  wife,  the  proceeds  of 
which  are  received  by  the  husband  for  the  expenses  of 
the  family. 

Authorization  to  trade  given  to  the  wife. 

Notwithstanding  the  general  disability  to  engage  in  trade, 
this  authorization  having  once  been  conferred,  and  she 
having  entered  into  business,  she  may  freely  enter  into 
commercial  contracts  without  need  of  further  special  author- 
ization and,  naturally,  her  transactions  may  affect  the 
matrimonial  property,  as  will  be  noted  presently. 

Conditions  of  authorization. 

The  wife  must  have  attained  a  certain  age  before  she  may 
be  authorized  to  trade.  This  age  varies  from  country  to 
country:  In  Chile  '*'*  she  must  be  over  25,  in  Spain, ■*•' 
Argentina, ^^  Bolivia,"*^  Guatemala, ^^  Honduras, "^^  and  Nic- 

*^  This  system  prevails  in  Louisiana. 

"Art.  11.  "^Art.  6.  «  Art.  14. 

«Art.  3.  "Art.  10.  « Art.  11. 


76  LATIN-AMERICAN    COMMERCIAL    LAW 

argua  '""  over  21;  in  Costa  Rica^^  over  20  years;  in  Brazil/^ 
Colombia, ^^  Mexico/'*  and  Uniguay^^  over  18,  and  in  Peru'^ 
over  16  years.  Other  countries  are  silent  on  this  matter 
hence  it  may  be  inferred  that  the  wife  in  those  countries  can 
be  authorized  to  trade  therein  when  she  is  of  legal  age. 

In  Chile  ^^  the  wife,  being  over  21  years  of  age,  and  in 
Honduras  '"^  the  wife  being  over  18  and  under  21  years  of  age, 
can  be  authorized  to  engage  in  commerce  under  the  following 
conditions : 

1.  If  the  husband  is  of  legal  age,  the  authorization 
may  be  given  in  a  formal  deed;  if  he  is  a  minor,  judicial 
approval  of  his  act  is  necessary; 

2.  The  decree  of  approval  must  be  registered  and 
pubhshed  according  to  law. 

Form  of  authorization. 

There  are  three  systems  prevailing  with  regard  to  the 
authorization  conferred  on  the  wife: 

1.  The  authorization  may  either  be  expressed  in 
writing  or  may  be  tacit,  when  the  wife  trades  with  the 
knowledge  of  her  husband,  who  does  nothing  to  mani- 
fest his  disapproval.^^ 

In  Brazil  ^°  the  authorization  may  also  be  tacit  when, 
prior  to  the  marriage,  the  wife  had  already  been  a  merchant 
and  the  husband  has  not,  after  marriage,  withdrawn  the 
authorization  in  wTiting  addressed  to  all  persons  formerly 
in  commercial  relations  with  her,  filed  in  the  mercantile 
registry  and  published  in  the  local  papers. 

2.  The  authorization  must  be  given  in  a  public 
instrument. ^^ 

^«Art.  3.  "Art.  5.  B2Art.  1. 

53  Art.  12.  "  Art.  8.  '^  Art.  18. 

58  Art.  6.  57  Art.  12.  ^  Art.  12. 

59  Spain,  7;  Argentina,  15;  Chile,  11  (only  when  the  wife  is  over  25  years  of 
age);  Ecuador,  12;  Guatemala,  12;  Peru,  7;  Uruguay,  19;  Venezuela,  14. 

«« Art.  29. 

81  Bolivia,  3;  Brazil,  1;  Colombia,  12;  Mexico,  8;  Panama,  17. 
A  bankrupt  may  authorize  his  wife  to  trade.     Brazil  Tribunal  de  Justicia 
de  S.  Paulo,  May  4,  1893.    Gaceta  Juridica  de  S.  Paulo,  vol.  32,  p.  88. 


MERCHANTS  77 

3.  The  codes  of  Haiti,  Nicaragua  and  Santo  Domingo 
are  silent  with  respect  to  the  form  of  the  authorization. 

The  authorization  is  to  be  registered  in  the  commercial 
registry.®- 

It  is  not  to  be  presumed  that  the  wife  is  authorized  to 
trade  when  she  merely  helps  her  husband  in  his  business, 
deals  in  his  stead  and  has  no  separate  business.*'^ 

Uruguay  ^"^  states  another  case  in  w^hich  the  authorization 
is  not  to  be  presumed,  namely,  when  the  wife  enters  into  a 
commercial  association,  unless  it  is  expressly  stipulated  and 
published  that  she  is  to  have  a  share  in  the  management  of 
the  affairs  of  the  company  or  association. 

The  order  and  unity  of  the  family  furnish  the  reason  why 
the  law  has  given  the  husband  the  power  of  authorizing  his 
wife  to  trade.  This  fact  explains  w^hy  the  courts  have  not 
been  given  the  same  power.  It  is  expressly  so  provided  by 
the  codes  of  Argentina,^ ^  and  Uruguay, ^^  but  in  case  the 
husband  unreasonably  refuses  his  consent  to  have  his  wife 
appear  in  court,  when  she  has  been  previously  authorized  to 
trade,  the  court  may  supply  the  necessary  consent. 

Withdrawal  of  authorization. 

The  husband  may  freely  withdraw  the  authorization  to 
trade  expressly  or  by  implication  gi'anted  to  his  wife;  the 
withdrawal  must  be  expressed  in  a  public  deed,  duly  in- 
scribed in  the  commercial  registry  and  published  in  the 
official  papers.*'"  In  Guatemala''^  the  inscription  in  the 
registry  is  not  required.  In  Ecuador''^  the  authorization 
cannot  be  withdrawn  without  judicial  approval.     In  Spain, 

«2  Spain,  6;  Argentina,  14;  Brazil,  5;  decree  No.  596  of  July  19,  1890.  Art. 
48;  Ecuador,  28;  Mexico,  21;  Panama,  17;  Uruguay,  25;  Venezuela,  22. 

"'  Chile,  14;  Ecuador,  13;  Guatemala,  14;  Panama,  31;  Santo  Domingo,  5; 
Uruguay,  17.  Acts  performed  by  a  woman  in  the  management  of  a  commer- 
cial house  while  her  husband  was  in  prison  bind  the  latter,  for  she  acted  in  his 
stead.  Brazil,  Judge  of  1st  Instance  of  S.  Paulo,  March  11,  1898,  and  Tribunal 
de  Jusiida  ofS.  Paulo,  May  24,  1899,  Gaceta  Juridica  de  S.  Paulo,  vol.  22,  p.  63. 

"  Art.  16.  8^  Argentina,  16.  «« Art.  20. 

e^  Spain,  8;  Argentina,  21;  Brazil,  28;  Chile,  13;  Mexico,  10,  17,  21,  IX; 
Panama,  21;  Peru,  8;  Uruguay,  25;  Venezuela,  25. 

«s  Art.  13.  89  Art.  20. 


78  LATIN-AMERICAN    COMMERCIAL   LAW 

Brazil,  Mexico  and  Peru,  the  withdrawal  of  the  authoriza- 
tion must  be  made  known  to  other  merchants  by  means 
of  circulars. 

The  codes  of  Bolivia,  Colombia,  Haiti,  Nicaragua,  San 
Salvador  and  Santo  Domingo  are  silent  on  this  important 
matter. 

If  the  withdrawal  has  not  been  pubhshed  and  inscribed,  it 
will  not  produce  any  effect  as  against  third  parties.  In 
Mexico  it  does  not  operate  until  ninety  days  after  its  publi- 
cation in  the  papers  and  in  the  commercial  establishment  of 
the  wife.™ 

Cases  in  which  authorization  is  unnecessary. 

The  wife  can  trade  without  her  husband's  authorization — 

1.  when  she  is  separated  from  her  husband  by  virtue 
of  a  final  decree  of  divorce  ;^^ 

2.  when  her  husband  has  been  subjected  to  guard- 
ianship ; 

3.  when  her  husband  is  an  absentee,  his  whereabouts 
being  unknown  and  his  return  not  expected.^-  Mexico 
and  Panama  add  to  these  the  case  when  the  husband 
has  been  deprived  of  his  civil  rights. 

The  other  codes  are  not  so  explicit,  but  the  force  of  facts  is 
superior  to  the  lawmaker's  foresight.  Divorce,  even  though 
it  does  not  break  the  conjugal  ties,  puts  an  end  to  the 
common  living  and  matrimonial  partnership;  the  submission 
of  the  husband  to  guardianship  renders  him  unable  to  give 
his  consent,  and  his  absence  in  the  legal  meaning  of  the  word 
carries  with  it  the  presumption  of  death.  Under  such  cir- 
cumstances the  wife  could  not  be  left  under  a  perpetual 
disability  because  of  a  matrimonial  unity  which  does  not  in 

'°  Article  44  of  the  above  mentioned  decree  of  April  12,  1917,  provides  only 
that  the  husband,  two  months  previous  to  the  withdrawal,  must  notify  his 
wife  of  the  same  in  writing. 

^1  Divorce,  according  to  most  Latin- American  codes,  does  not  liberate  the 
spouses  from  the  matrimonial  bonds  ■  it  only  liberates  them  from  the  obligation 
of  living  together  and  puts  an  end  to  the  matrimonial  partnership  and  to  the 
authority  of  the  husband. 

"  Spain,  11;  Ecuador,  14,  18;  Mexico,  8;  Panama,  17;  Peru,  11. 


MERCHANTS  79 

fact  exist  or  which  cannot  be  represented  by  the  husband. 
For  these  reasons,  notwithstanding  that  the  Brazihan  code 
makes  mention  only  of  divorce  among  the  circumstances 
which  permit  the  wife  to  trade  without  the  husband's 
authorization,'^  Can'-alho  de  Mendonga,'^'^  an  eminent 
authority  on  commercial  law,  mentions  absence  and  subjec- 
tion of  the  husband  to  guardianship  among  the  circumstances 
which  liberate  a  married  woman  from  the  requisite  of 
marital  authorization.  Bolivia'^  like  Brazil,  refers  only  to 
the  case  of  divorce.  Colombia  '^  mentions  the  case  of  separa- 
tion of  property,  i.  e.,  when  there  is  no  legal  or  contractual 
partnership  between  the  spouses.  Chile,'^'  Guatemala  "^  and 
Venezuela  "^  refer  to  separation  of  property  and  divorce. 

The  codes  of  Chile  ^  and  Venezuela  ^^  require  judicial  au- 
thorization in  the  cases  above  mentioned  where  the  wife  can 
trade  without  the  consent  of  the  husband,  if  she  is  a  minor. 

Property  liable  for  the  commercial  obligations  of  married 
women. 

In  matters  relating  to  property  that  may  be  affected  by  the 
results  of  the  conunercial  transactions  of  a  married  woman, 
it  is  necessary  to  make  certain  distinctions  between  the 
cases  where  the  woman  trades  (a)  with  and  (b)  without  the 
expressed  or  imphed  authorization  of  her  husband. 
In  the  first  case  there  are  four  systems,  as  follows: 

1st.  The  property  of  the  wiie,  that  of  the  matrimonial 
partnership  and  that  of  her  husband  are  responsible 
for  the  commercial  transactions  of  the  wife.^^ 

2d.  Her  own  property  and  that  of  the  matrimonial 
community  (conjugal  partnership)  are  responsible.'^^ 

"  Art.  1. 

'^  Carvalho  de  Mendon^a.     Tratado  de  Direito  commercial  Brazileiro,  S. 
Paula,  Cardoso  Filho,  1910. 

"  Art.  3.  ^8  Art.  12.  "  Art.  16. 

^8  Art.  10.  "  Art.  17.  «« Art.  16. 

81  Art.  17. 

82  Chile,  15;  Ecuador,  15;  Haiti,  5;  Santo  Domingo,  5. 

8' Spain,  10;  Argentina,  14;  Colombia,  13;  Guatemala,  10;  Mexico,  9; 
Nicaragua,  4;  Panama,  22;  Peru,  10*  Uruguay,  18;  Venezuela,  10. 

A  promissory  note  signed  by  a  woman  without  her  husljand's  authorization 


80  LATIN-AMERICAN    COMMERCIAL   LAW 

3d.  Her  own  property  and  her  share  in  the  conjugal 
partnership  are  responsible.^ 

4th.  Only  her  own  property  is  responsible.^^ 
When  a  woman  trades  without  her  husband's  au- 
thorization the  matrimonial  property  is  liable  accord- 
ing to  the  following  systems: 

(a)  property  of  her  own  and  that  of  the  partnership 
arising  from  her  deahngs;  ^^ 

(6)  her  own  property  and  the  profits  of  the  part- 
nership; ^^ 

(c)  only  her  own  property.^^ 

Power  of  a  merchant  woman  to  sell  and  mortgage  real 
estate. 

A  married  woman,  authorized  to  trade,  has  power  to 
dispose  of  real  estate,  with  limitations  according  to  the 
following  systems: 

1st.  She  can  sell  and  mortgage  her  own  property  and 
that  of  the  conjugal  partnership.*^ 

2d.  She    can    sell    and    mortgage    her    own    prop- 
erty .^° 

3d.  She  can  mortgage  only  her  own  property." 

gives  rise  to  an  action  against  her,  and  binds  her  own  property.  Argentina, 
Camara  de  Apelacidn  commercial,  Camissa  v.  Slant,  March  5,  1914.  Jurisp.  de 
los  Trib.  Macs.,  March,  1914,  p.  170. 

8*  Brazil,  27. 

Property  acquired  in  commerce  by  a  married  woman  is  liable  for  all  obliga- 
tions of  her  husband  arising  during  the  marriage  under  the  regime  of  partner- 
ship. Brazil,  Tribunal  de  Just,  de  S.  Paulo,  Feb.  27,  1902,  Gaceta  Jur.  de  S. 
Paulo,  vol.  29,  p.  170. 

The  creditors  of  a  married  woman  and  those  of  her  husband  have  an  equal 
right  to  property  obtained  by  her  in  commerce.  Trib.  de  Ju^t.  de  S.  Paulo, 
May  4,  1903,  Gaceta  Jur.  de  S.  Paulo,  vol.  32,  pp.  89-90. 

"  San  Salvador,  8. 

a>  Spain,  12;  Peru,  12. 

^  Ecuador,  18;  Mexico,  9. 

88  Colombia,  13;  Guatemala,  10;  Uruguay,  18. 

89  Spain,  10;  Peru,  10;  Colombia,  13. 

90  Chile,  17;  Haiti,  7. 

91  Argentina,  19;  Bolivia,  4;  Ecuador,  16;  Guatemala,  11;  Mexico,  9;  Uru- 
guay, 24. 


MERCHANTS  81 

Powers  of  a  merchant  woman  to  appear  in  court. 

The  codes  of  Guatemala,^-  Mexico/^  and  Venezuela/'* 
grant  a  woman  who  has  been  authorized  to  trade  the  power 
to  appear  in  court.^^ 

The  codes  of  Chile  ^^  and  Uruguay  ^^  expressly  prohibit  a 
merchant  woman  from  appearing  in  court  without  special 
authorization  of  her  husband. 

Art.  19  of  the  code  of  Panama  provides  that  a  merchant 
married  woman  cannot  enter  into  any  partnership  or  any 
form  of  association  which  may  bind  her  ilhmitably,  without 
special  authorization  of  her  husband,  set  forth  in  the  contract 
of  association. 

FOREIGNERS 

The  most  liberal  principles  are,  as  a  rule,  established  in 
Latin-America  in  reference  to  foreigners,  who  in  many  cases 
due  to  diplomatic  protection,  enjoy  in  effect  greater  privi- 
leges than  citizens.^^  Notwithstanding  the  opinion  of  Fiore 
that  the  Italian  civil  code  of  1865  was  the  first  to  establish 
civil  equality  between  the  ahen  and  the  citizen,  it  is  a  fact 
that  Andres  Bello  incorporated  this  Uberal  provision  in  the 
Chilean  civil  code  in  1855,  while,  in  Mexico  the  principle  was 
recognized  as  far  back  as  1822,  in  the  constitutional  basis  of 

92  Art.  92.  93  Art.  9.  «<  Art.  16. 

9s  Article  22  of  the  commercial  code  of  Argentina  is  at  variance  with  articles 
188  and  190  of  the  civil  code,  because  while  the  former  positively  prohibits  the 
woman  from  appearing  in  court  without  the  consent  of  her  husband  or  that  of 
the  coiu-t,  the  latter  assumes  that  the  woman  is  authorized  thereto  by  the 
mere  fact  that  she  exercises  publicly  some  profession  or  industry  in  matters 
referring  to  said  profession  or  industry.  It  seems  that  the  commercial  law, 
because  it  constitutes  in  Argentina  an  exception  to  the  civil  law,  should  prevail 
in  this  matter,  jjut  this  is  not  the  case,  because  the  matter  relates  to  family 
relations,  and  to  rights  and  obligations  of  the  spouses,  which  are  exclusively 
governed  by  the  civil  law.  Such  is  the  doctrine  of  the  article  of  the  draft  of 
amendments  to  the  commercial  code.  Cf.  Obarrio.  Commenlarios  al  cddigo  de 
comerdo,  vol.  I,  p.  78,  and  Jurisprudencia  Comercial,  vol.  .3,  p.  386. 

A  married  woman  does  not  need  her  husband's  authorization  to  appear  in 
court  when  he  is  subject  to  guardianship.  Bolivia,  Corle  Suprema,  March  18, 
1882,  Gaceta  Jud.,  No.  505,  p.  8. 

«  Art.  18.  9'  Art.  22. 

98  Cf.  Borchard,  E.  M.  Diplomatic  protection  of  citizens  abroad.  New 
York,  1915,  sec.  33  et  seq. 


82  LATIN-AMERICAN    COMMERCIAL    LAW 

February  22d  of  that  same  year,  and  in  the  previous  decree 
of  January  9,  1822.  Nevertheless,  there  are  some  exceptions 
to  the  favored  position  of  a  foreigner,  which  it  is  necessary 
to  point  out. 

The  Spanish  code  ^^  provides  that  foreigners  and  commer- 
cial associations,  corporations  and  partnerships,  organized 
in  foreign  countries  may  do  such  business  in  Spain  as  they 
have  legal  capacity  to  engage  in  imder  the  law  of  their 
countrj^,  whereas  in  all  matters  relating  to  the  organization 
of  their  business  within  the  territory  of  Spain,  to  their  com- 
mercial acts  and  to  the  jurisdiction  of  the  courts,  they  are 
subject  to  the  Spanish  law.  This  provision  is  to  be  under- 
stood without  prejudice  to  the  stipulations  of  international 
treaties. 

Even  though  the  phraseology  of  the  law  in  other  countries 
may  be  different  and  in  some  cases  reference  is  made  not  to 
the  law  of  the  country  but  to  the  law  of  the  domicil,  as,  for 
example,  in  Argentina,  the  fundamental  principles  of  inter- 
national law  upon  this  matter  are  accepted,  as  expressed  in 
article  15  of  the  Spanish  code,  by  all  the  Latin-.Ajnerican 
countries  which  follow  the  principle  of  equaUty  between 
foreigners  and  citizens  in  commercial  matters. 

We  may  classify  the  Latin-American  countries  into  the 
following  systems: 

1st.  Those  which  declare  that  foreigners  and  citizens 
enjoy  legal  equaUty  in  relation  to  commerce. ^'^ 

39  Art.  15. 

i*  Spain,  15;  Argentina,  6;  Brazil,  39;  Chile,  57,  c.  c;  Colombia,  19;  Costa 
Rica,  21  c.  c,  12  Const,  and  Art.  14  of  the  law  of  Dec.  21,  1886,  which  repealed 
art.  19  of  the  code  of  commerce;  Guatemala,  18;  Paraguay,  law  of  May  20, 
1845,  Art.  1;  Uruguay,  31. 

The  Spanish  law  of  July  4,  1870,  relating  to  foreigners  was  in  force  in  Cuba, 
and  according  to  the  military  government's  declaration  of  Jan.  1,  1899,  it  is  still 
in  force  in  the  island. 

A  law  which  imposed  unequal  contributions  or  taxes  upon  foreigners  other 
than  those  imposed  upon  citizens  was  held  unconstitutional.  BrazU,  Corte  de 
A-peloQao  de  Capital  Federal,  May  9,  1898,  Revista  de  Jurisprudenda,  vol.  4, 
pp.  59-76. 

In  reference  to  Brazil  see  also  Const.,  article  13,  decrees  No.  123  of  Nov.  11, 
1892,  and  No.  2,304  of  July  2,  1896. 


MERCHANTS  83 

2d.  Those  which  leave  the  matter  to  be  decided  by 
treaties  and  in  default  thereof  proclaim  the  principle  of 
reciprocity.^''^ 

3d.  The  code  of  Nicaragua,  ^"^  which,  while  declaring 

equality  between  foreigners  and  citizens  in  commerce, 

subjects  that  equality  to  the  condition  that  he  possess  a 

commercial  establishment  in  the  republic. 

In  Venezuela  the  law  of  June  24,   1919,  declares  that 

aliens  shall  enjoy  the  same  rights  as  Venezuelans  with  the 

exceptions  established  in  the  same  or  other  laws.     Aliens 

are  divided  into  two  classes,  resident  and  transient.    Aliens, 

in  arriving  in  Venezuela,  shall  present  themselves  within 

101  Mexico,  12,  14  and  article  32  of  law  of  May  28,  1886;  Bolivia,  6. 

Article  33  of  the  Mexican  constitution  of  1857  provided  that  aliens  are  en- 
titled to  the  guarantees  granted  to  man  by  the  first  section  of  that  constitution, 
except  that  in  all  cases  the  government  has  the  right  to  expel  'pernicious  for- 
eigners. 

This  provision  was  a  source  of  insecurity  for  foreigners  in  that  country. 

The  new  constitution  provides  as  follows :  .  .  .  "  but  the  execw/we  shall  have 
the  exclusive  right  to  expel  from  the  republic  forthwith,  and  without  judicial 
process,  any  foreigner  whose  presence  he  may  deem  inexpedient. 

Article  27  of  the  same  constitution  provides,  with  reference  to  foreigners  as 
follows: — "Only  Mexicans  by  birth  or  by  naturalization  and  Mexican  com- 
panies have  the  right  to  acquire  ownership  in  lands,  waters  and  their  ap- 
purtenances, or  to  obtain  concessions  to  develop  mines,  waters  or  mineral 
fuels  in  the  Republic  of  Mexico.  The  Nation  may  grant  the  same  right  to 
foreigners,  provided  they  agree  before  the  Department  of  Foreign  Affairs  to  be 
considered  Mexicans  in  respect  to  such  property,  and  accordingly  not  to  invoke 
the  protection  of  their  governments  in  respect  to  the  same,  imder  penalty,  in 
case  of  breach,  of  forfeiture  to  the  Nation  of  property  so  acquired.  Within  a 
zone  of  100  kilometers  from  the  frontiers,  and  of  50  kilometers  from  the  sea 
coast,  no  foreigner  shall  under  any  condition  acquire  direct  ownership  of  lands 
and  waters." 

"Commercial  stock  companies  shall  not  acquire,  hold,  or  administer  rural 
properties.  Companies  of  this  nature  which  may  be  organized  to  develop  any 
manufacturing,  mining,  petroleum  or  other  industry,  excepting  only  agricul- 
tural industries,  may  acquire,  hold  or  administer  lands  only  in  an  area  abso- 
lutely necessary  for  their  establishments  or  adequate  to  serve  the  purposes 
indicated,  which  the  Executive  of  the  Union  of  the  respective  State  in  each  case 
shall  determine." 

"Excepting  charitable  corporations  and  banks  no  other  civil  corporation  may 
hold  or  administer  on  its  own  behalf  real  estate  or  mortgage  loans  derived 
therefrom,  with  the  single  exc(!ption  of  I)uildiags  designed  directly  and  imme- 
diately for  the  purposes  of  the  institution." 

'"2  Art.  11. 


84  LATIN-AMEKICAN    COMMERCIAL   LAW 

fifteen  days  before  the  highest  political  authority  in  their 
place  of  residence  to  prove  their  identity,  theii*  intentions  of 
settling  in  Venezuela  and  the  business  or  occupation  in 
which  they  intend  to  engage.  Aliens  shall  observe  strict 
neutrality  in  regard  to  Venezuelan  national  affairs.  Those 
who  infringe  this  neutrality  shall  be  considered  dangerous 
persons  and  may  be  deported  from  the  republic.  They  shall 
not  have  the  right  to  take  recourse  to  diplomatic  means 
until  all  legal  means  have  been  exhausted  and  it  is  evident 
that  justice  has  been  defaulted.  They  shall  have  the  right, 
like  citizens,  to  indemnity  from  the  government  for  damage 
caused  intentionally  in  times  of  war  by  legally  constituted 
authorities  acting  in  their  official  capacity.  Entry  to 
Venezuela  is  forbidden  to  aUens  disturbing  the  public  peace, 
or  whose  presence  may  jeopardize  the  international  relations 
of  the  republic. 


CHAPTER  V 

MERCANTILE   REGISTRY 

Spain. — Estadistica  del  registro  mercantil  formada  por  la  direcci6n  general 
de  los  registros.  .  .  .  Ed.  oficial.    Madrid,  1901. 

An  extensive  report  on  the  registration  of  commercial  firms  and  associations 
in  the  various  comitries  of  Latin-America,  including  English  translations  of  the 
texts  of  the  law,  is  printed  in  the  British  Parliamentary  Papers,  House  of 
Commons  Sess.  Papers,  1908,  vol.  107  [Cd.  4420]. 

Object  of  the  commercial  registry. 

Publicity  is  one  of  the  characteristic  needs  of  commerce. 
The  more  advanced  the  methods  of  doing  business,  the 
greater  the  benefits  derived  from  publicity. 

It  is  necessary,  however,  to  distinguish  between  two 
classes  of  necessity  met  by  pubUcity,  the  one  economic,  the 
other  legal.  The  first  is  voluntarily  undertaken  by  merchants 
in  any  manner  they  may  deem  most  suitable — by  means  of 
the  press,  by  signs,  labels,  marks,  pictures  or  any  other 
device  to  attract  the  attention  and  patronage  of  the  public. 

As  the  very  effectiveness  of  this  method  of  economic 
publicity,  however,  may  subject  the  public  to  deception,  the 
law  has  created  a  system  of  publicity  designed  not  for  the 
benefit  of  the  merchant  chiefly,  but  for  the  protection  of  the 
public.  This  system  is  the  Commercial  Registry.  Economic 
publicity  is  a  privilege  widely  exercised  by  merchants; 
legal  publicity  is  its  natural  corresponding  obligation. 

The  distinction  between  the  matricula  and  the  Commer- 
cial Registry  and  the  evolution  of  the  one  into  the  other  will 
be  explained  presently. 

Matricula  of  merchants. 

When  mercantile  law  regulated  not  commercial  acts  as 
such,  but  the  acts  of  a  certain  class  of  the  community,  it  was 
necessary  to  have  a  list  of  merchants  in  every  locality  and 

85 


86  LATIN-AMERICAN    COMMERCIAL   LAW 

that  list  was  the  first  form  of  pubHcity  adopted  by  the  law. 
Such  was  the  origin  of  the  matricula  which  still  exists  in 
Argentina/  Bolivia/  Brazil/  Ecuador/  Nicaragua/  Pan- 
ama ^  and  Uruguay^ 

The  matricula  was  kept  in  the  beginning  by  administrative 
authorities,  who  passed  upon  the  title  of  an  applicant  to 
admission  thereto.  Now  only  Bohvia/  Nicaragua^  and 
Panama  ^°  preserve  this  system.  In  Panama  ^^  however, 
decisions  rendered  by  the  governors  of  the  provinces  refusing 
to  matriculate  a  merchant  may  be  revised  by  the  courts. 

In  Argentina,^-  in  Brazil, ^^  Colombia, ^^  Ecuador  ^^  and 
Uruguay, ^^  the  matricula  is  kept  by  the  commercial  court. 

Contents  of  the  matricula. 

The  matricula  must  contain,  in  Argentina  ^^  and  Uruguay  ^^: 
a,  the  name,  status  and  citizenship  of  the  merchant,  and  in 
case  of  a  partnership  or  corporation,  the  names  of  the 
partners  and  the  firm  name  adopted;  h,  the  line  of  business 
engaged  in;  c,  the  location  of  the  enterprise;  d,  the  name  of 
the  manager,  factor  or  employee  at  the  head  of  the  house; 
and  e,  the  papers  showing  the  capacity  to  trade  in  case  of  a 
married  woman  or  a  minor. 

In  Brazil  ^^  the  same  information  is  required  except  the 
merchant's  line  of  business. 

In  Bolivia  -°  the  party  must  furthermore  state  the  capital 
invested  in  the  business  and  whether  the  trade  is  retaU  or 
wholesale. 

Ecuador  -^  also  requires  in  case  of  a  partnership,  the  names 
of  the  unlimited  partners,  a  copy  of  the  signature  of  the 
managers  and  of  the  circulars  advertising  the  establishment, 
the  continuation  or  the  alteration  of  the  commercial  organi- 
zation or  business. 


1  Art.  25. 

2  Art.  8. 

'  Art.  4. 

*  Art.  21. 

6  Art.  6. 

« Art.  45. 

■>  Art.  32. 

8  Art.  8. 

"  Arts.  6,  7,  8. 

10  Art.  48. 

"  Art.  53. 

12  Art.  25. 

"  Art.  4. 

"  Art.  32. 

"  Art.  21. 

i«  Art.  32. 

"  Art.  27. 

"  Art.  34. 

■8  Art.  6. 

^  Art.  10. 

"  Arts.  22,  25. 

MERCANTILE    REGISTRY  87 

Panama  ^^  requires :  a,  the  commercial  name  of  the  party 
or  firm;  h,  the  name,  age,  status  and  citizenship  of  the 
individual  or  individuals  who  are  represented  in  the  firm 
name;  c,  the  line  of  business;  d,  the  date  on  which  the  person 
commenced  or  intends  to  commence  business ;  e,  the  location 
of  the  main  office;  /,  the  name  of  the  manager,  factor  or 
employee  in  charge  of  the  estabhshment ;  g,  the  memorandum 
of  inscription  in  the  commercial  registry,  in  case  of  a  partner- 
ship or  corporation;  h,  the  documents  duly  registered, 
showing  the  legal  capacity  to  trade  of  emancipated  minors 
and  married  women;  i,  a  copy  of  the  signature  of  the  mer- 
chant. 

Effects  of  the  matriculation. 

Argentina  provides  that  the  inscription  in  the  matricula 
confers  the  following  privileges  and  advantages :  a,  the  books 
of  matriculated  merchants  possess  evidential  value;  b,  the 
merchant  can  request  a  mercantile  moratorium;  ^^  c,  they 
can  request  a  rehabilitation  after  bankruptcy;  d,  they  can 
perform  the  functions  of  a  receiver. 

In  Bolivia  the  law  of  Aug.  8,  1842,  provides  that  merchants 
even  though  not  matriculated  are  subject  to  commercial 
courts. 

Panama-"*  provides  that  when  a  merchant  fails  to  comply 
with  the  requirements  of  the  matricula,  he  can  be  compelled 
by  the  competent  authorities  to  do  so  under  penalty  of  a  fine 
of  from  twenty-five  to  one  hundred  balboas,  (  =U.  S.  dollars) 
and  until  he  does  comply  he  cannot  enjoy  any  of  the  benefits 
the  law  grants  to  merchants.  It  likewise  provides  -''  that  a 
commercial  name  registered  in  the  malricala  cannot  be 
registered  by  anyone  but  the  owner  thereof  or  his  authorized 

"  Arts.  49  to  51. 

^'  The  benefits  of  the  moratorium  granted  by  creditors  must  be  extended  to  a 
person  when  by  reason  of  the  lapse  of  time  after  matriculation  it  is  not  to  be 
presumed  that  he  matriculated  himself  with  the  sole  purpose  of  enjoying  the 
benefits  thereof.  Argentina,  Camara  de  Apelaci6n  de  la  Capital  Federal, 
Jurisp.  Com.,  vol.  I,  p.  119.    Ser.  5^  vol.  36. 

Cf.  Infra,  Chapters  on  Bankruptcy.  The  rehahilitacidn  is  the  reestablish- 
ment  of  the  bankrupt  in  the  exercise  of  his  civil  rights  lost  by  bankruptcy. 

^*  Art.  46.  26  Art.  52. 


88  LATIN-AMERICAN    COMMERCIAL    LAW 

agent,  thus  recognizing  and  protecting  the  right  of  property 
in  a  commercial  name;  and,  finally,  it  provides  that  only 
matriculated  merchants  are  allowed  to  register  their  papers 
in  the  commercial  registry. 

Modern  codes  have  experienced  considerable  difficulty  in 
enumerating  the  benefits  derived  from  matriculation,  so  that 
most  of  them  are  silent  on  this  particular  point. -^ 

As  a  matter  of  fact  matriculation,  in  subjecting  merchants 
to  the  law  of  commerce,  does  not  intend  to  confer  on  them  a 
privilege,  for  while  that  law  is  sometimes  beneficial,  it  often 
is  not;  but  on  the  contrary  matriculation  imposes  on  mer- 
chants strict  obligations  and  only  aims  to  foster  the  circula- 
tion of  wealth  for  the  well-being  of  the  community. 

The  Spanish  code  of  1829,  following  the  tradition,  pro- 
vided for  the  matriculation  of  merchants;  but  at  the  same 
time  it  introduced  the  institution  of  the  commercial  registry, 
recording  facts  in  relation  to  the  financial  condition  of  a 
merchant  for  the  information  of  the  pubhc.  It  provided  for 
the  inscription  in  the  registry  of  documents  relating  to  the 
dowry  of  the  merchant's  wife,  the  pecuniary  stipulations  of 
the  matrimonial  contract,  articles  of  organization  of  partner- 
ships or  corporations,  and  powers  of  attorney  given  by 
merchants.  ^^ 

On  the  other  hand,  the  new  code  of  Spain  omitted  the 
matricula  as  superfluous  and  devoted  more  attention  to  the 
commercial  registry.  Chile,  Costa  Rica,  Honduras,  Mexico, 
Peru,  San  Salvador  and  Venezuela  have  adopted  this  single 
system  of  legal  publicity. 

Method  of  publicity  established  in  Mexico. 

Mexico  -^  also  requires  a  merchant :  a,  to  announce  the 

29  In  Brazil  it  has  been  so  difficult  that  several  times  it  has  been  necessary 
to  make  explanations,  as  in  decree  No.  930  of  March  10,  1852;  order  of  the 
Ministry  of  Justice  No.  188  of  July  2,  1853;  decision  No.  IV  of  July  6,  1857, 
rendered  by  the  commercial  courts  of  the  capital  and  of  Bahia,  Pernambuco 
and  Maranhao;  decree  No.  1597  of  May  1,  1855;  and  decree  No.  596  of  July  19, 
1890. 

"Argentina,  25-35;  Bolivia,  8-20;  Ecuador,  21-27;  Nicaragua,  13,  14; 
Panama,  45-55;  Uruguay,  32-45. 

28  Art.  17. 


MERCANTILE   REGISTRY  89 

opening  of  his  establishment  by  means  of  circulars  addressed 
to  merchants  in  his  own  town,  or  of  the  place  where  he  has 
branches  or  other  commercial  connections.  These  circulars 
must  contain  the  name  of  the  establishment  or  office,  its 
location  and  purpose,  the  name  and  signature  of  the  person  in 
charge  of  its  management;  in  case  of  a  partnership  or 
corporation,  its  character,  name  of  the  manager,  the  firm 
name  and  the  persons  authorized  to  sign  it,  and  a  statement 
of  their  houses,  branches  or  agencies,  should  there  be  any; 
b,  also  to  announce  by  means  of  circulars  any  changes  made 
in  the  foregoing  details;  c,  to  publish  in  the  official  paper, 
and  in  default  thereof  in  some  other  paper,  the  above 
mentioned  circulars,  as  well  as  notice  of  the  fact  that  the 
house  has  been  put  in  liquidation  or  that  the  business  has 
been  wound  up. 

Organization  of  the  commercial  registry. 

The  Commercial  Registry  is  an  office  of  the  state,  which, 
under  the  direction  of  a  public  official  called  the  Registrar,  is 
designed  to  inscribe  commercial  persons  and  such  acts 
relating  to  mercantile  enterprises  as  the  interests  of  com- 
merce may  require. 

Article  16  of  the  Spanish  and  Peruvian  codes  reads: 

''In  each  of  the  capitals  of  the  provinces  there  shall  be  a 
commercial  registry,  divided  into  two  separate  books:  the 
first  for  individual  merchants,  the  second  for  partnerships 
and  corporations.  In  the  provinces  of  the  coast  and  in  those 
inland  provinces  in  which  navigation  may  be  carried  on,  the 
registry  must  have  another  book  for  the  inscription  of 
vessels." 

Argentina  ^^  and  Uruguay  ^^  provide  that  there  must  be  as 
many  books  in  the  office  of  the  registry  as  there  are  kinds  of 
commercial  acts  to  inscribe;  that  is,  five  volumes  in  Argen- 
tina and  four  in  Uruguay. 

Bolivia  ^^  and  Venezuela  ^-  require  a  single  book. 

2»  Art.  35.  »»  Art.  46, 

31  Art.  25.  "  Art.  21. 


90  LATIN-AMERICAN    COMMERCIAL   LAW 

In  Costa  Rica,^^  besides  the  book  for  the  general  register, 
there  is  a  special  book  for  powers  of  attorney. 

In  Chile, ^"^  Ecuador,  Honduras,  Mexico,  Nicaragua  and 
San  Salvador  no  mention  is  made  of  the  number  of  books. 

Acts  and  contracts  subject  to  inscription  in  the  registry. 

The  kinds  of  commercial  acts  or  contracts  which  m.ust  be 
inscribed  vary  from  country  to  country,  and  we  may  classify 
the  Latin- American  codes  in  this  respect  into  two  systems: 
(a)  those  which  follow  the  Spanish  code  of  1829; 
(6)  those  which  follow  the  Spanish  code  of  1885. 
1st  System:  The  documents  which  must  be  inscribed 
are :  a,  those  which  specify  the  property  managed  by  the 
merchant,   but   belonging  to  his  wife;   b,   articles   of 
organization  of  a  partnership  or  corporation ;  c,  powers  of 
attorney  given  to  factors  and  clerks;  d,  authorization  to 
married  women  and  to  minors  to  do  business,   and 
revocations  thereof.  ^^ 
BoUvia,  Honduras  and  San  Salvador  do  not  require  the 
inscription  of  the  authorization  given  to  married  women  and 
to  minors. 

Chile,  Ecuador,  Honduras  and  San  Salvador  require  the 
inscription  of  documents  specifying  the  property  which 
belongs  to  the  merchant's  children. 

In  Ecuador,  hcenses  for  brokers  and  judicial  declarations 
of  bankruptcy  require  inscription. 

2d  System.  On  the  registration  page  of  every  merchant 
or  commercial  association  there  shall  be  recorded: 

a,  name  or  firm  name;  h,  hne  of  business;  c,  date  on 
which  the  business  was  begun  or  is  to  begin;  d,  the 
principal  residence  or  home  office,  specifying  the 
branches  already  established;  and  in  addition,  each 
branch  must  be  registered  in  the  registry  of  the  province 
in  which  it  is  located;  e,  deeds  (pubUc  instruments)  of 

"  Arts.  2-5  of  law  No.  13  of  June  21,  1901. 

'^  Decree  of  August  1,  1866,  regulates  the  Commercial  Registry  in  Chile. 
»5  Argentina,  36;  Bolivia,  21;  Chile,  22;  Ecuador,  28;  Honduras,  22;  Nicar- 
agua, 14;  San  Salvador,  12;  Uruguay,  47. 


MERCANTILE    REGISTRY  91 

organization  of  commercial  associations,  whatever  their 
object  and  name;  as  well  as  notices  of  all  changes, 
liquidation  and  dissolution  of  commercial  associations; 
/,  general  powers  of  attorney,  as  well  as  their  revocation, 
given  to  managers,  factors,  clerks,  and  other  agents; 
g,  the  authorization  given  by  the  husband  to  his  wife 
to  engage  in  business  and  the  legal  or  judicial  authoriza- 
tion granted  to  the  married  woman  for  the  administra- 
tion of  her  property  in  case  of  the  absence  or  incapacity 
of  her  husband;  h,  the  revocation  of  the  authorization  to 
trade  given  to  the  wife;  i,  deeds  constituting  dowries, 
matrimonial  contracts  and  instruments  proving  that 
the  property  belongs  to  the  merchant's  wife;  j,  the  issue 
of  shares,  bonds,  and  the  obligations  of  railways  and 
every  kind  of  corporation  engaged  in  public  works, 
credit,   et  cetera;  expressing  the  series,  number  and 
denomination  of  securities  of  every  issue;  their  interest, 
amortization  and  redemption,  should  these  be  shown; 
the  total  amount  of  the  issue;  and  the  property,  works, 
rights,  or  mortgages,  if  any,  pledged  or  liable  for  their 
payment;  there  shall  also  be  recorded  in  accordance 
with  the  foregoing  provisions,  issues  of  securities  by 
private  parties;  k,  the  issue  of  bank-notes,  stating  the 
date,  kind,  series,  amount  and  denomination  of  every 
issue;  I,  the  certificates  of  industrial  property,  trade- 
marks and  patents  granted  in  accordance  with  the  law. 
Foreign    commercial    associations    wishing    to    establish 
themselves  or  create  branches  in  Spain  must  present  and 
have  filed  in  the  registry,  besides    their  by-laws  and  the 
documents  required  for   Spanish   companies,   a   certificate 
issued  by  the  Spanish  consul  stating  that  they  have  been 
constituted  and  authorized  in  accordance  with  the  laws  of 
their  respective  country  of  origin. 

In  the  register  of  vessels  notice  shall  be  taken  of: — 

The  name  of  the  vessel;  her  equipment;  the  system  and 

power  of  her  engines;  if  a  steamer,  the  nominal  or  indicated 

horse-power;  place  of  construction  of  hull  and  engines;  year 

of  construction;  material  of  the  hull,   stating  whether  of 


92  LATIN-AMERICAN    COMMERCIAL    LAW 

wood,  iron,  steel  or  of  mixed  substances ;  main  dimensions  of 
length,  breadth  of  beam  and  depth  of  hold;  gross  and  net 
tonnage;  distinctive  signal  by  which  she  is  known  in  the 
international  code  of  signals;  and  lastly,  the  names  and 
residences  of  the  owners  of  the  vessel.  There  must  also  be 
recorded  any  change  effected  in  the  ownership  of  the  vessel 
or  in  any  of  the  foregoing  details,  as  well  as  the  imposition, 
modification  or  cancellation  of  liens  or  obUgations  of  every 
kind  upon  the  vessel. 

This  system  is  substantially  followed  by  the  codes  of 
Mexico,^''  Panama, ^^  Peru,^'^  Costa  Rica^^  and  Venezuela, '*" 
but  principally  in  the  first  three.  Mexico  and  Panama 
require  in  addition  that  the  documents  relating  to  a  minor's 
authorization  to  trade,  and  in  Mexico,  that  the  property  of 
the  merchant's  children  managed  by  him,  be  inscribed. 
Peru  relieves  from  the  requirement  of  registry,  bank-notes, 
bonds  or  securities;  but  extends  it  to  brokers'  licenses  and  to 
declarations  of  bankruptcy,  their  revocation,  the  appoint- 
ment of  receivers  and  the  rehabilitation  of  the  bankrupt. 
Venezuela  requires  the  inscription  of  the  authorization  given 
to  the  father  or  guardian  for  continuing  the  business  belong- 
ing to  a  minor;  of  the  sale  of  a  conmiercial  enterprise  or  its 
stock  in  bulk  or  in  portions,  in  such  manner  that  the  owner 
ceases  to  carry  on  the  enterprise;  and  of  licenses  granted  to 
brokers. 

New  system  of  Cuba. 

According  to  article  2  of  the  regulations  of  December  21, 
1885,  for  the  commercial  registry  of  Spain,  in  force  in 
Cuba  by  virtue  of  royal  decree  of  February  12,  1886,  the 
registrars  of  property  in  the  capital  of  every  province,  and  in 
default  of  such,  the  agents  of  the  government  in  the  munici- 
pal courts  were  to  take  charge  provisionally  of  the  commer- 
cial registry;  and  military  order  No.  400  of  September  28, 
1900,  provided  that  the  registrars  of  property  in  the  capital  of 
each  province  shall  provisionally  take  charge  of  the  commer- 

3«  Art.  2L  "  ^^rts.  57-58.  '»  Arts.  15  to  22. 

39  Art.  2  of  decree  of  June  21,  1901.  ^»  Art.  22. 


MERCANTILE    REGISTRY  93 

cial  registry  as  long  as  the  commercial  registrars  were  not 
appointed,  their  jurisdiction  being  confined  to  the  limits  of 
the  province.  Military  order  No.  400  has  been  comple- 
mented by  decree  No.  1056  of  1908,  which  establishes  the 
commercial  registrars,  decree  No.  65  of  1909,  and  others  of 
minor  importance. 

The  same  order  400  of  1900,  provides  in  article  1  that 
after  the  date  of  its  promulgation  ''all  merchants  or  indus- 
trials, owners  of  establishments  wholesale  or  retail,  in  every 
hne  of  commerce  or  industiy  shall  inscribe  the  same  in  the 
commercial  registry,"  and  article  4  prescribes  that  in  case 
the  inscription  is  not  made  within  eight  days  after  the  mer- 
chant or  industrial  starts  business  or  opens  his  establishment, 
he  will  be  fined  $25.00  United  States  currency.  Finally 
article  19  of  the  order  imposes  upon  registrars  the  obli- 
gation of  notifying  the  Treasury  Department  of  cases  in 
which  persons  have  become  hable  to  said  fine.  Married 
women  who  trade  must  state  that  fact  in  the  commercial 
registry.'*^ 

A  most  important  change  introduced  by  order  400  enables 
any  merchant  or  industrial  inscribed  in  the  commercial 
registry,  who  has  an  evidence  of  credit  consisting  in  a  prom- 
issory note,  an  account  current,  or  receipt  signed  by  another 
inscribed  merchant,  and  originating  in  money  loaned  or 
goods  supplied  or  services  rendered,  to  inscribe  his  credit 
in  the  registry,  presenting  the  original  document  and  swear- 
ing to  the  authenticity  of  the  debtor's  signature.  The  in- 
scription is  to  be  made  by  means  of  an  entry  signed  by  the 
creditor  under  oath  in  the  corresponding  book  of  the  register, 
and  a  full  copy  of  the  document  recorded.  Should  the  debt 
be  evidenced  by  a  pubhc  instrument  executed  by  the  debtor, 
the  personal  appearance,  the  oath  of  the  creditor  and  the 
full  copy  of  the  document  are  not  necessary,  the  abstract  of 
the  document  being  sufficient. 

Order  34  of  1902  in  the  matter  of  railway  lands  contains 
some  provisions  relating  to  the  commercial  registry. 

"  Art.  29,  of  the  rcKulHt-ioiis  of  December  21,  1885. 


94  LATIN-AMERICAN   COMMERCIAL   LAW 

Enforcement  of  the  law  of  commercial  registry. 

There  are  four  systems  followed  for  the  enforcement  of  the 
law  of  conmiercial  registry,  namely: 

1.  The  German  system.  According  to  this  system  the 
failure  to  register  is  punishable  by  fine.  This  practice 
is  followed  by  Cuba,  as  we  have  observed,  by  BoUvia,^^ 
providing  that  in  case  a  document  which  must  be  regis- 
tered is  produced  in  court  without  prior  registration, 
the  parties  must  pay  a  fine  of  5%  of  the  amount  ex- 
pressed in  the  document.  Ecuador  '^^  imposes  a  fine  of 
one  hundred  pesos  ($48.70  U.  S.)  upon  the  parties  who 
fail  to  register  and  twenty  pesos  upon  the  pubUc  official 
before  "whom  the  document  was  executed,  or  the  judge 
who  issued  the  decrees  or  judgments  which  ought  to 
have  been,  but  were  not  registered  in  the  commercial 
court  and  in  the  office  of  the  registrar;  and  imposes  a 
fine  of  twenty  pesos  upon  the  clerk  of  the  commercial 
court  who  fails  to  draw  up  an  abstract  of  the  papers  in- 
scribed or  fails  to  preserve  the  abstract  for  six  months. 
Venezuela  ^^  has  a  like  provision  with  the  difference  that 
the  fine  imposed  is  500  bolivars  ($96.50  U.  S.)  for  the 
parties  and  100  bohvars  for  the  officials,  judges  and 
clerks.  In  San  Salvador  the  fine  is  imposed  only  upon 
the  parties  and  the  amount  is  from  25  to  100  pesos  (from 
about  $10  to  $39.78  U.  S.). 

2.  The  Spanish  system.  Although  inscription  is  not 
compulsory  upon  individual  merchants  but  only  upon 
commercial  associations  and  with  respect  to  vessels,  the 
law  endeavors  indirectly  to  effect  the  registration  of 
certain  kinds  of  commercial  instruments  by  individual 
merchants  as  well  as  by  associations,  by  depriving  the 
unregistered  commerical  instrument  of  legal  effect  as 
against  third  parties.  It  will  be  recalled  that  the  pur- 
pose of  the  institution  is  to  give  publicity  to  certain 
kinds  of  acts  and  contracts.'*^ 

«  Art.  31.  "  Art.  31.  "  Arts.  24,  25,  26. 

«  Spain,  24,  26  to  29;  Costa  Rica  law  of  June  21,  1901,  Art.  4;  Mexico,  26 
and  27;  Panama,  68;  Peru,  24,  26  to  29. 


MERCANTILE   REGISTRY  95 

In  Mexico,  the  bankruptcy  of  a  merchant  who  has  failed 
to  inscribe  his  documents,  is  considered  fraudulent. 

The  new  code  of  Panama  has  devised  a  useful  system 
which  is  calculated  to  avoid  serious  difficulties.  It  provides 
that  besides  the  definite  inscription  in  the  commercial 
registry,  provisional  inscription  covering  the  following 
documents  can  be  made  in  the  same  books  in  which  the 
definite  ones  are  entered: 

(a)  matrimonial  stipulations,  whether  entered  into 
before  or  after  marriage; 

(6)  demands  for  separation  of  matrimonial  property 
or  interdiccion  of  merchants;  ^^ 

(c)  documents  of  transfer  or  mortgage  of  vessels; 

(d)  minutes  of  partnerships  or  corporations  embody- 
ing decisions  as  to  the  reduction  or  increase  of  the 
corporate  capital,  or  the  merging  or  extension  of  the 
period  of  duration  of  commercial  associations; 

(e)  all  other  acts  subject  to  registration,  when  the 
registrar  is  in  doubt  as  to  the  legality  of  a  definite  in- 
scription of  such  documents.  These  provisional  regis- 
trations are  made  definite,  as  to  those  referred  to  under 
letter  a,  when  the  certificate  of  marriage  is  presented; 
as  to  those  covered  by  letter  6,  when  a  final  judgment 
is  obtained;  as  to  those  covered  by  letter  c,  when  the 
contract  is  produced;  as  to  those  covered  by  letter  d, 
when  a  certificate  is  presented,  showing  that  there  was 
no  opposition  to  the  decision  taken  or  that  the  opposi- 
tion was  deemed  irrelevant;  as  to  those  covered  by 
letter  e,  when  a  judgment  declares  unfounded  the 
doubts  of  the  registrar.  These  provisional  registrations 
lapse  if,  six  months  after  they  have  been  made  they 

Commercial  associations  are  bound  to  comply  with  the  law  of  registry,  but 
failure  to  do  so  does  not  deprive  them  of  the  rights  derived  from  contracts 
entered  into  by  them.  Mexico,  Segunda  Sala  del  Tribunal  Superior  del  Dis- 
trito  Federal,  Ruiz  y  Hermanos  v.  Mijaros,  Sept.  11,  1911,  and  Juzgado  5. 
Menor  del  Distrito  Federal,  Singer  Mfg.  Co.  v.  Gutierrez,  Nov.  6,  1889, 
Aunario  de  Leg.  y  Jur.  Sec.  de  Jur.,  vol.  VII,  p.  31. 

^  Hy  inlerdiccidn  is  meant  the  status  of  a  person  who  has  been  declared  in- 
cotn|)('tent  to  contract  obligations  on  account  of  insanity. 


96  LATIN-AMERICAN   COMMERCIAL   LAW 

are  not  made  definite,  unless  they  refer  to  shares,  or 
deprivation  of  rights  (incompetence),  or  separation  of 
matrimonial  property,  in  which  case  the  provisional 
inscription  lasts  until  a  final  judgment  is  rendered. 

3.  The  Chilean  system.  The  diff"erence  between  the 
Chilean  and  the  Spanish  system  lies  in  the  fact  that 
according  to  the  former,  documents  not  registered  do 
not  produce  any  efi'ect  upon  the  parties  to  them,  but 
produce  their  full  effect  with  respect  to  third  parties.  ^^ 
Nevertheless,  in  Argentina  and  Uruguay  partners  in 
rights  or  interests  acquired  by  the  association  cannot 
avail  themselves  of  lack  of  registration  as  a  defense. 

4.  System  of  Nicaragua.  According  to  the  Nicaraguan 
code/^  unregistered  contracts  of  commercial  associa- 
tions are  without  legal  effect  among  the  associates;  but 
with  respect  to  the  obligations  contracted  with  a  third 
party,  they  are  binding  only  between  the  latter  and  the 
contracting  associate.  Unregistered  powers  of  attorney 
are  entirely  null  and  void. 

Connection  between  the  commercial  registry  and  the  gen- 
eral registry  of  property. 

Notwithstanding  the  independence  of  the  commercial 
from  the  civil  law,  the  commercial  codes  of  Spain  ^^  and 
Peru  ^°  provide  that  the  merchant's  wife  has  a  right  of 
preference  over  the  other  creditors  of  her  husband  with 
respect  to  all  real  property  and  rights  in  it  belonging  to  her, 
notwithstanding  the  fact  that  the  corresponding  documents 
are  not  recorded  in  the  commercial  registry,  provided  they 
have  been  entered  in  the  registry  of  property. 

Mexico  ^^  and  Panama  ^^  provide,  in  a  general  way,  that 

^  Chile,  24;  Argentina,  41;  Honduras,  24;  Uruguay,  52,  53. 

The  fact  of  inscribing  articles  of  agreement  of  a  commercial  association 
implies  an  acknowledgment  that  it  is  intended  to  engage  in  commerce.  Argen- 
tina, Jur.  Com.,  vol.  2,  p.  116,  Ser.  5*. 

In  order  to  have  a  commission  agent  inscribed  in  the  commercial  registry 
he  must  prove  that  he  is  a  merchant.    Ibid.,  vol.  1,  p.  166,  Ser.  4. 

«  Arts.  17,  18.  ^«  Art.  27.  «•  Art.  27. 

"  Art.  26.  ^2  Art.  67. 


MERCANTILE   REGISTRY  97 

notwithstanding  the  omission  of  inscription  in  the  commer- 
cial registry  of  documents  relating  to  real  estate  or  rights  in 
it,  they  have  legal  effect  as  to  third  parties  provided  they 
have  been  entered  in  the  registry  of  property  according  to 
the  civil  law. 

Foreign  commercial  associations. 

Foreign  commercial  associations  desiring  to  establish 
branches  in  the  country  must  record  in  the  commercial 
registry,  in  addition  to  their  by-laws  and  other  documents 
required  by  the  national  law  for  all  national  commercial 
associations,  a  certificate  from  the  national  consul  to  the 
effect  that  said  associations  have  been  organized  in  accord- 
ance with  the  laws  of  the  country  of  origin. ^^ 

In  Argentina,  by  law  number  8867  of  February  6,  1912, 
foreign  corporations  are  dispensed,  under  condition  of 
reciprocity,  from  the  obligation  imposed  on  them  by  article 
287  of  the  commercial  code,  of  obtaining  a  preliminary 
authorization  from  the  Executive  in  order  to  do  business  in 
Argentina;  they  need  merely  show  that  they  are  regularly  con- 
stituted in  their  home  countries  and  register  their  by-laws. 

In  Mexico  "  foreign  commercial  associations  must  in- 
scribe the  first  certified  copy  (testimonio)  of  the  "  protocoliza- 
tion"  ^^  of  their  by-laws,  articles  of  agreement  and  other 
papers  referring  to  their  organization,  the  inventory  and 
last  balance  sheet,  if  they  have  any,  and  a  certificate  that 
they  have  been  organized  and  authorized  according  to  the 
law  of  the  country  of  origin,  issued  by  the  Mexican  diplo- 
matic representative  accredited  to  that  country,  and  in  his 
absence,  by  the  Mexican  consul.  Documents  proceeding 
from  foreign  countries  and  subject  to  registration  must  first 
be  protocolized  in  Mexico. 

In  San  Salvador  the  code  ^*'  provides  that  articles  of  agree- 

"  Spain,  21;  Peru,  21.  ^4  ^rt.  24. 

^*  By  leslimonio  is  meant  the  first  certified  copy  made  by  the  notary  of  a 
deed  entered  in  his  prolocolo  or  notarial  book;  and  by  protocolizaci6n  the  filing 
of  a  document  among  those  regularly  kept  by  a  notary  in  his  jjrotocolo  or  in  the 
appendix  thereof. 

sfl  Art.  12. 


98  LATIN-AMERICAN    COMMERCIAL   LAW 

ment  and  by-laws  of  commercial  foreign  associations  which 
estabhsh  branches  in  the  republic,  the  document  appointing 
a  manager  or  agents  and  a  copy  of  the  recording  of  said 
documents  and  contracts  in  the  court  of  commerce  of  the 
domicile  of  the  aforesaid  association,  are  subject  to  registra- 
tion. 

The  commercial  house  or  firm  (casca  de  comercio). 

The  commercial  hmise  or  firm  is  the  combination  of 
everything  that  constitutes  the  assets  and  habilities  of  a 
commercial  enterprise. 

The  characteristic  feature  of  a  commercial  firm  is  its 
stability;  the  owner  may  change,  but  the  firm  may  last  for 
generations.  The  firm  is  a  real  entity  and  by  means  of  its 
commercial  activity  a  sphere  of  action  is  created  for  it.  The 
commercial  house  may  have  credit  independently  of  its 
owner,  who  may  sell  or  transfer  his  interest ;  and  considering 
it  as  a  whole  and  as  a  unit,  the  firm  may  be  the  subject  of 
rights,  privileges,  powers  and  immunities  which  require 
special  attention  on  the  part  of  the  law,  as  they  have  at- 
tracted the  special  attention  of  writers  hke  Endemann  and 
Lyon-Caen.  Unfortunately  in  Latin-America  only  three 
countries,  Brazil,  Panama  and  Venezuela,  have  a  special 
section  in  their  laws  covering  this  matter,  although  the 
substance  of  the  system  may  also  be  found  in  the  codes  of 
other  countries. 

Decree  number  916  of  October  24,  1890,  in  Brazil,  provides 

that  the  registration  of  a  commercial  firm  is  optional,  but  the 

consequences  of  non-registration  of  a  merchant  or  firm  are: 

(a)  the  commercial  books  do  not  constitute  evidence; 

(6)  the  declaration  of  bankruptcy  of  a  debtor  cannot 

be   demanded ; 

(c)  a  settlement  with  creditors  cannot  be  entered  into. 
On  the  other  hand,  registration  of  a  firm  produces  the 
following  benefits: 

(a)  irrebuttable  evidence  of  the  existence  of  the  firm; 
(6)  a  presumption  that  the  firm  is  distinct  from  any 
other ; 


MERCANTILE    REGISTRY  99 

(c)  a  right  to  forbid  the  inscription  of  any  other 
similar  or  homonymous  firm. 
The  existence  of  a  commercial  firm  may  terminate: 

(a)  by  the  death  of  the  merchant  or  the  voluntary 
abandonment  of  his  occupation; 

(6)  by  liquidation  of  a  commercial  association; 

(c)  by  the  change  of  a  partnership  to  a  corporation. 
The  firm  name  cannot  be  assigned  or  transferred;  it  is 
inherent  in  the  person  who  bears  it,  and  to  assign  or  transfer 
it  would  create  a  fictitious  firm.  Merchants  or  partners  of 
commercial  associations  who  transfer  the  enterprise  to  some 
one  else,  may  authorize  him  to  add  to  his  own  name  the 
words:  ''Sucesor  de  .  .  ."  (successor  of)  the  vendor  firm. 
The  transferee  having  this  right  may  prohibit  his  transferor 
from  using  the  firm  name. 

Panama  provides  that  every  merchant  must  use  a  firm 
name,  and  inscribe  it  in  the  matricula  and  in  the  commercial 
registry;  that  no  one  else  may  use  said  name,  with  judicial 
redress  against  any  one  who  prepares  to  use  it;  ^^  that  the 
name  of  partnerships  must  include  the  name  of  one  or  more 
of  the  partners  with  some  addition  indicating  that  it  is  a 
partnership  or  limited  partnership;  and  it  must  likewise  be 
made  clear  when  the  name  applies  to  a  corporation.^^  On 
the  other  hand,  an  individual  merchant  cannot  use  a  name 
which  may  suggest  the  idea  of  association,  even  in  case  of  the 
total  transfer  of  a  commercial  house  to  him  by  an  associa- 
tion.^^ The  commercial  name  must  not  suggest  an  enterprise 
not  related  to  the  actual  business.^"  When  one  of  the  part- 
ners retires  from  a  partnership,  the  firm  name  may  continue 
unchanged,  with  the  consent  of  the  retiring  partner  or  his 
heirs,  the  consent  being  published  in  the  local  paper.*'^ 

Venezuela  provides  ^'^  that  an  individual  merchant  cannot 
use  any  other  firm  name  than  his  own;  the  firm  name  of  a 
partnership  must  contain  at  least  the  name  of  one  of  the 
partners,  with  some  indication  that  the  firm  is  a  partnership; 
a  limited  partnership  must  be  designated  by  the  name  of  one 

67  Arts.  36,  37.  ^^  Art.  39.  ^9  Art.  41. 

60  Art.  40.  "  Art.  43.  ««  Arts.  29  to  34. 


100  LATIN-AMERICAN   COMMERCIAL   LAW 

of  the  general  partners  and  some  indication  that  it  is  a 
Umited  partnership. 

Every  new  firm  must  be  distinct  from  other  firms  ah-eady 
registered. 

The  successor  in  the  use  of  the  firm  name  must  add  some 
statement  to  show  that  he  is  a  successor. 

The  assignment  of  a  mercantile  firm  name  independently 
of  the  corresponding  commercial  house  is  prohibited. 

When  there  is  a  change  in  a  partnership,  either  because  of 
the  entrance  of  a  new  partner  or  the  retirement  of  one  of  the 
former  partners  the  firm  may  subsist,  but  the  permission  of 
the  retiring  member  is  necessary  if  his  name  is  included  in  the 
firm. 


CHAPTER  VI 


COMMERCIAL   BOOKKEEPING 


Brazil. — Carvalho  de  Mendonga,  Jos6  Xavier.  Dos  libros  dos  commer- 
ciantes.    Estudo  theorico-pratico.    Sao  Paulo,  1906. 

General  principles. 

Bookkeeping,  although  a  matter  of  convenience  and  per- 
sonal benefit  to  the  merchant  himself,  is,  from  the  point  of 
\'iew  of  the  law,  a  matter  of  social  interest,  an  institution 
created  principally  for  the  benefit  of  third  parties.  The 
speed  with  which  mercantile  transactions  are  accomplished 
makesj;he  fulfillment  of  the  formalities  of  civil  contracts  an 
impossibihty;  hence  the  difficulty  of  adducing  evidence  in 
case^o^  dispute.  The  book  records  kept  by  merchants  are, 
indeed,  the  only  trace  of  many  mercantile  contracts.  By 
making  the  appropriate  entries  in  their  books,  merchants  are 
considered,  by  the  law,  as  agents  for  the  other  parties  to  the 
transaction  and  this  is  a  part  of  their  social  function. 

On  the  other  hand,  merchants  habitually  make  efforts  to 
gain  the  good  will  and  confidence  of  the  public,  which  are 
business  assets;  but  as  a  corresponding  obligation  to  the 
benefit  they  derive  from  that  confidence  and  credit,  the  law 
compels  them  to  keep  accurate  records  of  their  acts,  in  order 
that  evidence  may  be  at  hand  to  prove  them  deserving  of 
credit.  In  case  of  insolvency  they  can  thus  account  to  their 
creditors  and  to  the  community  for  the  use  they  have  made 
of  that  social  confidence,  and  the  court  is  enabled  either  to 
impose  upon  them  the  p>enalty  incurred  by  unworthy  persons 
having  a  quasi-public  social  status  or  is  in  a  position  to  de- 
clare with  certainty  that  the  insolvency  was  due  to  circum- 
stances beyond  the  control  of  human  foresight,  and  that  the 
merchant  is  still  worthy  of  the  public's  confidence,  and  may 
continue  in  business.  These  general  principles  will  serve  as 
an  aid  in  comprehending  the  legal  rules  of  bookkeeping. 

101 


102  LATIN-AMERICAN   COMMERCIAL   LAW 

Books  prescribed  by  the  law. 

A  merchant  may  keep  as  many  books  as  he  thinks  the 
management  of  his  business  requires;  but  the  law  makes  it 
compulsory  to  keep  some  books  with  certain  prescribed 
requisites  considered  appropriate  for  social  security.  The 
essential  books  are  the  journal  and  the  letter-copying  books, 
but  the  law  of  the  different  countries  varies  on  this  point.  In 
dealing  with  the  books  required,  we  may  divide  the  codes 
into  the  following  groups: 

1.  Those  which  require  five  books  or  classes  of  books, 
namely:  a,  inventory  and  balance  sheet;  h,  journal; 

c,  ledger;  d,  letter  and  telegram  copying  book;  e,  minute 
book  for  partnerships  and  corporations  and  other  books 
which  the  law  may  specially  prescribe.^ 

2.  Those  which  require  fom*  books,  namely:  a,  in- 
ventory and  balance  sheet  book;  h,  journal;  c,  ledger; 

d,  letter  and  telegram  copying  book.- 

3.  Those  which  require  three,  namely:  a,  inventories; 
h,  journal;  c,  letter  copying  book;  d,  minute  book  for 
partnerships  and  companies.^ 

4.  Finally  the  code  of  Brazil,^  which  only  requires 
the  journal,  letter-copying  book,  and  minute  book  for 
partnerships  and  stock  companies. 

Besides  these  books  generally  required,  various  provis- 
ions of  the  law  in  each  country  mention  other  books 
needed  for  special  purposes,  as  for  brokers,  companies, 
pawnshops,  etc. 

The  law  makes  no  distinction  between  individuals  and 
associations,  inscribed  or  not  inscribed,  natives  or  resident 
foreigners,  ignorant  or  learned ;  all  are  bound  to  keep  books, 
if  they  are  merchants.  But  a  distinction  is  made  in  certain 
countries  with  respect  to  the  amount  of  capital  of  the  trader 

1  Spain,  33;  Costa  Rica,  law  of  July  5,  1901,  articles  1,  8;  Honduras,  25; 
Mexico,  33,  48;  Peru,  33;  Uruguay,  65;  Panama,  73. 

2  Bolivia,  32;  Chile,  25;  Colombia,  27;  Ecuador,  35,  54;  Guatemala,  20; 
Nicaragua,  19,  37;  Venezuela,  35-50. 

'Argentina,  44;  Haiti,  8,  9,  10;  San  Salvador,  18,  also  requires  a  minute 
book  for  partnerships  and  corporations;  Santo  Domingo,  8,  9,  10;  Uruguay,  55. 
*  Brazil,  11. 


COMMERCIAL    BOOKKEEPING  103 

or  the  character  of  the  business.     The  countries  may  be 
divided  into  two  groups: 

1.  Those  which  make  no  distinction;  ^ 

2.  Those  which  distinguish  between  large  and  small 
dealers,  or  wholesalers  and  retailers.^ 

By  a  retailer  is  meant: 
(a)  In  Argentina  and  Uruguay,  one  who  sells:  things  that 
are  measured,  by  the  meter  or  by  the  liter;  things  that 
are  weighed,  in  quantities  smaller  than  ten  kilograms; 
things  that  are  counted,  in  single  packages; 
(6)  In  Chile,  Honduras,  San  Salvador  and  Vene- 
zuela, one  who  habitually  sells  directly  to  the  con- 
sumer; 

(c)  In  Brazil,  one  whose  capital  is  not  over  five  contos 

of  reis  (about  SI, 500.  U.  S.),  in  Costa  Rica,  not  over 

two  thousand  colonos   ($1,000  U.  S.),  in  Mexico,  not 

over  two  thousand  pesos  ($1,000  U.  S.),  and  in  Panama, 

not  over  one  thousand  balboas.  ($1,000  U.  S.) 

Small  traders  are  not  obliged  to  keep  books  in  Brazil, 

Costa  Rica  and  Mexico.    They  need  keep  only  one  book, 

comprising  journal  and  statements,   in   Chile,   Honduras, 

Panama,  San  Salvador  and  Venezuela.     In  Argentina  the 

only  concession  in  their  favor  is  that  they  must  draw  up  a 

balance  sheet  every  three  years  only.    In  Uruguay  a  retailer 

is  bound  only  to  make  an  entry  every  day  in  his  journal  with 

the  total  amount  of  cash  sales  and  another  with  the  total 

amount  of  sales  on  credit.^ 

Inasmuch  as  the  law  of  June  1st,  1906,  of  Mexico,  which 
makes  a  distinction  between  traders  according  to  the  size 
of  their  capital,  is  directed  to  fiscal  purposes  only,  some 
doubt  may  arise  whether  or  not  the  code  of  commerce,  which 
makes  no  distinction,  is  thereby  amended. 

^  Spain,  Bolivia,  Colombia,  Guatemala,  Haiti,  Nicaragua,  Peru  and  Santo 
Domingo. 

6  Brazil,  law  No.  2024  of  Dec.  17,  1908,  article  167,  No.  7;  and  decree  No. 
3564  of  January  22,  1900;  Chile,  30;  Costa  Rica,  law  of  July  5,  1901,  article  1; 
Mexico,  law  of  June  1,  1906,  article  167;  Honduras,  42;  Panama,  74;  San 
Salvador,  36,  37;  Uruguay,  3,  62;  Venezuela,  40. 

^  Art.  58. 


104  LATIN-AMERICAN    COMMERCIAL    LAW 

External  form  of  mercantile  books. 

Merchants  are  required  to  present  the  books  prescribed 
by  the  law,  bound  and  paged,  to  the  judicial  authority  of  the 
district  in  which  they  have  their  commercial  house,  for 
official  authentication.  On  the  first  page  of  every  book  the 
judge  inscribes  a  signed  statement  of  the  number  of  pages 
contained  in  the  book,  and  every  page  must  be  stamped  with 
the  seal  of  the  court. ^ 

Mexico  ^  and  Nicaragua  ^°  establish  these  requisites,  but  the 
books  must  be  authenticated  by  an  administrative  authority. 

In  Haiti  ^^  and  Guatemala  ^-  the  judge  is  required  to 
authenticate  the  books  and  mark  their  pages  with  his 
rubrica  ^^  every  year.  In  Uruguay  ^^  the  books  must  be 
presented  every  year  to  the  commercial  court  in  Montevideo 
or  to  the  judge  of  first  instance  in  other  departments,  in 
order  to  have  the  number  of  pages  written  in  them  certified. 

In  Chile  ^^  and  Ecuador  ^^  the  books  are  not  authenticated. 

Merchants  may  also  keep  any  other  books  they  may 
deem  advisable,  according  to  their  business  methods.  These 
books  do  not  require  authentication,  but  they  may  be  authen- 
ticated at  the  request  of  the  merchant.  ^^ 

Internal  formalities. 

Merchants,  besides  fulfilling  all  other  requirements  pre- 

8  Spain,  36. 

During  the  Spanish  regime  in  Cuba  the  books  of  merchants  were  subject 
to  the  stamp  tax;  but  this  tax  was  abolished  by  order  of  the  United  States 
Treasury  Department  on  June  10,  1899.    Argentina,  53;  Bolivia,  33;  Brazil,  13 
Colombia,  31;  Costa  Rica,  law  of  July  5,  1901,  article  11;  Guatemala,  34 
Honduras,  29;  Panama,  76;  Peru,  36;  San  Salvador,  22;  Santo  Domingo,  11 
Uruguay,  65;  Venezuela,  36. 

^  Mexico,  34  and  stamp  tax  law  of  June  1,  1906,  article  171. 

10  Nicaragua,  24.  "  Art.  10.  ^^  Guatemala,  34, 

1'  By  rubrica  is  meant  a  flourishing  line  habitually  drawn  by  every  person 
below  his  signature. 

"  Art.  2  of  law  of  January  25,  1916. 

IS  Art.  30.  »"  Art.  35. 

"  Spain,  23;  Brazil,  10;  Argentina,  43;  Bolivia,  52;  Chile,  28,  40;  Colombia, 
27,  34;  Costa  Rica,  17;  Ecuador,  48;  Guatemala,  45;  Haiti,  8;  Honduras,  27; 
Mexico,  33;  Nicaragua,  19;  Panama,  72;  Peru,  34;  San  Salvador,  20;  Santo 
Domingo,  8;  Uruguay,  54;  Venezuela,  44. 


COMMERCIAL   BOOKKEEPING  105 

scribed  by  the  law,  must  keep  their  books  in  a  clear  form; 
in  the  order  of  dates,  without  intervals,  interhneations, 
erasures  or  blots;  and  without  any  substitution  or  tearing 
out  of  a  sheet,  or  any  other  mutilation  whatsoever. 

As  soon  as  a  merchant  discovers  a  mistake  or  omission  in 
the  entries  in  his  books,  he  must  correct  it  by  means  of  a  new 
entry  explaining  the  error  clearly  and  making  the  correct 
entry.  If  some  time  has  elapsed  since  the  mistake  or  omission 
occurred,  the  merchant  must  make  the  entry  noting  the 
fact  of  the  correction  at  the  margin.  ^^ 

Language  in  which  commercial  books  must  be  kept. 

Commercial  books  must  be  kept  in  the  language  of  the 
country.  ^^ 

The  penalty  for  failure  to  comply  with  this  provision  is  a 
fine  of  30  to  300  pesos  in  Bolivia  and  Mexico,  2"  from  20  to 
200  in  Colombia,  from  50  to  500  in  Guatemala,-^  from  100 
to  500  in  Honduras,"  and  from  50  to  110  in  San  Salvador. 
In  Ecuador  ^^  and  Venezuela  -^  the  effect  of  the  failure  is 
that  the  books  do  not  constitute  legal  evidence. 

Argentina, ^'^  Brazil, ^^  Chile,-''  Costa  Rica,-^  Nicaragua, ^^ 
and  Panama  ^'^  expressly  authorize  foreigners  (Chile,  Costa 
Rica  and  Panama  authorize  any  person  to  keep  books  in  a 
foreign  language)  to  keep  their  books  in  their  own  language; 
but  in  case  of  a  judicial  contest  the  relevant  parts  of  the  book 
must  be  translated. 

The  codes  of  Spain,  Haiti,  Peru,  Santo  Domingo  and 
Uruguay  are  silent  on  this  matter. 

i«  Spain,  43,  44;  Argentina,  54;  Bolivia,  43;  Brazil,  14;  Chile,  31,  32;  Colom- 
bia, 37,  38;  Costa  Rica,  law  of  July  5,  1901,  article  12;  Ecuador,  41,  42; 
Guatemala,  35;  Haiti,  10;  Honduras,  36,  37;  Mexico,  36;  Nicaragua,  25; 
Panama,  77;  Peru,  43,  44;  San  Salvador,  29,  30;  Santo  Domingo,  10;  Uruguay, 
66;  Venezuela,  41,  42. 

19  Bolivia,  42;  Colombia,  32;  Ecuador,  35;  Guatemala,  21;  Honduras,  26; 
Mexico,36;  San  Salvador,  19;  Venezuela,  25. 

20  Mexico,  37.  ^i  Guatemala,  37.  "  Honduras,  26. 
23  Art.  23.                               ^*  Art.  43.                                      "  Art.  66. 

28  Art.  16.  "  Art.  26. 

28  Art.  13  of  law  No.  20  of  July  5,  1901. 

29  Art.  13  of  the  bookkeeping  law. 
«>  Art.  78. 


106  LATIN-AMERICAN    COMMERCIAL   LAW 

The  Statement  and  balance  book. 

The  statement  and  balance  book  is  to  be  started  by  the 
merchant  when  he  begins  business,  with  the  following  entries : 

1.  an  exact  statement  of  his  assets,  in  the  fonn  of 
cash,  securities,  credits,  biUs  receivable,  movable  and 
real  property,  goods  and  items  of  every  kind  appraised 
at  their  proper  value; 

2.  an  exact  statement  of  his  habilities  and  all  pending 
obligations,  if  any; 

3.  a  statement  of  the  exact  difference  between  his 
assets  and  his  liabihties,  a  difference  which  constitutes 
the  capital  with  which  he  begins  business. 

Moreover,  every  year  the  merchant  must  draw  up  and 
sign  in  the  same  books,  and  under  his  responsibihty,  the 
balance  sheet  of  his  business,  with  all  the  above  mentioned 
details,  and  in  accordance  with  the  entries  of  the  journal, 
without  reserve  or  omission. ^^ 

The   journal. 

The  first  entry  in  the  journal  must  consist  of  the  items  of 
the  above  mentioned  statement,  divided  into  as  many 
accounts  as  the  system  adopted  may  require.  Daily  entries 
must  follow  thereafter,  stating  the  credit  and  the  debit  of 
the  respective  account.  When  the  transactions  are  numer- 
ous, whatever  their  amount,  or  when  they  take  place  outside 
the  domicil  of  the  commercial  house,  but  refer  to  the  same 
account,  or  when  they  are  made  on  the  same  day,  they  may 
constitute  a  single  entry.  But  when  the  transactions  are 
stated  in  detail,  their  corresponding  entries  must  follow  the 
order  in  which  they  took  place.  There  must  be  entered 
also,  on  the  date  when  they  were  taken  from  the  cash  box, 
all  amounts  which  the  merchant  uses  for  his  domestic  ex- 
penses, and  these  amounts  are  to  be  entered  under  a  special 
account  opened  in  the  ledger  for  that  purpose. ^^ 

"  Spain,  37;  Argentina,  48;  Bolivia,  38;  Chile,  29;  Colombia,  36;  Costa  Rica, 
law  of  July  5,  1901,  art.  4;  Ecuador,  39;  Guatemala,  25;  Haiti,  9;  Honduras,  37; 
Mexico,  38;  Nicaragua,  23;  Panama,  79;  Peru,  37;  San  Salvador,  23;  Uruguay, 
59;  Venezuela,  39. 

32  Spain,  38;  Argentina,  45;  Bolivia,  34;  Brazil,  12;  Chile,  27;  Colombia,  33; 


COMMERCIAL    BOOKKEEPING  107 

The  ledger 

The  ledger  must  contain  a  credit  and  a  debit  side,  with 
separate  accounts  for  object  and  person  with  which  or  with 
whom  the  merchant  deals  according  to  the  system  of  ac- 
counting adopted;  and  the  entries,  under  each  account,  must 
be  in  strict  chronological  order.  ^^ 

Letter  and  telegram  book. 

All  letters  and  telegrams  which  a  merchant  may  write  in 
reference  to  his  business,  must  be  transcribed  in  the  copying 
book,  either  in  handwriting  or  by  means  of  some  mechanical 
copying  device;  this  transcription  must  be  in  the  successive 
order  of  dates  and  must  include  the  subscribing  clause  and 
the  signature. ^^ 

The  bookkeeper. 

Merchants  may  keep  their  books  themselves  or  through 
a  bookkeeper.  Because  of  the  great  importance  of  the  books, 
which  may  constitute  evidence  against  the  owner  and  may  be 
of  decisive  influence  in  case  of  bankruptcy,  the  functions  of 
a  bookkeeper  are  of  a  most  delicate  character.  The  legal 
character  of  a  bookkeeper  is  that  of  an  agent,  whose  acts 
bind  his  principal.  Hence  questions  may  arise  concerning 
the  powers  of  the  bookkeeper,  and  in  this  respect  the  Latin- 
American  codes  may  be  divided  into  three  groups: 

Costa  Rica,  law  of  July  5,  1901,  art.  5;  Ecuador,  36;  Guatemala,  22;  Haiti,  8; 
Honduras,  38;  Mexico,  39;  Nicaragua,  20;  Panama,  81;  Peru,  38;  San  Salvador, 
24;  Santo  Domingo,  8;  Uruguay,  56;  Venezuela,  37. 

^^  Spain,  39;  Bolivia,  35;  Colombia,  35;  Costa  Rica,  law  above  mentioned, 
art.  7;  Ecuador,  38;  Honduras,  32;  Mexico,  40;  Nicaragua,  22;  Panama,  83; 
Peru,  39;  San  Salvador,  25;  Venezuela,  38. 

^*  Spain,  41;  Argentina,  51,  52;  Bolivia,  45;  Brazil,  12. 

The  commercial  court  of  Rio  de  Janeiro  in  its  opinion  of  FeV)ruary  3,  1851, 
decided  that  letters,  copies  of  accounts,  invoices  and  instructions  accompany- 
ing the  same,  should  be  transcribed  in  full;  the  merchant  l)oing  allowed  to 
divide  the  copying  book  into  two  volumes — one  for  registering  letters  and 
the  other  for  registering  invoices  and  accounts. 

Chile,  46;  Colombia,  61 ;  Costa  Rica,  9;  Ecuador,  54;  Guatemala.  55;  Haiti,  9; 
Honduras,  34;  Mexico,  42;  Nicaragua,  37;  Panama,  84;  Peru,  41;  San  Salvador, 
27;  Santo  Domingo,  9;  Uruguay,  63;  Venezuela,  50. 


108  LATIN-AMERICAN    COMMERCIAL   LAW 

1.  Those  codes  which  require  that  a  power  of  attorney- 
be  given  formally  by  the  merchant  to  the  bookkeeper, 
in  order  that  the  latter  may  in  his  bookkeeping  represent 
the  merchant.^'' 

2.  Those  codes  according  to  which  the  mere  fact  that 
the  merchant  entrusts  somebody  with  the  keeping  of 
his  books  constitutes  a  presumption  that  he  has  given 
the  bookkeeper  due  power  therefor,  unless  the  con- 
trary be  proved. ^^ 

3.  Those  codes  which  are  silent  in  this  respect,  leaving 
to  the  discretion  of  the  court  the  appreciation  of  the 
facts  and  the  application  of  the  general  principles  of 
law. 

Commercial  books  as  a  means  of  evidence. 

From  the  theory  we  have  advanced  that  a  merchant  is 
engaged  in  an  occupation  of  a  quasi-pubUc  character,  it 
might  be  inferred  that  his  books  would  be  open  to  free 
inspection  by  persons  interested  in  his  transactions.  But 
that  is  not  so,  since  the  conduct  of  business  requires  privacy, 
without  which  the  great  stimulus  of  private  interest,  the 
propulsive  force  making  wealth  circulate  universally,  would 
be  greatly  weakened.  This  explains  why  the  law  in  Latin- 
America  provides  that  no  official  inquiry  can  be  made  by 
judges  or  courts  or  any  other  authority,  in  order  to  determine 
whether  merchants  keep  their  books  in  accordance  with  the 
provisions  of  the  commercial  law;  nor  can  investigation  or 
general  examination  of  their  bookkeeping  be  made  by  public 
authority.  The  production  in  court  or  delivery  for  general 
inspection  of  books,  correspondence  and  documents  of  a 
merchant  cannot  be  demanded  in  a  suit  or  ordered  by  a 
judge,  except  in  case  of  liquidation,^  general  succession  or 
bankruptcy.  ^^    But  an  exhibition  of  books  may  be  ordered  on 

"  Bolivia,  33,  166,  168;  Guatemala,  44;  Uruguay,  75. 

'8  Spain,  35;  Argentina,  62;  Honduras,  28;  Mexico,  35;  Panama,  87;  Peru,  35; 
San  Salvador,  21. 

'^  A  general  succession  is  that  in  which  a  merchant  succeeds  another  as  his 
heir  or  as  the  transferee  of  the  whole  commercial  house. 


COMMERCIAL   BOOKKEEPING  109 

petition  of  a  party,  or  ex-officio,  when  the  person  to  whom 
they  belong  has  any  Habihty  or  legal  interest  in  the  case.  The 
exhibition  must  be  made  at  the  place  of  business  of  the 
merchant,  in  his  presence,  or  in  the  presence  of  a  person 
delegated  by  him,  and  the  inspection  must  be  confined 
exclusively  to  the  points  in  litigation.  ^^ 
There  are  two  exceptions  to  this  rule — one  in  Costa  Rica  ^^ 

^^  Spain,  45  to  47;  Argentina,  57  to  59;  Bolivia,  55  to  57;  Brazil,  17  to  19 
Chile,  41  to  43;  Colombia,  55  to  57;  Costa  Rica,  14,  15,  law  of  July  5,  1901 
Ecuador,  49  to  51;  Guatemala,  46  to  49;  Haiti,  14,  15;  Honduras,  38  to  40 
Mexico,  42  to  44;  Nicaragua,  31,  33;  Panama,  88  to  89;  Peru,  45  to  47;  San 
Salvador,  31  to  33;  Santo  Domingo,  14,  15;  Uruguay,  70  to  72;  Venezuela,  45 
to  47. 

The  fact  that  a  merchant,  party  to  a  suit  against  another  merchant,  cannot 
designate  exactly  the  date  of  the  entry  or  even  the  special  book  in  which  the 
entry  was  made  or  a  certain  and  specified  document  of  the  adverse  party,  is 
not  an  obstacle  to  the  examination  of  the  books  in  the  office  of  the  merchant  and 
carmot  be  considered  as  a  general  inspection  of  said  books,  provided  that  the 
applicant  refers  to  facts  clearly  stated.  Cuba,  Trib.  Sup.,  May  29,  1900, 
Jurisp.  del  Trib.  Sup.  en  mat  Cidl,  vol.  4,  p.  261. 

The  constitutional  guaranty  that  one  cannot  be  compelled  to  give  testimony 
against  himself,  includes  the  provision  that  one  need  not  produce  his  books  and 
private  papers  as  proof  of  his  own  fault.  Argentina,  Camara  Federal  de 
Apelaci6n,  Capital  de  Buenos  Aires,  May  14,  1914,  Jurisp.  de  los  Tribs.  Nacs. 
May,  1914,  p.  37. 

The  plaintiff  cannot  compel  a  railway  company,  the  defendant,  to  produce 
its  correspondence  with  the  Director  General  of  Railroads  nor  communications 
referring  to  service  which  is  not  of  the  nature  of  a  mercantile  enterprise. 
Argentina,  Camara  Federal  de  Apel.  Corboda,  April  24,  1913,  Velazquez  v. 
F.  C.  Argentino  del  Norte,  Jur.  de  los  Trib.  Nacs.    April,  1914,  p.  98. 

The  examination  of  the  mercantile  books  of  the  defendant,  in  case  of  forgery 
of  a  patent,  is  not  contrary  to  the  principle  that  nobody  can  be  compelled  to 
give  testimony  against  himself,  because  it  is  an  examination  made  by  experts 
and  not  testimony.  Argentina,  Cam.  Fed.  de  Apel.  La  Plata,  August  6,  1913, 
Agar  Cross  y  Cia.  Ltda.  v.  Stein  y  Cia.,  Jurisp  de  los  Tribs.  Nacs.  August, 
1913,  p.  72. 

The  judge  has  no  power  to  compel  a  party  to  a  suit  to  produce  his  commer- 
cial books  in  order  to  take  a  copy  of  entries  relating  to  the  subject-matter  of 
the  suit  when  requested  by  the  opposing  party.  Colombia,  Panama,  Decision 
of  October  31,  1896,  Regislro  Judicial  de  Panama,  vol.  VII,  p.  254. 

The  commercial  books  have  the  character  of  pul)lic  documents  in  the  cases 
referred  to  in  article  56  (cases  of  liquidation,  succession  or  bankruptcy)  of  the 
code  of  commerce.  Among  these  books  the  auxiliaries  are  included.  Medellin, 
Colombia,  Decision  of  August  3,  1898,  Cronica  Judicial  de  Antioquia,  vol.  XIV, 
p.  3145. 

»» Costa  Rica,  42. 


110  LATIN-AMERICAN    COMMERCIAL   LAW 

where  pawnshops  must  show  to  the  govemment  agent 
the  special  book  that  the  law  of  July  16,  1887,  requires, 
the  inspection  being  confined  to  fiscal  purposes;  and  the 
other  in  Mexico,  where  art.  346  of  the  law  of  June  1st,  1906, 
authorizes  the  inspectors  of  the  stamp  tax  to  inspect  the 
special  book  of  sales  that  merchants  or  industrials  have  to 
keep,  as  well  as  the  stub  book  of  invoices.  If  they  find 
irregularities  in  the  books  the  inspectors  may  ask  for  all 
papers  relating  to  the  transactions  of  the  merchant  during 
any  month,  but  not  beyond  one  year;  if  new  irregularities 
are  discovered  in  this  way  the  inspectors  may  ask  for  papers 
corresponding  to  another  month,  and  so  on,  without  ex- 
ceeding one  year.^° 

Panama  ^^  makes  it  obligatory  upon  every  merchant  to 
account  to  persons  with  whom  he  deals  any  time  those 
persons  so  request.  The  accounts  must  be  in  accordance 
with  the  entries  in  the  books  of  such  merchant,  who  is 
bound  to  deliver  the  accounts  at  his  place  of  business,  unless 
otherwise  stipulated.  For  commercial  transactions  of  a 
continuous  character,  accounts  must  be  submitted  to  the 
other  party  every  year — otherwise  at  the  conclusion  of  the 
transaction.  The  obhgation  of  accounting  is  considered 
fulfilled  when  all  differences  arising  from  the  accounts  are 
settled. 

Evidential  value  of  cominercial  books. 

In  order  to  estabhsh  the  probative  force  or  evidential 
value  of  mercantile  books,  we  must  distinguish  between  two 
cases  ^^ — one  when  the  suit  is  between  two  merchants,  and 
the  other  when  one  of  the  parties  is  not  a  merchant. 

Evidential  value  of  books  between  two  merchants. 
In  this  case  the  following  rules  are  to  be  appUed : 

*o  Arts.  346  to  348  of  law  of  June  1,  1906. 

"  Panama,  96  to  99. 

*^  Evidence  taken  from  books  kept  in  foreign  countries  is  irrelevant.  Ar- 
gentina, Jurisprudenda  Comerdal  de  la  Camara  de  Apel.  Buenos  Aires,  vol.  9» 
p.  545,  Ser.  3^. 


COMMERCIAL   BOOKKEEPING  111 

1.  A  merchant's  books  constitute  irrebuttable  evi- 
dence against  him,  but  the  other  party  cannot  accept 
entries  favorable  to  himself  while  rejecting  others 
unfavorable  to  him.  Having  accepted  this  means  of 
evidence,  he  is  subject  to  the  consequences  of  the  whole 
of  it,  both  for  and  against  him.^^ 

2.  If  entries  in  the  books  exhibited  by  two  merchants 
should  not  agree  and  those  of  one  have  been  kept  with 
all  the  formalities  above  mentioned,  while  those  of  the 
other  contain  defects  or  lack  the  requisites  prescribed 
by  the  commercial  code,  the  entries  in  the  book  cor- 
rectly kept  must  be  admitted  as  against  those  of  the 
defectively  kept  books,  unless  the  presumption  thereby 
arising  in  the  merchant's  favor  is  overcome  by  other 
evidence  legally  admissible. ^^ 

*^  The  entries  in  the  books  of  a  merchant  constitute  evidence  against  him, 
provided  they  are  taken  as  they  are,  wdth  all  the  details  given  and  without 
additions  or  arbitrary  interpretations.  Cuba,  Supremo  Tribunal,  June  2, 
1904,  Jurisp.  de  la  Trib.  Sup.  en  Mat.  Civ.,  vol.  22,  p.  718. 

Statements  of  the  minute  book  of  a  corporation  constitute  evidence.  Mex- 
ico, Tribunal  Superior  del  Distrito  Federal,  2^  Sala,  Banco  Mexicano  de 
Comercio  e  Industria  S.  A.  v.  Moran,  Nov.  1,  1910,  Diario  de  Jurisp.,  vol.  24, 
p.  473. 

The  entries  made  in  commercial  books  constitute  perfect  evidence  against 
the  owner  of  said  books.  Mexico,  D.  F.  Juzgado  Primero  de  la  Civil  Zaccagna 
V.  Compania  Italiana  de  Construcciones,  S.  A.,  Nov.  15,  1911,  Tribvmal  Supe- 
rior del  D.  F.  3d  Sala,  Diar.  de  Jurisp.,  vol.  25,  p.  705;  Rio  del  Campo  v. 
Ricardo  del  Rio  y  Compania,  May  2,  1912,  Ih.,  vol.  26,  p.  449;  January  9,  1907, 
Tribunal  Superior  del  D.  F.  3?  Sala;  Alvarez  v.  Lucio  Rodrigo  y  Cia,  Sept.  23, 
1908,  Ih.,  vol.  15,  p.  603. 

In  a  suit  between  a  principal  and  his  agent  the  entries  made  in  the  book  of 
the  former  constitute  evidence  against  the  latter.  Mexico,  Tribunal  Superior 
del  D.  F.,  "La  Nacional"  v.  Remy,  Oct.  1,  1909,  Diario  de  Jurisp.,  vol.  19, 
p.  265.     Cf.  art.  1295. 

The  evidence  derived  from  commercial  books  is  acceptable  only  in  matters 
which  refer  to  the  subject-matter  of  the  suit.  Uruguay,  Alta  Cortc  de  Justicia, 
Montevideo,  August  17,  1909,  Folios  de  la  Alia  Corle  de  Justicia,  vol.  1,  p.  334. 

The  evidence  taken  from  the  commercial  books  is  of  special  importance  even 
though  they  have  not  been  marked  with  the  rubrica  of  the  commercial  judge 
in  case  of  a  dispute  between  the  merchant  and  his  bookkeeper.  Argentina, 
Cam.  2  de  Apel.  Civ.  La  Plata,  August  14,  1913,  Raidel  v.  Schellenberg,  Jurisp. 
de  los  Tribs.  Nac.j  August,  1913,  p.  269. 

**  Irregularities  in  keeping  the  books  may  be  attributed  to  other  persona 
than   the   merchant;   furthermore,  it  does  not  constitute  a  crime  when  the 


112  LATIN- AMERICAN    COMMERCIAL   LAW 

3.  If  one  of  the  merchants  should  not  present  his 
books  or  should  state  that  he  does  not  possess  any,  those 
of  his  adversary,  kept  with  the  required  formalities, 
constitute  evidence  against  him,  unless  it  is  proved  that 
the  absence  of  said  books  is  caused  by  force  majeure,  and 
always  reserving  the  privilege  to  adduce  evidence 
against  the  entries  exhibited  by  other  means  legally 
admissible  in  judicial  proceedings. 

4.  If  the  books  of  the  contending  merchant  possess 
all  the  legal  requirements  and  are  contradictory,  the 
judge  or  court  must  resolve  the  conflict  by  other  evi- 
dence, evaluating  its  weight  and  probative  force  accord- 
ing to  the  general  legal  rules  of  evidence/^ 

There  are,  in  addition,  certain  peculiar  provisions  which 
warrant    mention. 

Brazil  ^^  discriminates  between  partial  defects  relating  to 
special  entries,  and  general  defects  which  relate  to  the 
external  formal  requirements  of  the  books.    Books  that  are 

purpose  has  not  been  to  commit  a  fraud,  but  to  prepare  a  proposition  of 
settlement;  nor  is  it  a  crime  to  attribute  exaggerated  values  to  real  estate  if 
this  has  not  been  done  Avith  a  view  to  obtaining  an  unlawful  benefit.  Argen- 
tina, Cam.  de  Apel.  Crim.  Buenos  Aires,  Oct.  14,  1913,  Jurisp.  de  los  Tribs. 
Nacs.,  Oct.,  1913,  p.  274. 

Entries  in  the  regularly  kept  books  of  a  merchant  constitute  full  evidence 
against  the  merchant  who  does  not  keep  his  books  in  proper  form.  Costa  Rica, 
Corte  de  Casacidn  de  Costa  Rica,  Sept.  16,  1904,  Sandoval  Escofie  v.  Ruiz 
Ramirez,  Sentencias  de  la  Corte  de  Casacion,  1904,  p.  637. 

Entries  in  the  books  of  a  merchant  constitute  evidence  against  another 
merchant  who  fails  to  produce  his  own  books.  Costa  Rica,  Corte  de  Casaci6n 
de  Costa  Rica,  Sept.  16,  1904,  Sandoval  Escofie  v.  Ruiz  Remirez,  lb. 

Books  of  commerce  regularly  kept  constitute  evidence  in  favor  of  their 
owner  against  the  merchant  who  has  no  books  or  has  not  kept  them  correctly. 
Mexico,  Tribunal  Superior  del  D.  F.,  2^  Sala,  Compania  Comcrcial  Pan 
Americana,  S.  A.  v.  Leon,  February  17,  1908,  Diario  de  Jurisp.,  vol.  14,  p.  548. 

Commercial  books  will  not  constitute  evidence  when  the  entries  in  the  ledger 
do  not  correspond  with  those  of  the  journal;  when  cash  sales  are  mixed  up  with 
installments  paid  on  account  of  a  promissory  note,  or  when  they  are  at  variance 
with  invoices.  Mexico,  Tribunal  Superior  del  D.  F.,  Contreras  v.  Rodriguez, 
August  26,  1912.    Diario  de  Jurisp.,  vol.  27,  p.  185. 

«  Spain,  48;  Argentina,  63;  Bolivia,  46  to  48;  Brazil,  23,  25;  Chile,  34,  38,  39, 
35,  36;  Colombia,  40,  44,  45,  47,  48;  Costa  Rica,  16;  Ecuador,  45,  46,  47; 
Mexico,  1295;  Guatemala,  51,  52;  Honduras,  41;  Panama,  90;  Peru,  48;  San 
Salvador,  34;  Uruguay,  76.  «  Brazil,  15. 


COMMERCIAL    BOOKKEEPING  113 

partially  defective  do  not  constitute  evidence  with  respect 
to  acts  referred  to  in  the  defective  entries;  external  defects 
deprive  the  books  entirely  of  probative  force. 

In  Colombia  ^^  books  not  only  do  not  constitute  evidence 
when  irregularly  kept,  but  also  when  the  owner  has  been 
convicted  of  perjury,  fraudulent  bankruptcy  or  forgery  of 
documents  of  any  kind. 

In  Costa  Rica  ^^  the  books  of  merchants  do  not  constitute 
evidence  against  small  traders. 

In  Nicaragua,"*^  when  the  merchant  does  not  present  his 
books  or  when  they  are  defective,  those  of  his  opponent 
constitute  irrebuttable  evidence,  unless  the  former  proves 
that  his  books  were  lost  without  his  fault. 

In  Venezuela, ^°  the  provision  respecting  the  probative 
force  of  the  books  is  somewhat  laconic,  namely:  ''Books 
kept  in  accordance  with  the  former  articles  may  constitute 
evidence  between  merchants  with  respect  to  acts  of  com- 
merce." 

Evidential  value  of  books  between  a  merchant  and  a  non- 
merchant. 

In  this  matter,  we  find  the  following  systems: 

1.  System  of  the  Spanish  code.  The  books  constitute 
evidence  against  the  merchant  because  the  law  does  not 
make  any  distinction.^^ 

2.  System  of  Chile.  The  books  of  merchants  are  only 
a  means  of  evidence  in  commercial  cases  and  between 
merchants.  ^2 

«  Art.  54.  "8  Art.  18.  «  Art.  28. 

^  Art.  43. 

"  Spain,  48;  Bolivia,  40;  Costa  Rioa,  law  of  July  .5,  1901,  Art.  IG;  Ecuador, 
47;  Guatemala,  40;  Honduras,  41;  Me.xico,  1295;  Nicaragua,  34;  Peru,  48;  San 
Salvador,  34;  Venezuela,  43. 

"  Chile,  25;  Argentina,  63;  Uruguay,  76. 

Commercial  books  only  constitute  a  means  of  evidence  between  merchants 
and  in  regard  to  commercial  affairs.  Argentina,  Jurisp.  Comercial  de  la 
Camara  de  Apel.  Buenos  Aires,  vol.  9,  p.  471,  Ser.  3"^.  When  the  case  does  not 
refer  to  commerce  the  commercial  books  are  only  a  foundation  of  evidence 
(prindpio  de  jyrueba),  if  the  litigation  is  between  merchants.  Argentina, 
Jurisp.  Com.  de  la  Camara  de  Apel.  Buenos  Aires,  vol.  4,  p.  46,  Ser.  5". 


114  LATIN- AMERICAN    COMMERCIAL   LAW 

3.  System  of  Colombia.  Books  in  this  case  constitute 
only  a  foundation  of  evidence  (principio  de  prueba), 
that  is,  they  must  be  supported  by  further  evidence.  ^^ 

4.  System  of  Brazil.  Books  may  constitute  full 
evidence  against  the  merchant,  but  only  a  foundation  of 
evidence  against  the  non-merchant. 

Books  subject  to  inspection. 

All  books,  principal  and  auxiliary,  including  those  which 
are  required  by  the  law  and  in  addition  those  which  the 
merchant  deems  fit  to  keep,  are  subject  to  be  exhibited  in  the 
cases  and  under  the  conditions  above  mentioned,  inasmuch 
as  all  of  them  may  afford  evidence  in  a  particular  case;  but 
only  the  codes  of  Argentina  ^^  and  Uruguay  ^^  explicitly 
provide  that  merchants  may  be  compelled  to  exhibit  their 
auxiliary  books  as  well  as  the  obligatory  ones. 

Auxiliary  books  as  evidence. 

Three  systems  are  followed  by  the  codes  with  reference  to 
the  evidential  weight  of  auxiliary  books: 

First  system.  They  cannot  constitute  evidence  in 
favor  of  their  owner  except  when  the  obligatory  books 
are  lost  without  fault  of  the  owner.  ^^ 

Second  system.  They  constitute  evidence  if  they  are 
kept  with  all  legal  formalities." 

Third  system.  They  may  or  may  not  constitute 
evidence,  according  to  the  general  rules  of  evidence  in 
those  countries  whose  codes  do  not  provide  for  this  case. 

Result  of  failure  to  exhibit  books. 

In  a  suit  in  which  a  merchant  having  been  regularly 

^^  Colombia,  49;  Panama,  91. 

"Art.  61.  55  Art.  74. 

^  Argentina,  65;  Chile,  40;  Colombia,  52;  Costa  Rica,  17;  Guatemala,  53; 
Panama,  92;  Uruguaj^  78. 

Entries  made  in  books  which  are  not  obligatory  according  to  the  law  will  not 
constitute  evidence.  Costa  Rica,  Corte  de  Casaci6n  de  Costa  Rica,  Aug.  26, 
1911.  Knohr  Hijos  v.  Avendano,  Sentencias  de  la  Corte  de  Casacidn,  1911,  2nd 
semester,  p.  222. 

"  Bolivia,  52;  Ecuador,  48;  Venezuela,  44. 


COMMERCIAL    BOOKKEEPING  115 

requested  by  the  judge  to  exhibit  his  books  fails  to  do  so  or 
conceals  them,  the  books  of  his  opponent  constitute  conclu- 
sive evidence  against  him.^^ 

The  codes  of  some  countries  provide  in  such  case  that  the 
books  of  the  opposing  party  constitute  conclusive  evidence, 
provided  no  other  evidence  is  produced  to  rebut  the  entries 
exhibited.  ^^ 

If  one  of  the  parties  to  a  suit  offers  to  accept,  as  evidence, 
the  entries  in  the  books  of  his  opponent,  and  the  latter  fails  to 
exhibit  them  without  good  reason,  the  court  may  accept  as 
conclusive  the  sworn  statement  of  the  petitioner.^" 

Duty  to  preserve  commercial  books  and  papers. 

We  may  divide  the  systems  adopted  by  the  codes,  as 
follows : 

1.  The  merchant  must  preserve  his  books  up  to  the 
time  of  the  complete  liquidation  of  the  business.^ ^ 

2.  He  must  preserve  them  for  a  certain  period  after 
the  liquidation  of  the  business;  this  period  being  five 
years  in  Spain,''-  Ecuador,''^  Honduras,^^  Panama,''^ 
Peru  ^^  and  San  Salvador;  ^'^  ten  years  in  Haiti,^^  Mexico,*'^ 
Santo  Domingo,''"  and  Venezuela;  ''^  and  twenty  years 
in  Argentina  ^-  and  Uruguay.^^ 

3.  He  must  preserve  his  books  for  the  period  estab- 
lished by  the  statute  of  limitation  in  Brazil.^^  The 
period  of  limitation  runs  from  one  to  twenty  years, 
depending  on  the  subject-matter.''^ 

^*  Argentina,  56;  Bolivia,  59;  Brazil,  20;  Chile,  33;  Colombia,  39;  Ecuador, 
44;  Nicaragua,  28;  Uruguay,  68. 

5^  Spain,  48;  Costa  Rica,  16;  Guatemala,  51;  Honduras,  41;  Mexico,  1295; 
Panama,  90;  Peru,  48;  San  Salvador,  34. 

60  Chile,  37;  Colombia,  46;  Ecuador,  52;  Guatemala,  42;  Venezuela,  48. 

"1  Bolivia,  54;  Chile,  44;  Colombia,  59;  Guatemala,  54. 

62  Art.  49.  63  Art.  19.  64  Art.  42. 

65  Art.  93.  66  Art.  49.  «'  Art.  35. 

68  Art.  10.  6^  Art.  46.  ™  Art.  10. 

'"■  Art.  49.  "  Art.  67.  "  Art.  80. 

7*  Art.  10.  "  Brazil,  442-449. 


CHAPTER  VII 

AUXILIARIES   OF   COMMERCE 

Spain. — Capdeville,  Edmundo:  La  bolsa  al  alcance  de  todos.  Las  opera- 
ciones  en  la  Bolsa  de  Madrid,  Paris,  Bruselas.    Madrid,  1905. 

Lastres,  Francisco:  Operaciones  de  bolsa.  Contrataci6n  sobre  efectos 
publicos  de  los  corredores  de  comercio  y  de  los  agentes  de  bolsa.    Madrid,  1878. 

Maluquer  y  Viladot,  Juan:  Irreivindicacion  de  los  efectos  al  portador  en  los 
casos  de  robo,  hurto  o  extravio.  Estudio  sobre  las  bolsas  de  comercio  y  sus 
agentes  mediadores.  Anotado  con  la  jurisprudencia  .  .  .  pr61ogo  de  Antonio 
Maura.    Barcelona,  1901. 

Montero  y  Vidal,  Jose:  La  bolsa,  el  comercio  y  las  sociedades  mercantiles. 
3d  ed.    Madrid,  1883. 

Mexico. — Pizarro  Sudrez,  Ismael:  Formalidades  de  los  contratos  celebrados 
ante  corredores.    Rev.  de  Leg.  y  Jurisp.  1899,  2nd  semes,  p.  72. 

Functions  of  persons  who  are  auxiliaries  of  commerce. 

The  term  "auxiharies  of  commerce"  is  apphed  to  those 
classes  of  aids  such  as  factors,  clerks,  brokers,  etc.,  who  have 
become  almost  essential  to  modern  commerce.  The  auxil- 
iaries of  commerce  have  two  functions  to  perform,  the  one 
economic  and  the  other  legal.  The  economic  function 
consists  of  the  help  they  furnish  to  merchants;  for  the  latter 
would  find  it  physically  impossible  to  attend  personally  to 
all  their  business  at  home  and  abroad;  on  the  other  hand,  the 
employment  of  auxiliaries  of  commerce  is  an  appUcation  of 
the  principle  of  subdivision  of  labor,  which  permits  of 
quicker  and  more  efficient  work. 

Besides  those  persons  who  are  characterized  as  auxiliaries 
of  commerce  there  are  others  who  also  aid  coimnerce  by 
supplying  necessary  help  and  subdividing  labor,  such  as 
bankers  and  carriers.  The  latter  are  not,  however,  consid- 
ered as  auxiliaries,  although  their  acts  are  ''auxihary"  to 
commerce.  They  are  independent  merchants,  deriving  prof- 
its from  the  transaction,  though  their  business  serves  others 
also;  while  the  auxiliaries  of  commerce  are  not  independent 
merchants,   derive   no   personal   profit  from   the   business 

116 


AUXILIARIES    OF    COMMERCE  117 

transaction  as  such,  but  from  the  service  alone.  They  are 
only  a  continuation,  so  to  speak,  of  the  personality  of  their 
principal,  who  derives  the  profit  from  the  commercial 
transaction. 

The  legal  position  of  auxiliaries  of  commerce  involves 
features  of  the  contracts  of  agency  and  of  the  hiring  of 
services. 

Kinds  of  auxiliaries  of  commerce. 

There  are  two  kinds  of  auxiharies,  namely:  dependent 
and  independent. 

Dependent  auxiliaries  of  commerce. 

The  law  divides  dependent  auxiliaries  into  three  classes: 
a,  factors;  b,  clerks;  c,  mancehos  (subordinate  employees, 
shop  clerks,  office  boys,  etc.).^ 

Other  countries  admit  the  distinction  between  factors  and 
clerks  only. 

Factors. 

The  manager  of  an  industry,  commercial  house  or  factory, 
duly  empowered  to  contract  in  all  matters  concerning  it,  as 
the  owner  considers  suitable,  is  a  factor  in  the  legal  accept- 
ance of  the  word.^ 

Capacity. 

The  capacity  of  a  person  to  act  as  a  factor  is  not  uniformly 
regulated  in  the  Latin-American  codes.  They  may  be 
divided  into  three  groups: 

1.  Those  which  prescribe  that  the  capacity  to  act  as 
a  factor  is  governed  by  the  general  rules  of  the  code  of 
commerce;  ^ 

2.  Those  which  provide  for  a  minimum  age  limit — 

» Spain,  283,  292,  293;  Honduras,  196,  205,  206;  Peru,  277,  286,  287. 

2  Spain,  283;  Argentina,  132;  Bolivia,  149;  Colombia,  435;  Ecuador,  113; 
Honduras,  196;  Mexico,  309;  Nicaragua,  92;  Panama,  619;  Peru,  277;  Uruguay, 
147;  Venezuela,  102. 

'Spain,  282;  Argentina,  132;  Honduras,  195;  Mexico,  310;  Panama,  603; 
Peru,  276;  Uruguay,  133. 


118  LATIN- AMERICAN    COMMERCIAL   LAW 

Chile,*    and    Colombia,^    seventeen    years;    Ecuador,^ 
fourteen  years;  Nicaragua/  twenty  years; 

3.     Those  which  make   this  matter  depend   upon 
civil  law.^ 

Power. 

Powers  of  attorney  given  to  factors  must  be  in  writing 
and  registered  in  the  commercial  registry.  Colombia  and 
Guatemala  do  not  require  registration  of  the  power.^ 

Only  San  Salvador  ^°  provides  that  the  power  may  be 
either  oral  or  in  writing. 

Powers  of  factors. 

Factors  must  transact  business  and  make  contracts  in  the 
name  of  their  principals,  and  in  all  instruments  which  they 
subscribe  in  such  capacity  they  must  state  that  they  do  so  by 
virtue  of  a  power  of  attorney,  or  in  the  name  of  the  person 
or  association  they  represent. 

When  factors  transact  business  in  the  manner  described 
above,  the  obligations  they  contract  are  for  account  of  their 
principals.  Any  actions  at  law  arising  therefrom  must  be 
brought  against  the  principals;  the  property  of  the  factor  is 
bound  when  it  is  mixed  with  that  of  the  principal. 

Contracts  made  by  factors  of  a  manufacturing  or  commer- 
cial enterprise,  which  by  common  knowledge  they  represent, 
are  deemed  to  have  been  made  for  the  account  of  the  prin- 
cipal, whether  actually  disclosed  or  not,  and  notwithstanding 
any  excess  of  his  powers,  or  misappropriation  of  the  goods, 
subject-matter  of  the  contract;  provide^  the  contract  in- 
volve an  object  within  the  normal  business  of  the  establish- 

^  Art.  338.  6  Art.  452.  «  Art.  115. 

'  Art.  93.  8  Costa  Rica,  120;  Guatemala,  115. 

9  Spain,  21,  282;  Argentina,  133;  Bolivia,  21,  150;  Brazil,  74;  Chile,  339; 
Colombia,  453;  Costa  Rica,  121,  122;  Ecuador,  116;  Guatemala,  116;  Hon- 
duras, 22,  195;  Mexico,  21,  310;  Nicaragua,  94;  Panama,  604;  Peru,  21,  276; 
Uruguay,  134;  Venezuela,  103. 

The  power  of  a  factor  must  be  entered  in  the  registry  of  the  commercial 
court,  in  Guatemala. 

1"  Art.  138. 


AUXILIARIES    OF   COMMERCE  119 

merit,  or  if  it  can  be  proved  that  the  acts  of  the  factor  were 
authorized  by  his  principal  or  subsequently  ratified  in 
express  terms  or  by  positive  acts.^^ 

A  contract  made  by  a  factor  in  his  own  name  binds  him 
directly  to  the  other  party,  but  if  the  transaction  was  under- 
taken for  the  account  of  the  principal,  the  other  party  may 
bring  action  against  the  factor  or  the  principal.  ^^ 

Obligations  of  factors. 

Factors  have  the  general  obligations  of  agents  ^^  but  the 
law  specifies  certain  duties  which  are  derived  from  their 
peculiar  functions.    They  must : 

1.  Transact  business  in  the  name  of  their  principals, 
as  already  observed; 

2.  Keep  the  books  of  the  estabhshment  under  their 
charge;  ^'^ 

3.  Fulfill  their  functions  during  the  period  stipu- 
lated, if  the  contract  has  fixed  such  a  period; 

4.  Give  their  principals  one  month's  notice  of  termin- 
ation of  their  service,  if  there  is  no  fixed  period  of  serv- 
ice. 

Disabilities  of  factors. 

Factors  are  forbidden: 

1.  To  trade  for  their  own  account  or  interest  them- 
selves in  their  own  name  or  in  that  of  another  person, 
in  transactions  of  the  same  character  as  those  they  are 
engaged  in  for  their  principals,  unless  expressly  author- 
ized thereto  by  the  principals.    Should  they  do  business 

'1  The  factor  of  a  commercial  house  whose  power  is  general  is  entitled  to  do 
all  acts  required  in  the  management  of  the  establishment,  without  other  re- 
strictions than  those  expressed  in  the  deed  of  power.  Spain,  Trib.  Sup., 
October  16,  1861. 

12  Spain,  284  to  287;  Argentina,  135  to  139;  Bolivia,  150  to  155;  Brazil,  75, 
76;  Chile,  340;  Colombia,  454;  Guatemala,  117  to  120;  Honduras,  197  to  200; 
Mexico,  311  to  316;  Nicaragua,  95,  96;  Panama,  605  to  609;  Peru,  278  to  281; 
San  Salvador,  138  to  141;  Uruguay,  136  to  140;  Venezuela,  103  to  105. 

"  Cf.  infra,  chapter  on  Commercial  Agency. 

^*  Argentina,  145;  Bolivia,  156;  Chile,  341;  Colombia,  455;  Costa  Rica,  133; 
Nicaragua,  100;  Panama,  615;  Uruguay,  146. 


120  LATIN-AMERICAN    COMMERCIAL    LAW 

without  this  authorization,  the  profits  thereof  inure  to 
the  principal,  and  the  losses  to  the  factor  personally.  ^^ 

2.  To  assign  or  delegate  their  power  of  attorney  to 
another  person  without  the  consent  of  the  principal.  ^^ 

Liabilities  of  factors. 

Factors  are  liable:  a,  for  fraud  or  negligence  in  the  per- 
formance of  their  duties;  h,  for  infringement  of  the  orders 
of  their  principals;  c,  for  assigning  or  delegating  their  powers 
without  specific  authorization;  d,  for  acts  done  in  their  own 
name  in  case  the  other  party  brings  an  action  against  the 
principal;  e,  for  breach  of  the  contract  by  leaving  their 
positions  before  the  time  stipulated,  or  before  one  month 
after  notice  in  case  there  is  no  stated  period  in  the  contract; 
/,  for  penalties  which  the  factors  may  incur  by  reason  of 
violation  of  fiscal  laws  and  governmental  regulations  in 
their  management  of  the  business,  when  the  penalties  are 
enforced  against  the  property  of  their  principals.^" 

Rights  of  factors. 

Factors  are  entitled: 

1.  To  be  compensated  for  their  services; 

2.  To  be  indemnified  in  case  they  incur,  while  accom- 
pHshing  their  duties,  some  extraordinary  expense,  or  if 

15  Spain,  288;  Argentina,  141;  Bolivia,  158;  Brazil,  84;  Colombia,  444 
Costa  Rica,  127;  Ecuador,  131;  Guatemala,  121;  Honduras,  201;  Mexico,  312 
Nicaragua,  97;  Panama,  611;  Peru,  282;  San  Salvador,  142;  Uruguay,  142 
Venezuela,  106. 

18  Spain,  296;  Argentina,  161;  Bolivia,  158;  Brazil,  95;  Costa  Rica,  142; 
Ecuador,  130;  Guatemala,  131;  Honduras,  209;  Panama,  633;  Peru,  289. 

1'  Spain,  287,  296,  297,  299;  Argentina,  139,  143,  154,  157,  158;  Bolivia,  155, 
157,  162,  163;  Brazil,  78,  81,  82;  Colombia,  438,  443,  445,  449;  Costa  Rica, 
126,  130,  142  to  144,  147;  Ecuador,  129,  132,  135,  139;  Guatemala,  120,  124, 
131,  132,  133,  136;  Honduras,  200,  209,  210,  212;  Mexico,  314,  317,  327,  328; 
Nicaragua,  98,  105;  Peru,  281,  290,  291,  293;  Panama,  609,  612,  613,  626,  629, 
630,  633;  San  Salvador,  142,  152,  153;  Uruguay,  143,  155,  157,  158,  162; 
Venezuela,  105,  111. 

The  obligation  of  a  factor  to  pay  damages  because  of  his  malice,  negli- 
gence or  abuse  of  power,  ceases  when  through  some  act,  it  may  be  inferred 
that  the  principal  ratified  the  act  or  contract  subject-matter  of  the  complaint. 
Spain,  Trib.  Sup.  April  18,  1868,  Gaceta  of  May  11,  1868. 


AUXILIARIES    OF    COMMERCE  121 

they  have  suffered  some  loss  regarding  which  there 
was  no  express  agreement  between  them  and  their 
principal; 

3.  To  be  paid  their  compensation  when,  by  reason  of 
some  unforeseen  event,  unavoidable  on  their  part,  they 
are  unable  to  render  their  stipulated  services,  provided 
the  incapacity  to  serve  does  not  exceed  three  months; 

4.  To  be  given  one  month's  notice  when  they  are 
discharged,  provided  their  contract  has  no  fixed  term, 
or  else  to  be  paid  one  month's  compensation; 

5.  Not  to  be  discharged  before  the  period  stipulated, 
unless  by  their  conduct  the  principal  has  good  reason 
to  do  so.^^ 

Rescission  of  the  contract  between  the  factor  and  his  prin- 
cipal. 

If  a  contract  between  a  merchant  and  his  factor  or 
employee  has  a  fixed  period  to  run,  the  former  cannot 
discharge  the  factor  nor  the  latter  leave  his  position 
while  the  contract  is  in  force,  under  pain  of  liability  for 
damages. 

Principals,  however,  may  discharge  their  factors  and  em- 
ployees even  though  the  term  of  service  under  the  contract 
has  not  expired,  for  the  following  reasons : 

1.  Fraud  or  breach  of  trust  in  the  business  entrusted 
to  them; 

2.  The  transaction  of  some  commercial  business 
without  the  principal's  authorization; 

3.  Serious  disrespect  to  and  lack  of  consideration  for 

"Spain,  298,  299,  302;  Argentina,  155  to  158;  Bolivia,  159,  162,  163;  Brazil, 
79  to  82;  Chile,  332,  335,  336;  Colombia,  445,  449,  450;  Costa  Rica,  143,  144, 
148,  149;  Ecuador,  132,  135,  136;  Guatemala,  132,  133,  137;  Honduras,  211, 
212,  215;  Mexico,  326,  328;  Nicaragua,  104,  106,  107;  Panama,  627,  628,  630, 
634;  Peru,  288,  289,  296;  San  Salvador,  152,  153,  154;  Uruguay,  156  to  159; 
Venezuela,  111,  112. 

The  share  that  a  merchant  gives  to  his  factor  or  clerk  in  the  profits  of  the 
business  do  not  constitute  a  gift,  as  their  "cause"  is  not  the  liberality  of  the 
merchant,  but  an  interested  motive,  namely,  to  create  a  stimulus  which  may 
induce  the  clerk  to  greater  exertion.  Spain,  Trib.  Sup.  Feb.  16,  1899;  Col. 
Leg.  de  Esp.;  Jur.  civ.,  vol.  IV,  sec.  I,  1899,  p.  298. 


122  LATIN-AMERICAN   COMMERCIAL   LAW 

the  principal  or  members  of  his  family  or  business 
house." 
Employees  may  leave  the  service  of  their  principals,  even 
though  the  term  of  their  contract  has  not  expired,  for  the 
following  reasons: 

1.  Non-payment  of  salary  or  remuneration  at  the 
time  agreed  upon; 

2.  Non-compliance  with  any  of  the  other  stipulations 
in  favor  of  the  employee; 

3.  Bad  treatment  or  serious  offenses  on  the  part  of  the 
principal. -° 

Nicarauga  -^  leaves  the  appreciation  of  the  causes  to  the 
discretion  of  the  commercial  courts. 

CLERKS 

Character  of  a  clerk. 

Merchants  may  entrust  other  persons,  besides  factors, 
with  the  constant  management,  in  their  name  and  for  their 
account,  of  one  or  more  departments  of  their  business. 

The  acts  of  these  special  employees  or  agents  only  bind  the 
principal  with  respect  to  transactions  within  the  scope  of  the 
department  or  business  entrusted  to  them.^^ 

Powers  of  clerks. 

The  matter  of  the  legal  form  of  the  power  of  attorney 

19  Spain,  300;  Argentina,  159,  160;  Bolivia,  164;  Brazil,  84;  Chile,  333; 
Colombia,  446,  448;  Costa  Rica,  145,  146;  Ecuador,  133;  Guatemala,  134; 
Honduras,  213;  Mexico,  330;  Panama,  631,  632;  Peru,  294;  San  Salvador,  153; 
Uruguay,  160,  161;  Venezuela,  111. 

20  Spain,  301;  Argentina,  159;  Bolivia,  162;  Brazil,  83;  Chile,  334;  Colombia, 
447,  448;  Costa  Rica,  145;  Ecuador,  134;  Guatemala,  135;  Honduras,  214; 
Mexico,  331;  Panama,  631,  632;  Peru,  295;  San  Salvador,  153;  Uruguay,  160, 
161;  Venezuela,  111. 

21  Art.  104. 

22  Spain,  292;  Argentina,  146;  ChUe,  343;  Colombia,  457;  Costa  Rica,  135; 
Ecuador,  119  to  121;  Guatemala,  127;  Honduras,  205;  Mexico,  309;  Nicaragua, 
101;  Panama,  618;  Peru,  286;  San  Salvador,  145;  Uruguay,  147;  Venezuela, 
102. 

It  can  never  be  understood  that  an  employee  is  serving  with  a  commercial 
firm  without  compensation.  Primera  Sala  del  Trib.  Sup.  Mexico,  March  20, 
1909.    Diar.  de  Jur.,  vol.  17,  p.  233. 


AUXILIARIES    OF    COMMERCE  123 

given  to  clerks  has  caused  a  difference  of  opinion  among 
law-makers.  This  is  due  to  the  circumstance  that  by  the 
mere  fact  that  a  person  is  employed  in  a  commercial  house, 
the  public  presumes  that  he  has  power  to  represent  it  at 
least  in  a  special  branch ;  but  the  functions  of  employees  are 
at  times  so  restricted  that  a  merchant  cannot  be  held  respon- 
sible for  all  acts  of  his  employees.  The  systems  followed  by 
the  codes  are  as  follows: 

1.  System  of  Spain.  The  power  of  attorney  may  be 
the  result  of  an  oral  or  written  agreement,  but  associa- 
tions must  publish  said  agreement  in  a  public  notice 
or  by  means  of  circulars  sent  to  their  correspond- 
ents.-^ 

2.  System  of  Chile.  Merchants  must  give  powers  in 
writing  to  clerks  or  employees  entrusted  with  the 
management  of  a  special  department  which  may  re- 
quire the  signing  of  documents  or  any  similar  acts 
creating  rights  and  obligations,  as,  for  example,  drawing 
bills  of  exchange,  collecting  and  giving  receipts  for 
money,  etc.  Such  a  power  must  be  registered  in  the 
commercial  registry. 

Nevertheless,  a  person  tendering  a  receipted  bill,  is 
deemed  authorized  to  collect  the  amount  therein  stated. 

When  merchants  send  circulars  to  their  correspondents 
making  known  that  their  employees  are  authorized  to  enter 
into  contracts  with  the  persons  to  whom  the  circulars  are 
addressed,  the  contracts  entered  into  in  that  respect  are 
vaUd.  Circulars  are  more  frequently  used  in  Latin- America 
than  they  are  in  the  United  vStates  as  a  means  of  communi- 
cating information  or  giving  notice  as  required  by  law. 

Similar  circulars  are  necessary  in  order  that  correspond- 
ence signed  by  an  employee  may  be  binding  upon  the  em- 
ploying merchant. 2* 

3.  System  of  Brazil.    Brazil  requires  a  written  power 

"Spain,  292;  Honduras,  205;  San  Salvador,  145;  Peru,  280. 

^*  Argentina,  147,  149;  Bolivia,  160  to  170;  ChiU;,  343  to  345;  Colombia,  457 
to  459;  Costa  Rica,  135  to  137;  Ecuador,  121,  122;  Guatemala,  127;  Nicaragua, 
101;  Panama,  020  to  622;  Uruguay,  148  to  150;  Venezuela,  107,  108. 

Under  the  name  "  cajero  "  (cashier)  in  Bolivia  is  meant  every  shop  clerk,  166. 


124  LATIN- AMEEICAN   COMMERCIAL   LAW 

duly  registered  in  the  commercial  registry,  under 
penalty  of  depriving  the  clerk  of  all  the  rights  of  his 
position;  but  acts  done  by  employees  within  the  com- 
mercial house  are  vaUd  and  binding  upon  the  merchant 
even  though  they  have  no  formal  power.  ^^ 

4.  System  of  Mexico.     The  acts  of  employees  are 

binding  upon  their  principals  in  all  transactions  within 

the  scope  of  their  authority.    The  law  does  not  require 

any  formal  power  for  employees  as  it  does  for  factors. 

Traveling  agents,  authorized  by  means  of  letters  or  other 

documents,  to  enter  into  contracts,  bind  their  principals 

to  the  extent  of  the  powers  granted  therein. 

Functions  of  clerks  which  do  not  require  a  special  power. 

Clerks,  by  the  mere  fact  of  employment  in  a  commercial 
house  and  rendering  their  services  within  the  estabhshment, 
have  power  to  carry  out  the  usual  daily  transactions  of  their 
department,  according  to  the  nature  and  importance  of  the 
house.  When  they  are  salesmen  in  a  retail  store  they  are 
considered  as  authorized  to  collect  the  amount  of  the  sales 
they  may  effect  and  their  receipts  given  in  the  name  of  the 
principal  are  vahd  and  binding  on  the  principal.  The  same 
power  is  vested  in  clerks  who  sell  in  wholesale  stores,  pro- 
vided the  sales  are  for  cash  and  payment  is  made  in  the  store : 
but  when  the  collections  are  to  be  made  outside  the  store,  or 
when  they  are  the  proceeds  of  credit  sales,  the  receipts  must 
necessarily  be  signed  by  the  principal  or  his  factor  or  man- 
ager, or  by  an  agent  authorized  to  make  collections. 

When  a  merchant  entrusts  a  clerk  with  the  duty  of  receiv- 
ing merchandise  and  the  latter  receives  it  without  comment 
as  to  its  quantity  or  quality,  his  acts  of  receiving  have  the 
same  legal  effect  as  if  made  by  the  principal.-^ 

"  BrazU,  74,  75. 

2«  Spain,  292  to  295;  Argentina,  151,  153;  Bolivia,  171,  172;  Chile,  346; 
Colombia,  460,  461;  Costa  Rica,  139,  141;  Ecuador,  123;  Guatemala,  128,  130; 
Honduras,  205  to  208;  Mexico,  321,  322,  324;  Nicaragua,  102;  Panama,  623, 
625;  Peru,  286  to  289;  San  Salvador,  148,  149;  Uruguay,  152,  154;  Venezuela, 
109. 


AUXILIARIES   OF   COMMERCE  125 

Capacity  of  shop  clerks. 

Notwithstanding  the  silence  of  the  codes  in  the  matter  of 
the  capacity  of  shop  clerks  and  the  natural  inference  that 
the  capacity  of  such  employees  is  governed  by  the  general 
principles  of  the  civil  law,  the  fact  is  that  merchants  do 
employ  and  have  always  employed  minors  as  shop  clerks. 
No  difficulty  has  ever  been  experienced  from  that  practice 
with  respect  to  matters  in  which  no  formal  power  is  required, 
although  where  it  is  required,  legal  capacity  is  necessary. 
This  illustrates  the  effect  of  commercial  custom  as  a  source 
of  law  independent  and  above  statute  law. 

Only  the  codes  of  Colombia  ^^  and  Ecuador  -^  expressly 
provide  that  minors  over  fourteen  years  may  be  shop  clerks, 
when  duly  authorized  by  their  parents,  guardians  or  hus- 
bands, as  the  case  may  be. 

Other  rules  applicable  to  shop  clerks. 

With  the  Umitation  as  to  powers  of  attorney  and  other 
special  provisions  relating  to  clerks  aheady  mentioned,  all 
the  rules  relating  to  the  rights,  duties,  powers  and  liabilities 
of  managers  or  factors,  including  the  rescission  of  the  con- 
tract of  employment,  are  applicable  to  commercial  clerks. 

INDEPENDENT   AUXILIARIES   OF   COMMERCE 

Brokers. 

Even  though  the  main  function  of  a  merchant  is  to  mediate 
betw^een  producer  and  consumer,  merchants  cannot  per- 
sonally deal  or  be  directly  acquainted  with  every  interested 
producer  or  seller  or  with  every  interested  consumer  or 
buyer.  In  many  cases  he  trades  in  absentia  in  one  or  more 
foreign  countries  simultaneously.  On  the  other  hand,  there 
are  persons  who,  lacking  capital  to  trade  on  their  own  ac- 
count, are  useful  to  the  merchant  because  of  the  knowledge 
they  possess  of  sellers  and  buyers  in  the  locality.  Such 
persons  are  brokers  whose  function  it  is  to  facilitate  com- 
merce by  their  mediation   between   sellers  and  merchants 

"  Colombia,  456.  ^s  Ecuador,  115,  120. 


126  LATIN-AMERICAN    COMMERCIAL    LAW 

on  the  one  hand,  and  merchants  and  buyers  on  the  other. 
In  this  mediation  they  operate  not  in  the  special  interest 
of  any  of  the  parties,  but  for  the  sole  purpose  of  bringing 
them  to  an  agreement  by  negotiation.  They  are,  then,  im- 
partial witnesses  and  their  testimony  can  be  used  as  e\'idence 
more  trustworthy  than  that  of  the  parties  themselves  or 
other  witnesses  who  may  not  have  been  aware  of  all  the  cir- 
cumstances of  the  transaction.  For  this  reason,  the  law 
charges  them  with  special  functions  in  the  matter  of  evi- 
dence. 

WTien  states,  using  their  credit  for  the  construction  of 
public  works,  and  undertaking  the  enormous  expenditures 
of  modern  governmental  administration,  issue  bonds  and 
other  securities,  they  need,  like  merchants,  some  depend- 
able intermediaries  to  sell  such  securities  and  obtain  the 
best  market  for  them,  a  circumstance  which  is  responsible 
for  the  creation  of  a  special  class  of  brokers. 

Brokers  may  be  defined  as  independent  auxiliaries  of 
commerce,  who  seek  by  negotiation  to  bring  prospective 
commercial  buyers  and  sellers  into  agreement,  with  legal 
authority  to  authenticate  the  ensuing  transaction.  Brok- 
ers, therefore,  perform  two  functions:  the  one  economic,  the 
other  legal. 

As  to  the  economic  function  of  brokers,  i.  e.,  in  bringing 
the  parties  to  an  agreement,  the  codes  of  Latin-America 
follow  two  systems : 

1.  French  system.  In  this  system,  there  are  only 
official  brokers ;  aU  brokers  must  fulfill  special  requisites 
and  must  obtain  a  license  to  engage  in  that  occupa- 
tion. ^^ 

Mexico  requires  that  the  license  be  renewed  e^'ery 
year  by  the  supreme  poUtical  authority  of  the  Federal 
or  state  government. 

29  Argentina,  88;  Bolivia,  66;  Brazil,  38,  39;  Haiti,  75,  76;  Honduras,  43; 
Mexico,  54,  55;  Nicaragua,  42;  Santo  Domingo,  74;  Uruguay,  90,  91. 

Transactions  transferring  the  shares  of  corporations  or  public  securities, 
or  any  other  securities  quoted  in  the  exchange  are  void  unless  made  through 
the  corresponding  official  brokers.  Brazil,  Law  No.  1083  of  1860,  arts.  2, 
and  31  and  decree  No.  2733  of  1861,  arts.  1  to  3. 


AUXILIARIES   OF   COMMERCE  127 

Bolivia  imposes  a  fine  of  ten  per  cent  of  the  amount  of 
the  transaction  upon  any  person  who  acts  as  a  broker 
without  proper  hcense,  and  banishment  in  case  of  re- 
currence, and  a  fine  of  five  per  cent  on  the  merchants 
who  permitted  the  mediation  of  the  unhcensed  broker, 
those  merchants  being  jointly  responsible  for  the  fine 
imposed  upon  the  broker. 

2.  Spanish  system.  Brokers  are  divided  into  two 
classes:  unlicensed  and  licensed  or  official;  all  brokers 
may  freely  perform  the  corresponding  economic  func- 
tion, ^o 

As  to  the  legal  function,  that  is,  the  power  to  au- 
thenticate commercial  contracts,  only  licensed  official 
brokers  may  exercise  it,  because  it  is  a  public  function. 

Brokers  as  officials  who  authenticate  contracts. 

Brokers,  as  officials  vested  with  powder  to  authenticate 
commercial  transactions,  must  be  citizens;  in  Argentina, 
Nicaragua,  Salvador  and  Uruguay  residents  only  can  be 
brokers,  and  must : 

(a)  keep  the  book  or  books  required  by  law  in  order 
to  enter  therein  a  memorandum  of  eveiy  brokerage 
transaction  conducted  through  them; 

(6)  give  to  each  of  the  parties  a  copy  of  the  memo- 
randum, signed  by  the  broker,  comprising  all  the  essen- 
tial points  covered  by  the  transaction; 

(c)  certify  the  authenticity  of  the  contract  at  the  end 
of  each  copy  thereof,  giving  the  parties,  when  so  re- 
quired, a  copy; 

{d)  certify  the  delivery  of  the  things,  the  subject- 
matter  of  the  contract  of  purchase  and  sale,  when  the 
parties  so  desire; 

(e)  issue  certified  copies  of  the  memorandum  entered 
in  their  books  when  the  parties  to  the  transaction  so 
require; 

(/)  keep  a  daily  record  of  the  prices  of  commodities, 

'"Spain,  89;  Chile,  80;  Colombia,  68,  69;  Ecuador,  72,  96;  Panama,  107; 
Peru,  89;  San  Salvador,  39;  Venezuela,  82. 


128  LATIN-AMERICAN    COMMERCIAL   LAW 

bonds  and  securities  on  the  exchange,  for  determining 
judicial  questions  which  may  arise  as  to  quotations; 

(g)  send  to  other  brokers  and  the  interested  parties 
a  daily  note  of  the  transactions  in  bonds  and  securities, 
in  which  they  have  rendered  service.  ^^ 

Associations  of  brokers. 

In  Spain  and  Peru  there  are  bodies  of  brokers  which  also 
have  a  notarial  character.  In  every  commercial  center 
there  may  be  established  a  body  or  association  of  exchange 
brokers  {colegio  de  agentes  de  holsa),  another  of  commercial 
brokers  {colegio  de  corredores  de  comercio),  and  in  maritime 
centers,  one  of  shipbrokers  (colegio  de  corredores  interprctes 
de  buque).  These  associations  are  composed  of  indi^dduals 
who  have  obtained  admission  after  proving  that  they  possess 
the  qualifications  already  mentioned.  These  associated 
agents  and  brokers  (agentos  corredores  e  interpretes  colegiados) 
may  exercise  the  notarial  functions  in  the  cases  stated.  ^- 

Mexico  provides  also  for  an  institution  of  the  same  name 
{colegio  de  corredores)  but  its  functions  are  of  an  adminis- 
trative character.^^ 

Brokers'  books. 

Official  brokers  must  note  in  their  books  in  separate 
entries  all  transactions  in  which  they  may  have  taken  part, 
with  particulars  of  names  and  domicil  of  the  contracting 
parties,  and  the  subject-matter  and  terms  of  the  contracts. 
In  sales  they  must  state  the  quality,  amount  and  price  of 
the  articles  sold,  the  place  and  date  of  delivery  and  the 
manner  in  which  the  price  is  to  be  paid.  In  the  negotiation 
of  bills  of  exchange,  they  must  enter  the  dates,  place  of  issue 

=>!  Spain,  102,  i03,  105,  106  to  109,  111;  Argentina,  91,  95,  101  to  103; 
Bolivia,  79,  80,  85,  88,  89,  94,  95;  Brazil,  46,  47,  50,  52,  53,  58;  ChUe,  56,  61,  71, 
73,  78;  Colombia,  74,  76,  79,  81,  82;  Ecuador,  77,  78,  94;  Haiti,  78,  79,  83; 
Honduras,  56  to  60;  Mexico,  63,  64,  67,  68;  Nicaragua,  41,  45,  47,  49,  51; 
Panama,  112,  120  to  122;  Peru,  102,  103,  105,  106  to  109,  111;  San  Salvador, 
44,  48  to  51;  Santo  Domingo,  73,  78,  84;  Uruguay,  92,  94,  95,  102  to  104;  Ven- 
ezuela, 80,  81,  88. 

"  Spain,  90;  Peru,  90.  "  Mexico,  73. 


AUXILIARIES   OF   COMMERCE  129 

and  payment,  terms  and  due  dates,  names  of  the  drawer, 
endorsers  and  drawee,  of  the  transferor  and  purchaser  and 
the  exchange  rate  agreed  upon.  In  insurance  there  must  be 
stated,  with  reference  to  the  poHcy,  its  number  and  date^ 
the  names  of  the  underwriter  and  of  the  insured,  the  object 
of  the  insurance,  its  amount,  the  premium  agreed  upon, 
and  in  an  appropriate  case,  the  place  of  loading  and  unload- 
ing, and  a  precise  and  exact  statement  of  the  ship  or  the 
means  of  transportation.^^ 

Probative  force  of  brokers'  books. 

Certified  copies  taken  from  brokers '  books  constitute  com- 
plete evidence  like  those  taken  from  the  books  of  notaries. ^^ 

Venezuela,  however,  provides  that  the  courts  may  order 
brokers  to  produce  their  books  in  order  to  compare  the 
copies  of  the  contracts  given  to  the  parties  with  the  cor- 
responding original  entry,  and  ask  the  brokers  for  any  other 
explanation  that  the  judge  deems  proper.^*' 

^*  Spain,  92,  102,  107;  Argentina,  105,  108;  Bolivia,  96,  99;  Brazil,  47  to  50 
Chile,  66,  76  to  79;  Colombia,  76  to  79;  Ecuador,  77;  Haiti,  83;  Honduras,  56 
Mexico,  64;  Nicaragua,  49;  Panama,  121;  Peru,  93,  102,  107;  San  Salvador,  49 
Santo  Domingo,  84;  Uruguay,  92,  93;  Venezuela,  80. 

Besides  the  books  provided  for  by  the  code  of  commerce  in  Brazil,  brokers 
must  keep  a  stub-book  authenticated  by  the  collector  of  the  stamp  tax. 
Brazil,  Decree  No.  2490  of  1859. 

"Spain,  93;  Argentina,  208;  Bolivia,  94;  Brazil,  52,  122;  Costa  Rica,  209; 
Ecuador,  82;  Mexico,  66;  Nicaragua,  45;  Panama,  244;  Peru,  93;  Uruguay, 
192;  Venezuela,  130. 

The  evidential  force  attributed  by  the  law  to  the  memoranda  and  certifica- 
tions of  brokers  depends  entirely  upon  the  circumstances  that  their  books  are 
kept  strictly  in  accordance  with  the  provisions  of  the  commercial  code.  Spain, 
Trib.  Sup.,  April  3,  1888;  Gaceta  of  Nov.  26,  1866. 

Accounts  or  entries  in  the  books  of  an  exchange  broker  have  not  the  char- 
acter of  authentic  documents.    lb. 

When  the  books  of  brokers  are  kept  in  accordance  with  the  law,  the  state- 
ments therein  constitute  full  evidence.    Brazil,  O  Direito,  vol.  15,  p.  473. 

The  probative  force  of  the  books  of  brokers  when  there  is  a  doubt  between 
the  two  copies  of  a  contract  made  through  a  broker,  does  not  exclude  any 
other  means  of  evidence  specially  when  the  broker  has  contracted  in  his  own 
name,  as  he  is  authorized  to  do;  because  that  would  be  equivalent  to  leaving  to 
his  discretion  the;  rights  and  obligations  of  his  principal.  Spain,  Trib.  Sup., 
Feb.  20,  1897,  Gaceta  of  March  21,  1897. 

'«Art.  81. 


130  LATIN-AMERICAN    COMMERCIAL    LAW 

The  system  of  Chile  is  quite  different.  The  books  of 
brokers  in  that  country  do  not  prove  the  actual  existence  of 
the  contracts  to  which  they  may  refer;  but  if  the  parties 
admit  their  existence,  the  books  prove  the  character  and 
terms  of  the  transaction.^^ 

The  memorandum  of  the  contract  that  brokers  give  to  one 
another  and  to  the  parties  concerned  constitutes  evidence 
against  the  brokers  but  not  in  their  favor.  ^^ 

Requisites  that  brokers  must  fulfill. 

There  are  four  requisites  that  an  applicant  must  fulfill 
in  order  to  obtain  a  license  or  appointment  as  a  broker,  in 
the  countries  where  official  brokers  are  provided  for,  namely, 
citizenship,  competence,  honesty  and  an  official  bond  as 
security.  Not  all  of  these  requisites  are  mentioned  in  eveiy 
code;  several  of  them  fail  to  provide  for  one  or  more  of  the 
qualifications  stated,  as  appears  in  the  following  analysis. 

Citizenship. 

Citizenship  is  required  by  Spain, ^^  Bolivia,'*"  Brazil,*^ 
Chile,^^  Honduras,-*^  Mexico  ^^  and  Peru.'*'^ 

In  Argentina, ^^  San  Salvador  and  Uruguay  ^^  the  code 
refers  to  domicil  instead  of  citizenship,  and  in  Nicaragua  '^^ 
the  mere  fact  of  residence  suffices. 

Competence. 

Evidence  of  competence  must  consist  in  the  fact  that  the 
applicant  has  practical  knowledge  of  trade  and  commerce 
by  reason  of  having  been  a  merchant  for  a  certain  number  of 
years.  ^^ 

In  BoUvia  the  broker  must  pass  an  examination. 

"  Art.  60. 

'8  Spain,  103;  Chile,  61;  Honduras,  57;  Panama,  120  and  San  Salvador,  48. 
39  Ai-t.  94.  «  Art.  68.  "  Art.  39. 

42  Art.  48.  «  Art.  50.  "  Art.  54. 

«  Art.  94.  «  Art.  89. 

«  San  Salvador,  43;  Uruguay,  90.  «  Art.  42. 

«  Argentina,  89;  Boliva,  68,  70;  Brazil,  39;  Chile,  Art.  5  of  the  law  of  Septem- 
ber 1,  1866;  Honduras,  46;  Mexico,  54. 


AUXILIARIES    OF   COMMERCE  131 

Honesty. 

Honesty  and  well-known  integrity  must  be  proved  by  the 
testimony  of  three  registered  merchants.^" 

Security. 

The  broker  is  required  to  give  an  official  bond  in  the 
amount  fixed  by  the  government  in  Spain;  ^^  in  Bolivia/-  of 
$3,000;  in  Brazil,  brokers  of  the  city  of  Rio  de  Janeiro  must 
give  a  bond  for  10,000  milreis,  those  of  the  cities  of  Bahia, 
Pernambuco,  Manaiion,  Para,  Ceara,  Alagoas,  Sergipe  and 
Rio  Grande  do  Sul,  for  from  500  to  10,000  milreis;  ^^  in 
Chile,  $1,000  to  $5,000;  '''  in  Ecuador,  $1,000  to  $2,000;  ^^ 
in  Honduras,  $500  to  $2,000;  ^^  in  Mexico,  the  amount  is  to 
be  regulated  in  every  state  and  in  the  Federal  district  and 
Federal  territories;  ^"  in  Panama,  5,000  balboas;  °^  in  Peru, 
the  amount  is  to  be  determined  by  regulations;  '"^  in  San 
Salvador,  $2,000;  «o  in  Santo  Domingo,  $10,000  as  a  maxi- 
mum; "  and  in  Venezuela,  from  1,000  to  12,000  bolivares.^^ 

Women  brokers. 

Women  cannot  be  brokers  in  Argentina,^^  Bolivia,^* 
Chile,^^  Ecuador, ^^  Nicaragua,^''  or  Uruguay.^^ 

Kinds  of  brokers. 

The  occupation  of  brokerage  has  been  subdivided  in  every 
countrj'-  according  to  the  necessities  of  the  general  subdivision 

^^  Spain,  94;  Argentina,  89;  Brazil,  39;  Honduras,  46;  Mexico,  54;  Nicara- 
gua, 42;  Panama,  108;  Peru,  94;  Venezuela,  83. 

*'  Spain,  94. 

Bonds  given  by  exchange  brokers  are  required  not  only  in  the  interest  of  the 
State  as  a  guaranty  for  their  dealings  in  state  securities,  but  also  for  the  benefit 
of  individuals  as  a  pledge  for  the  proper  conduct  of  the  business  intrusted  to 
them.    Spain,  Trib.  Sup.,  July  8,  1905;  Gaceta  of  Feb.  15  and  16,  1906,  p.  48. 

"  Art.  68. 

"  Art.  41,  and  decree  No.  5549  of  1874. 

^*  Arts.  52  and  53  and  article  4  of  law  of  September  1,  1866. 

"  Art.  74.  ^  Art.  47.  "  Art.  58. 

^  Arts.  108,  109.  ^^  Art.  94.  «» Art.  41. 

«i  Art.  90.  «2  Art.  71.  "  Art.  88. 

"  Art.  74.  «5  Art.  55.  ««  Art.  76. 

8'  Art.  42.  «8  Art.  89. 


132  LATIN-AMERICAN   COMMERCIAL   LAW 

of  labor,  although  in  some  instances  the  classes  of  brokers 
appear  to  have  been  planned  more  from  a  theoretical  point 
of  view  than  from  real  necessities  of  commercial  practice. 

In  Mexico  we  find  five  classes  of  brokers,  namely:  1,  ex- 
change brokers;  2,  merchandise  brokers;  3,  insurance  brok- 
ers; 4,  transportation  brokers;  5,  ship  brokers.^^ 

In  Peru  there  are  four  classes:  1,  exchange  brokers;  2, 
mercantile    brokers;  3,  shipbrokers;  4,  auctioneers.^" 

In  Santo  Domingo  there  are  four  classes:  1,  merchandise; 
2,  insurance;  3,  ship;  4,  overland  and  marine  transporta- 
tion brokers.'^  ^ 

In  Spain  there  are  three  classes,  the  first  three  mentioned 
under  Peru.^^ 

Colombia  has:  1,  exchange  brokers;  2,  mercantile  brok- 
ers; 3,  auctioneers.^^ 

Haiti  has  three:  1,  merchandise;  2,  insurance;  3,  ship- 
brokers. 

There  are  brokers  and  auctioneers  in  .Argentina,^'*  Brazil,^^ 
Ecuador,'^  Haiti,^'  San  Salvador  "^  and  Uruguay .^^ 

89  Art.  62.  '"  Art.  94.  "  Art.  77. 

72  Art.  94. 

The  only  licensed  brokers  existing  now  in  Cuba  are  official  brokers  {car- 
redores  colegiados);  there  are  no  official  agents  or  exchange  brokers  {agentes 
colegiados  de  carnhio  y  bolsa). 

The  tariff  for  the  compensation  of  brokers  was  issued  by  the  governor  of 
Cuba  on  August  14,  1887.  The  bond  that  brokers  must  give  is  fixed  by  arti- 
cle 3  of  the  Order  No.  79  of  1900,  which  prescribes  that  after  the  license  has 
been  given  to  a  broker,  and  he  has  paid  the  corresponding  duties,  he  must 
give  a  bond  as  follows : 

For  a  first  class  license  $5,000. 

For  a  second  class  license  S4,000. 

For  a  third  class  license  $1,500. 

The  class  depends  upon  the  importance  of  the  city. 

First  class  is  for  Havana. 

Second  class  is  for  Santiago  de  Cuba,  Cien  Fuegos,  Matanzas,  C&rdenas, 
Camagiiey  and  Sagua  la  Grande. 

Third  class  is  for  other  places. 

A  broker  cannot  exercise  his  profession  as  long  as  he  has  not  given  the  bond. 
Licenses  are  granted  for  a  previous  payment  of  $12. 

"  Arts.  65,  92,  106.  "  Arts.  84,  89.  "  Art.  35. 

'«  Arts.  70,  100.  "  Art.  77.  "  Arts.  39,  61. 

"'  Art.  88. 


AUXILIARIES    OF    COMMERCE  133 

In  Chile/"  Bolivia,^ ^  Nicaragua^^  and  Venezuela  ^^  there 
is  only  one  class  of  brokers. 

Obligations  of  brokers  in  general  from  the  economic  view 
point. 

The  obHgations  of  brokers  in  general  are  three:  1,  dili- 
gence; 2,  good    faith;  3,  secrecy.^^ 

DILIGENCE 

Brokers  must  be  sure  of  the  identity  and  capacity  of 
the  parties  to  the  transactions  they  initiate  or  negotiate,  and 
also  of  the  authenticity  of  their  signature.  When  some  of 
the  parties  have  not  the  free  management  of  their  property 
brokers  cannot  act  for  them  unless  a  proper  authorization 
therefor  is  given  in  accordance  with  the  law.^^ 

GOOD    FAITH 

Brokers  are  obhged  to  initiate  every  transaction  with 
precision  and  clearness,  refraining  from  making  representa- 
tions which  may  mislead.  They  can  not  trade  for  their  own 
benefit,  nor  acquire  for  themselves  merchandise,  the  negotia- 
tion of  which  has  been  charged  to  them,  under  pain  of 
answering  for  faults  of  the  seller  or  of  the  buyer.^^ 

SECRECY 

Secrecy  must  be  used  by  brokers  in  the  transactions  they 

8»  Art.  48.  81  Art.  65.  8^  Art.  41. 

8'  Art.  74. 

8''  Transactions  carried  through  by  exchange  brokers  in  behalf  of  a  third 
party  are  governed  by  the  law  of  agency.  Argentina,  Jurisprudencia  Comer- 
cial  y  Criminal,  vol.  3,  p.  53,  3d  Ser. 

8*  Cf.  infra,  chapter  on  Bankruptcy. 

Spain,  95,  96;  Argentina,  96,  108,  111;  Bolivia,  87,  97;  Chile,  56,  71;  Colom- 
bia, 70;  Ecuador,  80;  Honduras,  51;  Mexico,  67;  Nicaragua,  44;  Panama,  100; 
Peru,  95,  96;  San  Salvador,  44;  Uruguay,  97;  Venezuela,  76. 

8«  Spain,  9.5,  96;  Argentina,  98,  99,  1051;  Bolivia,  77,  96,  99;  Brazil,  59; 
Chile,  57;  Colombia,  71,  75,  83;  Ecuador,  78;  Honduras,  51,  52;  Mexico,  67; 
Nicaragua,  46;  Panama,  112;  Peru,  95,  96;  San  Salvador,  44,  45;  Uruguay, 
100,  106,  107. 

All  advantages  obtained  by  an  exchange  broker  in  transactions  made  for  the 


134  LATIN-AMERICAN    COMMERCIAL    LAW 

undertake.  They  must  not  reveal  the  names  of  the  parties, 
unless  it  is  required  b}^  the  nature  of  the  transaction  or  by 
the  law,  or  in  case  the  interested  parties  consent.  ^^ 

Disabilities  of  brokers. 

Brokers  are  forbidden: 

1.  To  trade  for  their  own  account; 

2.  To  be  insurers  of  maritime  risks; 

3.  To  negotiate  bonds  or  merchandise  in  behalf  of 
individuals  or  associations  which  have  suspended  pay- 
ment or  been  declared  bankrupt,  unless  they  have  been 
discharged; 

4.  To  obtain  for  themselves  merchandise,  the  nego- 
tiation of  which  has  been  charged  to  them,  under  pain 
of  answering  for  faults  of  the  seller  or  the  buyer; 

5.  To  give  certificates  not  directly  taken  from  their 
books; 

6.  To  be  cashiers,  bookkeepers  or  employees  of  any 
merchant  or  mercantile  concem.^^ 

Brokers  are  discharged  from  their  functions,  or  at  least 
temporarily  suspended  in  the  exercise  thereof,  as  the  case 
may  require,  when  they  do  not  fulfill  the  obhgations  or  when 
they  violate  the  prohibitions  imposed  upon  them  by  law,  or 
defraud  or  deceive  the  principal  for  whom  they  act.^^ 

Liability  of  brokers  for  the  obligations  of  the  parties. 

As  a  rule  brokers  are  only  Uable  to  pay  damages  for  their 

account  of  others  are  for  the  benefit  of  the  principal.  Argentina,  Jur.  Com., 
vol.  1,  p.  303,  Ser.  3^. 

^  Spain,  95;  Argentina,  100;  Bolivia,  76;  Brazil,  56;  Nicaragua,  46;  Panama, 
112;  Peru,  95;  San  Salvador,  44;  Uruguay,  101. 

Publicity  given  by  brokers  to  transactions  made  through  them  after  they 
were  consumed  is  not  against  the  obligation  of  secrecy  imposed  upon  brokers. 
Brazil,  Decree  No.  2733  of  1861,  art.  13. 

8«  Spain,  96;  Argentina,  105,  108;  Bolivia,  96,  99;  Chile,  57;  Brazil,  59; 
Colombia,  83,  84,  87;  Eucador,  78;  Haiti,  84;  Honduras,  52;  Mexico,  68; 
Nicaragua,  52;  Panama,  113;  Peru,  96;  San  Salvador,  45;  Santo  Domingo,  85, 
86;  Uruguay,  106. 

89  Spain,  97;  Argentina,  110;  Brazil,  52;  Chile,  50;  Colombia,  83,  86,  90; 
Ecuador,  79;  Haiti,  86;  Honduras,  54;  Mexico,  69;  Nicaragua,  53;  Panama, 
115;  Peru,  97;  San  Salvador,  46;  Santo  Domingo,  87;  Uruguay,  96. 


AUXILIAEIES    OF    COMMERCE  135 

negligence,  fault,  or  fraud,  but  they  are  not  liable  as  sponsors 
or  guarantors  of  the  parties.  Exchange  brokers,  however, 
are  responsible  to  the  buyer  for  the  delivery  of  the  merchan- 
dise or  securities  sold,  and  to  the  seller  for  the  price  thereof, 
when  it  is  a  cash  transaction.^" 

In  Panama  ^^  and  Venezuela  ^-  a  broker  who  does  not 
disclose  the  name  of  the  one  party  to  the  other  makes  himself 
responsible  for  the  fulfinment  of  the  contract,  and  in  so  doing 
he  is  subrogated  to  the  rights  of  the  party  for  whose  benefit 
he  performed  the  contract. 

The  bankruptcy  of  a  broker  is  always  considered  fraudu- 
lent.93 

Compensation  of  brokers. 

The  compensation  of  brokers  is  a  matter  generally  left  to 
tariffs  and  local  usages;  but  some  of  the  conmiercial  codes 
have  provisions  in  the  matter.  Argentina  ^*  prescribes  that 
in  case  one  broker  has  carried  through  the  transaction,  he 
may  receive  compensation  from  both  parties.  When  more 
than  one  broker  has  mediated  in  the  transaction  each  has  a 
right  to  receive  compensation  from  his  principal  only. 

In  Argentina  ^^  and  in  Panama  ^^  compensation  is  due  even 

»  Spain,  101;  Argentina,  97;  Bolivia,  92;  Brazil,  55;  Chile,  67;  Panama,  117; 
Peru,  101;  San  Salvador,  47;  Uruguay,  98. 

"Art.  119.  92  Art.  78. 

'^  Argentina,  112;  Chile,  64;  Ecuador,  81;  Haiti,  88;  Honduras,  63;  Mexico, 
70;  San  Salvador,  54;  Santo  Domingo,  89. 

94  Art.  111.  95  Art.  111. 

^  Art.  127. 

Notwithstanding  that  a  non-official  broker  has  no  action  to  recover  com- 
pensation as  such  broker,  his  services  must  be  paid  for  under  article  1627  of 
the  Civil  Code.  Camara  de  Apel.  Com.,  Buenos  Aires,  December  26,  1912, 
Jur.  de  los  Tnbs.  Macs.,  Dec,  1912,  p.  332. 

A  broker  who  has  lent  his  services  in  a  contract  of  jMirchase  and  sale  subject 
to  a  condition  precedent,  has  no  right  to  demand  compensation  if  the  purchase 
is  not  realized  because  the  condition  does  not  take  place  without  the  seller  being 
liable  therefor.  Cam.  de  Apel.  Com.,  Buenos  Aires,  Nov.  5,  1912,  lb.,  Nov., 
1912,  p.  285. 

A  person  is  entitled  to  compensation  when  he  works  as  a  broker,  even  though 
he  is  not  registered  in  that  capacity,  if  he  appears  in  the  registry  as  a  conuner- 
cial  agent.  Corte  de  Apel.  Com.,  Buenos  Aires,  April  18,  1914.  lb.,  April, 
1914,  p.  264. 


136  LATIN-AMERICAN    COMMERCIAL    LAW 

though  the  transaction  is  not  completed  owing  to  the  fault  of 
one  of  the  parties,  or  when  after  it  was  begun  by  a  broker, 
the  party  entrusts  its  conclusion  to  another  broker  or  the 
party  concludes  it  himself. 

In  BoUvia,  brokers,  in  purchase,  exchange,  insurance  or 
freight  contracts,  are  paid  one-half  per  cent  of  the  amount  of 
the  transaction  by  each  party,  a  quarter  per  cent  on  transac- 
tions in  gold  and  silver,  and  in  discounts  of  negotiable 
instruments  two  per  cent  per  thousand  from  each  party.^^ 

In  Colombia  the  maximum  compensation  is  five  per  cent, 
each  party  paying  half.^^ 

In  Panama  ^^  in  the  absence  of  special  agreement,  the 
broker  is  paid  in  accordance  with  the  local  usages. 

In  Venezuela  a  broker  is  not  entitled  to  compensation  if  he 
does  not  conclude  the  business. ^°° 

Non-official  brokers  are  not  entitled  to  compensation  in 
Bohvia,^"^  Colombia  ^°^  and  Panama.  ^°^ 

Statute  of  limitations. 

Rights  of  action  against  brokers  are  extinguished  by 
limitation  after  five  years  in  Guatemala,  ^""^  two  years 
in  Spain,  lO'^  Argentina,  ^o''  Brazil,  ^O'  Chile,  ^o^  Colombia,  ^^^ 
Ecuador,^^"  Honduras,^^^  Panama,"^  Peru,"^  and  Uru- 
guay, ^^"^  and  one  year  in  Mexico. ^^^ 

AUCTIONEERS 

Requisites  and  obligations  of  auctioneers. 

In  order  to  be  an  auctioneer  a  person  must  satisfy  all  the 
requirements  necessary  to  be  a  broker;  and  his  obUgations 

A  broker  has  no  right  to  receive  any  compensation  when  the  contract 

subject-matter  of  his  services  was  not  vaUdly  perfected.  Cam.  2a  de  Apel. 
Civ.,  Buenos  Aires,  May  16,  1914,  lb.,  May,  1914,  p.  189. 

^  Art.  93.                                 98  Art.  88.  ^  Art.  104. 

iM  Art.  79.                               101  Arts.  104,  105.  ^°^  Art.  69. 

i«3  Art.  110.                             i"-*  Art.  1189.  i"*  Art.  946. 

iM  Art.  851.                              «>'  Art.  446.  k*  Art.  63. 

109  Art.  91.                                "«  Art.  98.  "i  Art.  62. 

"2  Art.  125.                            "»  Art.  975.  "*  Art.  1020. 

"6  Art.  1043. 


AUXILIARIES    OF    COMMERCE  137 

are  also  the  same,  namely,  diligence,  good  faith  and  secrecy 
regarding  the  name  of  the  principal  for  whom  he  sells. 
They  must  show  their  diligence  by  advertising  in  the  best 
way  and  in  ample  time  the  terms  of  the  auction,  the  things 
for  sale,  and  the  place,  day  and  hour  of  the  sale.  Their  good 
faith  must  be  shown  in  the  way  they  attract  bidders,  without 
misrepresentation  concerning  the  quaUty,  weight  or  measure 
of  the  articles  offered.  ^^^ 

Manner  of  carrying  on  an  auction. 

Two  systems  may  be  noted  as  to  the  manner  of  carrying 
on  an  auction: 

1.  The  system  of  Argentina.  Sales  al  auction  cannot 
be  suspended  and  the  goods  must  be  sold  to  the  highest 
bidder,  whatever  the  amount  offered. ^^'' 

2.  System  of  Chile.  The  auctioneer  may  suspend  the 
sale  and  postpone  the  auction  when  the  bids  do  not 
reach  the  price  fixed  in  the  owner's  instructions;  should 
there  be  no  special  instructions,  the  auctioneer  may 
accept  the  highest  bid.^^^ 

In  Venezuela  a  previous  advertisement  of  the  minimum 
price  is  required. 

Books  of  auctioneers. 

Auctioneers  must  keep  three  books: 

1.  A  diary  of  entries,  in  which  they  must  note  all 
articles  received  for  sale,  stating  their  amount,  weight, 
trade-marks  or  signs,  name  of  the  person  from  whom 
received,  that  of  the  person  for  whose  account  they  are 
to  be  sold  and  the  terms  of  sale. 

2.  A  book  of  sales,  in  which  they  must  record  daily 
the  sales  made,  the  name  of  the  person  for  whose  ac- 

"« Argentina,  113,  114,  115;  Brazil,  68,  70,  89;  Chile,  81,  87;  Colombia,  106, 
107,  110,  111;  Ecuador,  100,  101,  104;  Honduras,  68,  71,  74;  Peru,  116  to  118; 
San  Salvador,  61,  63,  65;  Venezuela,  90,  94. 

"'Argentina,  117;  Ecuador,  106;  Honduras,  76. 

"8  Chile,  89;  Colombia,  113;  Panama,  133;  San  Salvador,  67;  Uruguay,  118; 
Venezuela,  96. 


138  LATIN-AMERICAN    COMMERCIAL   LAW 

count  they  were  made,  and  that  of  the  buyer,  terms  of 
payment  and  other  necessary  specifications. 

3.     A   book  of  accounts  current  with  every   con- 
signor. ^^^ 

Obligation  of  accounting. 

Within  two  days  after  the  sale,  the  auctioneer  must  send 
to  the  consignor  a  signed  account  of  the  sale  of  his  goods.  ^-^ 
In  Ecuador  the  period  is  five  days,  including  the  day  of  sale. 

The  auctioneer  must  deliver  the  balance  due  on  the 
account  when  the  account  is  presented  to  the  consignor,  in 
Colombia,  Ecuador,  Honduras,  Panama  and  San  Salvador; 
and  within  eight  days  after  the  sale  in  Argentina,  Brazil, 
Chile,  Peru,  Uruguay  and  Venezuela. 

"9  Argentina,  118;  Brazil,  71;  Chile,  85;  Colombia,  108;  Ecuador,  102; 
Honduras,  72;  Panama,  129;  Peru,  121;  San  Salvador,  64;  Uruguay,  119; 
Venezuela,  92. 

120  Argentina,  119;  Brazil,  72;  Chile,  93;  Colombia,  117;  Honduras,  80; 
Panama,  136;  Peru,  122;  San  Salvador,  71;  Uruguay,  120.  In  Venezuela  the 
period  is  four  days,  imder  article  100. 


CHAPTER  VIII 


INSTITUTIONS   FOR   HELPING   COMMERCE 

Argentina. — Llorena,  Rafael  R.:  De  las  bolsas  y  mercados  de  comercio, 
Critica  y  comentario  del  titulo  III  libro  I  del  c6digo  de  comercio.  Buenos 
Aires,  1903. 

Ramm  Domdn,  Roberto  A.:  Manual  de  la  bolsa  de  comercio  de  Buenos 
Aires.    Santiago  de  Chile,  1914. 

Bolivia. — Calder6n,  Ignacio.  Economic  conditions  of  Bolivia.  Lecture 
delivered  before  the  special  class  in  commerce  at  Harvard  University,  1910. 

Pan  American  Financial  conference:  Bolivia,  Group  conference  report: 
Washington,  1915. 

Development  of  Northeastern  Bolivia  and  Western  Brazil.  U.  S.  Com- 
merce reports.    March  20,  1918. 

Brazil. — Ouro  Preto,  Visconde  de:  Credito  novel  pelo  penhor  e  o  bilhete  de 
mercadorias.    Rio  de  Janeiro,  1898. 

Vidal,  Armando:  Warrants  agricolas.    Rio  de  Janeiro,  1915. 

Chile. — Ibdnez,  Gustavo:  Recopilacidn  de  las  disposiciones  vigentes  rela- 
tivas  a  la  conversion  y  emision  de  billetes,  a  la  acuuaci6n  de  moneda  y  a  los 
bancos.    Santiago,  1912. 

Santelices,  Ramon  E.:  Los  bancos  chilenoso  legislaci6n  bancaria,  Santiago 
de  Chile,  1910  (?) 

Ecuador. — Pan  American  Financial  Conference:  Memorandum  submitted 
by  the  delegation  of  the  republic  of  Ecuador.    Washington,  1915. 

Bank  rate  of  exchange  in  Ecuador:  recent  law  to  regulate  bank  rate  of  ex- 
change.   U.  S.  Commerce  reports,  Dec.  4,  1917,  p.  873. 

Informe  sobre  el  movimiento  bancario  en  la  repiiblica  del  Ecuador  al  31  de 
diciembre  de  1917  in  the  Economista  Peruano.  Lima,  Feb.  28,  1918,  pp.  1208- 
1209. 

Mexico. — Labastida,  Luis  G.  Estudio  hist6rico  y  filos6fico  sobre  la  legisla- 
ci6n  de  los  bancos  y  proyecto  de  ley  que  presenta.  .  .  .  Mexico,  1889. 

Ortega  Reyes,  Manuel:  Almacenes  generates  de  dep6sito.  Cardcter  juridico 
de  los  contratos  que  se  celebran  en  estos  establecimientos.  Rev.  de  Leg.  y 
Jurisp.    Mexico,  1896,  2d  sems.,  p.  188. 

Sdnchez  Gavito,  Indalecio,  y  Macedo,  Pablo:  La  cuesti6n  de  bancos.  Mex- 
ico, 1885-1890. 

Peru. — Hurley,  E.  N.  Banking  and  credit  in  Argentina,  Brazil,  Chile  and 
Peru.  U.  S.  Bureau  of  Foreign  and  domestic  commerce.  Special  agent's 
series.  No.  90. 

Lough:  Banking  opportunities  in  South  America.  Banking  situation  in 
Peru.    U.  S.  Department  of  commerce.  Special  agent's  series,  No.  106. 

Emisi6n  de  billetes  al  31  de  octubre  de  1917  in  Economista  peruano.  Nov. 
30,  1917,  p.  1165. 

139 


140  LATIN-AMERICAN    COMMERCIAL   LAW 

Proyecto  guvemativo  sobre  la  creaci6n  del  Banco  Nacional  Agricola.  In 
Economista  Peruano,  June  10,  1917,  p.  1107. 

Uruguay. — Credit  restrictions  in  Uruguay.  In  U.  S.  Daily  Consular  and 
trade  reports.    March  9,  1914,  p.  905. 

Legislaci6n  sobre  cheques:  lo  que  se  hace  en  otras  partes.  Revista  Comer- 
cial.    Montevideo.    Sept.,  1917,  p.  285. 

Nuestros  Bancos.    lb.,  Sept.,  1917,  p.  283. 

Venezuela. — Banks  and  Banking  in  Venezuela.  In  U.  S.  Commerce  re- 
ports.   June  3  and  7,  1916. 

Legal  relations  are  affected  not  only  by  what  the  parties 
expressly  stipulate,  but  also  by  certain  external  circum- 
stances, such  as  the  place  where  a  contract  is  concluded,  to 
which  the  law  attaches  certain  consequences.  Spain,  Peru 
and  Panama  devote  one  section  of  their  respective  codes  to 
transactions  taking  place  in  a  store  open  to  the  public. 
These  countries  as  well  as  Venezuela  also  regulate  commerce 
in  a  fair  (feria) .  Spain,  Argentina,  Brazil,  Ecuador,  Panama, 
Peru  and  Venezuela  provide  for  transactions  concluded  in 
exchanges.  In  Mexico  the  Federal  government  has  entered 
into  a  contract  with  private  parties  for  the  establishment 
of  an  exchange  in  the  city  of  Mexico,  guaranteeing  them 
certain  privileges  for  a  period  of  fifty  years;  this  contract 
was  approved  by  Congress  on  October  19,  1887,  and  thus 
far  is  the  only  enactment  relating  to  this  important  matter. 

In  Uruguay  the  exchange  of  Montevideo  was  established 
by  private  parties  as  a  corporation,  its  by-laws  being  ap- 
proved by  the  Government  in  accordance  with  the  provision 
of  article  405  of  the  code  of  commerce;  on  August  14,  1907, 
and  on  September  19  of  the  same  year,  the  Ministry  of 
Fmance  made  the  declaration  that  the  aforesaid  corporation 
had  furnished  evidence  of  owning  the  capital  necessary 
according  to  the  law  of  June  2,  1893.  The  corporation  was 
then  definitely  constituted. 

Spain,  Argentina,  Brazil,  Mexico,  Panama,  Peru  and 
Uruguay  have  also  regulated  general  warehouses  of  deposit 
and  warehouse  receipts. 

We  shall  discuss  in  order  the  provisions  governing  these 
different  matters. 


INSTITUTIONS   FOR   HELPING   COMMERCE  141 

PUBLIC   STORES 

Definition. 

By  a  public  store  is  meant  any  commercial  house  estab- 
lished by  a  merchant  whose  name  is  inscribed  in  the  com- 
mercial registry,  or  by  a  merchant  not  inscribed,  provided 
the  store  is  open  to  the  public  for  eight  consecutive  days,  or 
has  been  advertised  by  means  of  signs  in  the  locality  or 
announcements  to  the  public  or  in  the  local  papers.^ 

Goods  bought  in  public  stores  become  automatically  the 
property  of  the  buyer. 

Statutes  of  limitation  require  a  certain  lapse  of  time  before 
the  buyer  of  a  thing,  though  in  good  faith,  can  be  sure  that 
he  will  not  be  deprived  of  it  by  another's  action.  This  fact 
would  make  the  situation  of  those  who  buy  in  a  public  store 
uncertain  to  such  a  degree  that  commerce  in  general  would 
suffer.  This  consideration  has  induced  the  law  to  declare 
that  a  person  who  buys  in  a  public  store  acquires  instanta- 
neously ownership  of  the  things  bought,  thus  barring  any 
action  against  him  by  a  lawful  owner,  the  rights  of  the  latter 
against  the  unlawful  seller  being  reserved. - 

On  the  other  hand,  and  as  an  application  of  the  same 
principle,  money  paid  by  a  buyer  as  the  price  of  merchandise 
bought  in  a  public  store  cannot  be  recovered  by  a  person 
who  claims  to  have  been  dispossessed  thereof.^ 

Purchases  and  sales  are  presumed  to  be  for  cash. 

Purchases  and  sales  made  in  public  stores  are  presumed 
to  be  for  cash,  unless  otherwise  provided.^ 

FAIRS 

Character  of  fairs. 

Fairs  are  gatherings  of  producers,  consumers  and  mer- 

iSpain,  85;Peru,  85. 
2  Spain,  8.5;  Panama,  167;  Peru,  85. 
'  Spain,  8G;  Panama,  lfi7;  Peru,  86. 
*  Spain,  87;  Peru,  87. 


142  LATIN-AMERICAN    COMMERCIAL    lAW 

chants  from  different  places  who  seek  thus  to  overcome  the 
difficulties  created  by  distance,  in  order  to  display  and 
dispose  of  their  merchandise  or  to  obtain  what  at  their 
customary  residence  could  not  be  secured.  Fairs  as  a  rule 
have  been  the  subject-matter  of  administrative  provisions; 
but  private  interests  are  also  involved,  inasmuch  as  the 
main  object  of  such  gatherings  is  to  trade.  The  designation 
of  place  and  time  in  which  fairs  are  to  be  held  as  well  as  the 
police  regulations  to  be  observed  are  matters  for  the  ad- 
ministrative authorities.^ 

Contracts  entered  into  during  a  fair  must  be  speedily 
executed  in  order  to  avoid  differences  difficult  to  settle 
among  parties  who  often  live  at  a  considerable  distance,  and 
under  different  jurisdictions.  Consequently  contracts  of 
purchase  and  sale  made  for  cash  must  be  executed  within 
twenty-four  hours,  after  which,  if  none  of  the  parties  has 
demanded  the  fulfillment  of  the  other's  obligation,  the  con- 
tract is  nullified  and  all  earnest  money  is  forfeited.® 

Questions  arising  out  of  contracts  entered  into  at  fairs 
must  be  decided  at  an  oral  hearing  (juicio  verbal)  by  the 
municipal  judge  of  the  place  where  the  fair  is  held,  provided 
the  merchandise  in  question  is  not  worth  more  than  fifteen 
hundred  pesetas  ($300  U.  S.)  in  Spain,^  two  hundred  fifty 
balboas  ($250  U.  S.)  in  Panama,^  two  hundred  soles  ($85 
U.  S.)  in  Peru.^  In  Venezuela,  the  questions  must  be  de- 
cided by  one  of  the  aldermen  (regidor)  of  the  town;  no 
specffic  amount  is  fixed  for  his  jurisdiction.^" 

EXCHANGES 

In  the  matter  of  exchanges  certain  questions  have  arisen 
which  have  been  greatly  discussed  from  the  points  of  view 
of  free  trade,  ethics  and  economics.  The  most  important 
of  these  is  whether  or  not  the  seller  of  quoted  merchandise 
of  securities  need  be  an  actual  and  lawful  possessor  of  what 

6  Spain,  82;  Panama,  163;  Peru,  82;  Venezuela,  71. 

8  Spain,  83;  Panama,  165;  Peru,  83.  ^  Spain,  84. 

8  Panama,  166.  »  Peru,  84.  i"  Art.  72. 


INSTITUTIONS    FOR   HELPING    COMMERCE  143 

he  offers  for  sale.  Another  question  is  whether  or  not  the 
exchange  transactions  can  be  concluded  on  terms  freely 
fixed  by  the  parties,  and  whether  or  not  contracts  may  be 
made  optional  at  the  discretion  of  one  of  the  parties  who  may 
withdraw  from  the  transaction  by  paying  the  difference  in 
price  between  that  of  the  day  of  the  contract  and  the  day 
of  its  performance.  All  these  questions  are  intimately 
related  and  may  be  summarized  thus:  Is  gambling  in  busi- 
ness a  lawful  pursuit? 

From  a  legal  point  of  view  the  question  is  to  determine 
whether  the  seller  needs  to  be  the  owner  of  the  thing  sold,  as 
the  code  Napoleon  requires,  or  whether  the  contract  of  pur- 
chase and  sale  of  things  not  belonging  to  the  seller,  is  valid, 
in  accordance  with  the  system  of  the  Roman  law.     From 
the  economic  \'iew  point  the  question  is  directly  related  to 
the  freedom  of  commerce  and  to  the  effect  of  speculation  on 
future  prices.    From  the  ethical  point  of  view  gambling  has 
been  considered  an  evil  to  such  an  extent  that  ethical  con- 
siderations against  gambling  would  have  led  to  a  general 
condemnation  of  exchange  transactions  on  time  and  of  those 
contracts  in  which  the  offerer  was  not  the  actual  possessor 
of  the  offered  goods  or  securities;  but  experience  has  shown 
that  all  measures  taken  by  the  law  in  order  to  avoid  this  type 
of  business  have  proved  not  only  unsuccessful  but  rather 
harmful  owing  to  the  methods  employed  by  the  parties  to 
disguise  the  real  character  of  their  contract  and  to  evade 
the  provisions  of  the  law. 
We  therefore  find  two  systems' in  this  respect,  as  follows: 
1.  Transactions  entered  into  on  an  exchange  must  be 
performed   as  the  parties  have  stipulated  either  for 
cash  or  on  credit,  as  a  closed  transaction  or  as  an  option 
with  or  without  premium.    Actions  arising  out  of  these 
contracts  are  enforceable  in  the  courts.  ^^ 

"  Spain,  75;  Peru,  75. 

Exchange  transactions  are  valid  even  though  they  imply  a  gamble,  the 
success  of  which  is  the  result  of  a  difference  in  quotations;  inasmuch  as  the 
person  who  supports  the  validity  of  said  transactions  acted  as  an  agent  of  the 
defendant,  and  did  not  disclose  the  name  of  his  principal.  Spain,  Trih.  Sup., 
Dec.  26,  1905;  6'oceto  of  Sept.  19,  190G,  p.  154. 


144  LATIN-AMERICAN   COMMERCIAL   LAW 

2.  All  exchange  transactions  which,  under  the  guise 
of  a  lawful  contract,  cover  gambUng,  are  strictly  for- 
bidden. They  cannot  be  enforced  in  courts,  and  the 
parties  thereto  are  subject  to  fine. 

Purchases  and  sales  which  do  not  obUgate  the  parties 
to  make  delivery  but  only  to  pay  differences  in  price 
between  the  day  of  the  contract  and  the  day  of  maturity 
are  unlawful  and  unenforceable.  ^^Tien  a  transaction 
proves  to  be  lawful  for  one  of  the  parties  and  aleatory 
(gambling)  for  the  other,  it  can  produce  legal  effects 
only  in  favor  of  the  party  acting  in  good  faith.  ^^ 

Ecuador  practically  adopts  this  same  system,  but 
confines  it  to  public  securities  only,  providing  that  con- 
tracts relating  to  them  must  be  performed  at  the  most 
on  the  day  following  acceptance;  the  seller  must  dehver 
the  securities  before  the  exchange  is  closed,  and  the 
buyer  must  then  pay  the  price.  ^^ 

The  law  is  silent  in  Brazil  and  Venezuela.  Ecuador 
is  silent  also  as  to  all  transactions  relating  to  goods  and 
securities  other  than  public  securities. 

Liability  of  collegiate  exchange  brokers. 

When  a  transaction  has  been  entered  into  through  a 
collegiate  exchange  broker  who  has  not  disclosed  the  name 
of  his  principal,  and  who  delays  the  fulfillment  of  the  con- 
tract, the  other  party  to  it  has  the  choice,  at  the  next  meet- 
ing of  the  exchange,  between  giving  up  the  contract  after 
notice  to  the  governing  board  of  the  college  of  brokers,  or 
enforcing  performance  of  the  contract.  In  the  latter  case, 
the  enforcement  must  be  effected  through  a  member  of  the 
board,  who  must  sell  or  buy  the  goods  agreed  upon  for  the 
account  of  the  defaulting  broker;  the  rights  of  the  latter 
against  his  principal  being  reserved.  The  board  must,  if 
necessary,  liquidate  the  security  or  bond  given  by  the  de- 
faulting broker  in  order  to  pay  any  balance  due  on  the 
transaction.^^ 

12  Argentina,  78,  79,  80;  Panama,  142,  143,  144.  "  Art.  65. 

"Spain,  77;  Peru,  77. 


INSTITUTIONS   FOR   HELPING   COMMERCE  145 

In  Argentina  ^^  and  Panama,  ^^  the  exchange  brokers  are 
subject  to  the  general  duties  of  brokers  and  are  liable  for  the 
transactions  executed  by  them  only  in  case  they  violate 
their  duties. 

Public  functions  of  exchange  brokers. 

The  exchange  must  keep  records  of  the  daily  transactions 
concluded  in  it.  These  transactions  must  serve  to  determine 
the  current  price  of  merchandise,  freight,  and  discounts  in 
exchange  of  drafts  and  loans.  These  records  may  serve  as 
evidence  of  prices  in  the  locality  in  case  of  judicial  litigation. ^^ 
Spain  and  Peru  provide  in  detail  for  the  method  in  which 
exchange  brokers  must  keep  these  records. 

After  a  transaction  in  quoted  securities  or  goods  is  per- 
fected through  an  exchange  broker  the  latter  must  draw  up 
and  sign  a  note  and  deliver  it  to  the  announcer  of  the  ex- 
change, who,  after  reading  it  to  the  attendants,  must  pass  it 
to  the  board  of  associated  exchange  brokers  (junta  sindical) . 

Transactions  entered  into  through  a  collegiate  exchange 
broker  covering  public  securities  must  be  announced  in  the 
exchange  viva  voce  as  soon  as  they  are  concluded,  and  a 
corresponding  note  must  be  served  on  the  board  (junta 
sindical).  Of  other  contracts  notice  must  be  given  in  the 
Boletin  de  Cotizacion  (quotation  sheet)  stating  the  maximum 
and  the  minimum  price  of  commodities,  freights,  discount 
and  interest  rates  on  loans. 

After  the  business  hours  of  the  exchange  the  board  (junta 
sindical)  must  convene  and  examine  the  notes  delivered  by 
the  collegiate  exchange  brokers,  and  the  notices  of  the  trans- 
it Art.  82.  1"  Art.  148. 

"Spain,  79,  80;  Argentina,  83,  84;  Brazil,  33;  Ecuador,  67;  Peru,  79,  80; 
Venezuela,  66,  67. 

The  circumstance  that  the  exchange  in  Cuba  has  not  the  character  of  an 
official  institution  is  no  obstacle  to  taking  into  coasidoration,  together  with 
other  evidence,  a  report  of  the  same  tending  to  demonstrate  the  existence  of  a 
commercial  usage  in  the  locality.  Cuba,  Trilj.  Sup.,  Dec.  19,  1906;  Gaceta 
supplement  of  March  3,  1907. 

Article  31  of  the  code  of  commerce  in  establishing  a  method  of  proving  the 
price  of  securities  does  not  mean  that  other  means  of  evidence  are  to  be  re- 
jected.   Spain,  Trib.  Sup.,  Jan.  10,  1903;  Gaceta  of  Feb.  27,  1903,  p.  143. 


146  LATIN-AMERICAN   COMMERCIAL   LAW 

actions  as  given  to  the  board.  It  must  then  draw  up  the 
memorandum  of  quotations  and  send  a  copy  thereof  to  the 
commercial  registry. 

GENERAL  WAREHOUSES 

General  character  and  functions. 

Among  the  most  beneficial  institutions  auxihary  to 
commerce  are  general  warehouses.  They  are  estabhshments 
in  which  every  kind  of  merchandise  can  be  deposited;  and 
besides  care  in  its  preservation,  the  depositor  obtains  certain 
documents  which  represent  the  merchandise.  The  economic 
functions  of  warehouses  are  very  important:  they  make 
storage  easier  and  less  expensive;  they  give  to  depositors  a 
means  of  utilizing  credit  by  issuing  certificates  of  deposit, 
constituting  negotiable  paper;  they  facihtate  the  sale  of  said 
goods  by  avoiding  the  necessity  of  moving  them  from  place 
to  place,  the  formahties  of  delivery  being  confined  merely 
to  the  transfer  of  the  certificate  to  the  buyer. 

As  for  the  legal  functions  of  warehouses  of  deposit,  they 
are  governed  first  of  all  by  their  regulations  or  by  the  special 
law  relating  to  them,  then  by  the  pro\'isions  of  the  commer- 
cial code  dealing  with  those  institutions  or  with  deposit  in 
general,  and  lastly  by  the  civil  code.^^ 

In  Spain,  Mexico,  Peru  and  Panama  the  matter  of  ware- 
houses of  deposit  is  governed  by  the  commercial  code,  but  in 
regard  to  the  requisites  for  estabhshing  them  in  ^Mexico  the 
laws  of  March  19,  1897,  and  February  16,  1900,  are  con- 
trolling. In  Argentina  warehouses  are  governed  by  law  No. 
928  of  September  5,  1878.;  in  Brazil  by  decree  No.  1102  of 
November  21,  1903,  and  in  Uruguaj^  by  decree  of  Decem- 
ber 20,  1879,  to  the  articles  of  which  reference  is  made  in  the 
quotations  hereafter. 

Requisites  for  establishing  deposit  warehouses. 

There  are  different  systems  in  regard  to  the  method  of 
establishing  a  warehouse.    They  are  as  follows: 

i«  Spain,  310;  Peru,  304. 


INSTITUTIONS    FOR   HELPING    COMMERCE  147 

1.  System  of  Spain.  No  requisites  are  provided  for 
by  the  law;  hence,  entire  liberty  is  left  to  persons  to 
establish  and  conduct  warehouses.  But  as  the  title  of 
the  code  is  headed  "Companias  de  almacenes  generates 
de  deposito^'  some  authorities  maintain  that  only 
associations  can  undertake  business  of  this  kind, 
whereas  others  would  accord  this  privilege  freely  to 
individuals.^^ 

This  system  is  also  followed  by  Peru. 

2.  System  of  Argentina.  The  deposit  of  merchandise 
and  the  power  to  issue  certificates  of  deposit  and 
warrants  is  confined  to  custom  houses  and  applies  to 
goods  imported  from  foreign  countries. -°  The  execu- 
tive power  may  authorize  the  deposit  of  domestic  prod- 
ucts in  the  fiscal  warehouses  -^  and  may  also  authorize 
private  individuals  to  establish  such  warehouses. -^ 

3.  System  of  Brazil.  Every  person  or  legal  entity 
with  commercial  capacity  can  establish  general  ware- 
houses of  deposit,  and  for  that  purpose  must  state  before 
the  Board  of  Trade  {Junta  Commercial)  of  the  corre- 
sponding district:  a,  the  firm  name  and  domicil  of  the 
party;  h,  the  name,  location,  number,  space,  conven- 
ience and  safety  offered  by  the  warehouses;  c,  the 
character  of  the  merchandise  to  be  received  on  deposit; 
d,  the  kind  of  transactions  and  services  which  they 
propose  to  undertake.-^  To  this  statement  there  must  be 
added  the  internal  regulations  of  the  warehouse  and 
those  of  auction  rooms,  if  any;  the  tariff  of  compensa- 
tions for  deposit  and  other  services;  a  certified  copy  of 
the  articles  of  organization  duly  registered,  in  the  case 
of  associations.  If  the  regulations  do  not  infringe  the 
provisions  of  the  law,  the  Board  must  provide  for  the 
inscription  of  the  applicant  in  the  matricula  and  for  the 
publication  of  notices  containing  the  statement,  regu- 
lations and  tariffs;  after  this  formality  the  warehouses 

i»  Blanco  y  Constans,  Derecho  Mercantil,  Madrid,  1910,  vol.  1,  p.  636. 
^'Art.  1.  "Art.  30.  «  Art.  33. 

"  Art.  1. 


148  LATIN-AMERICAN    COMMERCIAL    LAW 

may  begin  business.  The  Government  can  also  desig- 
nate through  the  Minister  of  Finance  the  custom  houses 
and  through  the  Minister  of  Labor,  Commerce  and 
Public  Works  the  depots  of  Government  railways  which 
may  issue  certificates  of  deposit  and  warrants.  ^^ 

4.  System  of  Mexico.  Only  by  concession  of  the 
executive  power  can  general  warehouses  of  deposit  be 
established.  They  are  divided  into  two  classes:  a,  those 
which  receive  on  deposit  domestic  products  or  even 
foreign  products  which  have  already  paid  their  import 
duties,  a  class  of  institutions  which  can  be  estabhshed 
anywhere  in  the  country,  at  the  discretion  of  the 
national  Executive;  and  h,  those  which,  in  addition  to 
such  merchandise,  are  authorized  to  receive  foreign 
goods  which  have  not  yet  paid  import  duties;  these  can 
only  be  established  at  the  frontiers  or  at  ports  where 
there  is  a  custom  house.  A  minimum  capital  of  five 
hundred  thousand  pesos  is  required.-^ 

5.  System  of  Panama.  General  warehouses  of  deposit 
are  always  subject  to  the  inspection  of  the  Government, 
and  cannot  commence  business  until  they  furnish  a 
guaranty  satisfactory  to  the  Minister  of  Finance.  The 
Government  bonded  warehouse  like  general  warehouses 
can  also  issue  certificates  of  deposit  and  warrants,  and 
the  public  administration  is  in  that  case  responsible  for 
the  merchandise.^^ 

6.  System  of  Uruguay.  Only  the  custom  house  at 
Montevideo  is  authorized  to  issue  certificates  of  deposit 
to  the  order  of  the  depositor,  on  request  of  the  interested 
party,  and  when  the  value  of  the  goods  exceeds  $1,000, 
(about  $1,034  U.  S.)^^ 

Character  of  the  documents  issued  by  general  warehouses 
of  deposit. 

The  documents  issued  by  general  warehouses  of  deposit 

2*  Arts.  2,  3. 

"  Art.  6  of  the  lawiof  March  19, 1893,  and  article  3  of  the  law  of  Feb.  16, 1900. 

28  Art.  188.  *  Art.  2  of  the  law  of  Dec.  10,  187. 


INSTITUTIONS    FOR   HELPING    COMMERCE  149 

may  be  classified  as  private  instruments  or  as  public  instru- 
ments, depending  upon  whether  the  issuing  warehouses  are 
private  enterprises  or  custom  houses  and  other  institutions 
controlled  by  the  government  according  to  law. 

As  to  the  warehouse,  the  documents  constitute  evidence  of 
the  deposit,  involving  the  incidental  consequences  to  the 
bailee.  As  to  the  bearer  of  a  certificate  of  deposit,  it  con- 
stitutes evidence  of  title  to  the  property  deposited,  even 
against  creditors  of  the  depositor.  As  to  the  bearer  of  a 
warrant,  it  is  equivalent  to  a  pledge  authorizing  a  demand  for 
the  sale  of  the  goods  if  the  debt  is  not  paid  when  due.^^ 

The  documents  issued  by  general  warehouses  produce  two 
effects:  one  evidences  title  to  the  deposited  merchandise, 
while  the  other  is  made  for  the  purpose  of  pledging  it.  As  a 
consequence  of  these  two  different  purposes,  the  documents 
may  be  different ;  one  being  the  certificate  of  deposit,  the  other 
the  warrant.    They  are  issued  in  separate  instruments.^^ 

Spain, ^^  Peru,^^  and  Uruguay  ^^  do  not  require  the  issuing 
of  two  documents;  they  have  created  a  system  designed  to 
use  credit  in  connection  with  the  certificate  of  deposit.  By 
it,  there  are  two  ways  of  transferring  the  certificates — one 
with  a  view  to  convey  the  title  to  the  goods,  the  other  to 
pledge  them.^^ 

Kinds  of  certificates. 

The  certificates  can  be  issued  payable  to  a  certain  person 
or  his  order,  or  to  bearer.^^  In  Argentina, ^^  Mexico,^''  and 
Panama, ^^  the  certificate  of  deposit  and  the  warrant  are 
indorseable  even  if  issued  in  the  name  of  a  certain  person. 
In  Brazil  ^^  they  are  always  indorseable. 

Effects  of  indorsement. 

The  indorsement  of  the  certificate  of  deposit  together  with 

28  Spain,  195,  196;  Argentina,  9,  10,  11;  Brazil,  21,  23;  Mexico,  341;  Panama, 
179  to  182;  Peru,  199,  200. 
'''Argentina,  1;  Brazil,  15;  Mexico,  344;  Panama,  169. 
»» Art.  194.  "  Art.  198.  ^^  Art.  9. 

"  Spain,  196;  Peru,  200.         '<  Spain,  194;  Peru,  198.  »*  Arts.  12,  13. 

*>  Art.  344.  '^  Art.  173.  »»  Art.  15. 


150  LATIN-AMERICAN   COMMERCIAL   LAW 

the  warrant  conveys  full  title  to  the  indorsee,  who  can  with- 
draw the  goods  from  the  warehouse  or  renew  the  period  of 
deposit  or  divide  them  in  different  packages  or  lots  at  his 
discretion.  He  is  not  subject  to  any  claim  arising  against 
the  previous  holders;  he  need  only  pay  the  transportation  or 
warehouse  charges. 

The  indorsement  of  the  certificate  alone  conveys  title  to 
the  merchandise,  subject  to  the  payment  of  any  debt  due  the 
holder  of  the  warrant.  The  transfer  of  the  warrant  without 
the  certificate  gives  the  indorsee  a  right  of  pledge  or  lien  on 
the  goods.  ^^ 

Requisites  of  the  certificate  and  warrant. 

The  requisites  with  which  the  certificate  and  the  warrant 
must  comply  differ  from  country  to  country  as  follows : 

(a)  designation  of  the  kind  of  document,  whether 
certificate  of  deposit  or  warrant;  ^^ 

(b)  name  of  the  enterprise;  ^^ 

(c)  name  and  domicile  of  the  bailor.  ^^  In  Brazil  and 
in  Mexico  the  profession  of  the  bailor  must  also  be 
stated,  and  in  Peru  these  indications  are  not  necessary 
when  the  document  runs  to  bearer; 

(d)  place  where  the  deposit  is  made  and  period  of  its 
duration;  ^^ 

(e)  nature  and  amount  of  the  merchandise  deposited, 
designated  by  its  usual  name  in  commerce,  its  weight, 
the  state  of  wrappers  or  containers,  trade-marks,  and 
all  identifying  descriptive  characteristics;  ^^ 

(/)  the  quality  of  the  merchandise.^^  In  Brazil  the 
quality  must  be  stated  when  there  are  several  things 
of  the  same  kind  in  the  warehouse; 

39  Spain,  195,  196;  Argentina,  9,  10,  11;  Brazil,  17,  18;  Mexico,  344;  Peru. 
199,  200;  Panama,  174. 
^  Bolivia,  Panama, 
••i  Argentina,  Bolivia,  Panama. 
''^  Argentina,  Brazil,  Mexico,  Panama. 
*^  Argentina,  Brazil,  Panama. 

"  Spain,  Argentina,  Brazil,  Mexico,  Panama,  Peru. 
*^  Argentina,  Mexico,  Panama. 


INSTITUTIONS   FOR   HELPING   COMMERCE  151 

{g)  name  of  the  insurer  of  the  merchandise  and 
amount  of  the  insurance;  ^^ 

(h)  statement  of  the  fiscal  duties  which  the  goods  are 
liable  to  pay,  as  well  as  other  charges  they  may  incur;  ^^ 

(i)  statement  whether  the  charges  have  been  paid;  *^ 

(j)  signature  of  the  manager;  ^^ 

(k)  period  of  the  deposit;  ^° 

(l)  date  of  issue  of  the  document;  ^^ 

(m)  in  Argentina,  the  certificate  must  furthermore 
contain  the  following  statement:  "No  se  entregardn  las 
mercaderias  a  la  presencation  de  este  certificado,  sin  estar 
acompahado  del  warrant  y  ambos  con  endoso  en  forma,  si 
se  hubiesen  transferido."  (The  merchandise  shall  not 
be  delivered  on  the  presentation  of  this  certificate, 
unless  it  is  accompanied  by  the  warrant,  and  both, 
duly  indorsed,  if  they  have  been  transferred.) 

The  certificate  as  well  as  the  warrant  must  be  de- 
tached from  a  stub-book.  ^^ 

Spain  and  Peru  summarize  these  requisites  by  pro- 
viding that  the  certificate  and  the  warrant  (resguardo) 
must  state  the  kind  of  merchandise,  with  the  amount 
represented  by  each  of  them.  This  brief  statement  is 
not  construed  as  excluding  the  other  requisites  of  a 
regular  document,  such  as  date,  name  of  the  enterprise, 
signature  of  the  bailee,  place  of  deposit,  etc.,  as  mer- 
cantile usages  requires.  ^^ 

Failure  to  pay  the  debt  guaranteed  by  the  warrant. 

In  case  the  holder  of  a  warrant  is  not  paid  at  the  expiration 
of  the  agreed  period,  in  countries  which  separate  the  cer- 
tificate of  deposit  from  the  warrant,  he  must  protest  the 
warrant  just  as  in  the  case  of  a  bill  of  exchange. °'* 

The  holder  of  a  warrant  or  certificate  can  demand  the  sale 

■•*  Brazil,  Panama.  ■'^  Brazil. 

^  Argentina,  Mexico,  Panama.  ■"*  Argentina,  Brazil,  Panama. 

*"  Argentina,  Brazil.  ^^  Argentina,  Brazil. 

*^  Argentina,  Brazil,  Mexico,  Panama. 

"  Blanco  y  Constans,  Derccho  mercantil,  vol.  1,  p.  638. 

"Argentina,  18;  Brazil,  23;  Mexico,  348;  Panama,  182. 


152  LATIN-AMERICAN    COMMERCIAL   LAW 

of  the  merchandise  covered  by  the  document  and  the  pay- 
ment of  his  claim  with  the  proceeds,  without  having  re- 
course to  a  court.  ^^ 

The  sale  must  be  demanded  from  and  ordered  by  the  man- 
ager of  the  warehouse,  in  Spain, -^^  Argentina,^''  Mexico, ^^ 
Panama,''^  and  Peru.*'°  In  Brazil  "  the  holder  of  the  warrant 
can  sell  the  goods  through  a  broker  or  auctioneer  of  his  own 
choosing. 

Period  for  selling  the  goods. 

The  laws  of  Spain,  Peru  and  Uruguay  do  not  provide  for 
any  special  period  during  which  the  merchandise,  subject- 
matter  of  the  deposit,  must  be  sold. 

In  other  countries,  the  period  varies  as  well  as  the  con- 
sequences of  not  carrying  on  the  sale  within  such  period,  as 
follows : 

In  Argentina  ^^  the  period  is  fifteen  days  from  the 
date  of  the  protest,  and  the  holder  of  the  warrant  loses 
his  rights  against  its  indorsers  if  he  fails  to  demand  the 
sale  within  that  period  or  if  he  leaves  the  document 
unprotested. 

In  Brazil  '^^  the  period  is  ten  days  from  the  date  of 
the  memorandum  of  protest ;  if  this  period  elapses  with- 
out the  sale  being  held,  the  holder  preserves  his  rights 
of  action  against  the  first  indorser  only  and  against  all 
the  indorsers  of  the  certificate  of  deposit. 

In  Mexico  ^^  the  period  is  eight  days,  but  no  provision 
is  made  in  case  of  failure  to  sell  the  goods  within  that 
period;  the  effect  of  this  silence  of  the  law  is  that  the 
holder  retains  only  the  ordinary  right  of  action  of  a 
pledgee. 

In  Panama  ^^  the  holder  of  a  warrant  loses  all  his 
rights  against  the  indorsers  if  he  has  not  made  protest 

"  Spain,  196;  Argentina,  19;  Brazil,  23;  Mexico,  a48;  Panama,  182;  Peru,  200. 
58  Art.  196.  6^  Art.  20.  ^8  Art.  348. 

69  Art.  182.  80  Art.  200.  "  Art.  23. 

82  Art.  20.  «»  Art.  25.  84  Art.  23. 

86  Art.  348. 


INSTITUTIONS    FOR   HELPING    COMMERCE  153 

or  demanded  the  sale  of  the  merchandise  within  ten 
days  after  maturity  of  the  debt.  He  only  preserves  his 
rights  against  the  debtor,  but  the  law  does  not  clearly 
estabhsh  who  the  debtor  is. 

Liabilities  of  general  warehouses. 

General  warehouses  of  deposit  are  liable  for  the  identity 
and  preservation  of  the  merchandise  deposited  according 
to  the  law  of  deposit  for  hire.^   -  / 

In  Brazil/'  warehouses  are  not  responsible  for  the  identity 
of  goods  closely  resembling  other  deposited  gOods  of  the 
same  kind,  but  are  liable  merely  to  deliver  the  correct  quan- 
tities of  goods  of  the  same  kind  and  quality. 

8«  Art.  186. 

"Spain,  198;  Argentina,  31,  34;  Mexico,  357;  Panama,  188;  Peru,  202; 
Uruguay,  16. 

Not  because  a  warehouse  is  located  in  the  custom  house,  is  the  government 
responsible  for  the  careful  preservation  of  the  goods  therein  deposited;  only 
the  owner  or  manager  thereof  is  liable.  Mexico,  Sup.  Trib.  Fed.,  Dec.  12,  1898; 
Jurisp.,  1898,  p.  298. 

Besides  the  institutions  named  in  the  body  of  this  chapter,  the  chamber  of 
commerce  warrants  mention.  In  regard  to  the  functions  of  this  institution 
article  8  of  Royal  decree  of  Spain,  Dec.  29,  1911,  reads  as  follows: 

"All  Commercial  Chambers  created  in  accordance  with  the  law  and  these 
regulations  shall  be  consultative  bodies  to  the  public  administration  and  shall 
be  heard  on  proposed  treaties  of  commerce  and  navigation,  as  well  as  in  com- 
mercial covenants  and  arrangements;  on  the  amendment  of  custom  tariffs  and 
ordinances,  consular  tariffs,  port  arbiters,  the  formation  and  amendment  of 
railway  tariffs  and  maritime  transportation  enterprises  assisted  by  the  state, 
especially  when  they  refer  to  a  particular  region;  on  the  modification  of  official 
valuation  of  commodities,  on  proposed  changes  in  taxes  directly  affecting  com- 
merce, industry  or  navigation;  on  the  creation  of  monopolies;  on  projects  of 
public  works  related  with  industrial  and  commercial  life,  which  must  be  exe- 
cuted within  the  corresponding  district;  on  mercantile  usages  and  practices 
within  their  territory,  and  on  the  creation  therein  of  commercial  exchanges, 
colh'gcs  of  brokers,  general  warehouses  or  any  other  establishment  of  a  mer- 
cantile character  rendering  public  service;  on  amendments  to  the  code  of  com- 
merce and,  in  general,  on  social  legislation  (sobre  los  projectos  de  leyes  sociales) 
and  on  bills  regarding  social  reforms. 


CHAPTER  IX 

COMMERCIAL  ASSOCIATIONS  (1) 

Spain. — Benito  y  Eudara,  Lorenzo:  Fonnas  que  pueden  adoptar  las 
sociedades  mercantiles.    Madrid,  1904. 

Estasen,  Pedro:  Tratado  de  las  sociedades  mercantiles  y  demds  entidades  de 
cardcter  comercial  segun  el  derecho  espanol.    Madrid,  1907. 

Ponsa  GU,  J. :  Sociedades  civiles,  mercantiles,  cooperativas  y  de  seguras.  2  v. 
Madrid,  1911. 

Sarria,  J.  de,  Las  companias  anonimas.  Necesidad  de  reformarlas.  Es- 
tructura  juridica.    Legislaci6n  vigente,  Reformas.    Bilbao,  1916. 

Argentina.— Baiocco,  Pedro  J.:  Funciones  de  la  sindicatura  y  fiscalizaci6n 
de  las  sociedades  an6nimas.    Buenos  Aires,  1917. 

Casarino,  Nicolds:  Estudio  sobre  las  personas  juridicas.  Buenos  Aires, 
1883. 

Cooke,  J.  I.,  and  Sommariva,  L.  H.:  Curso  de  sociedades  comerciales. 
desarroUado  a  base  de  las  notas  tomades  en  la  cdtedra  del  Dr.  Ram6n  S, 
Castillo.    V.  I,  La  Plata,  1916. 

Cuerpo  de  inspectores  de  sociedades  an6nimas.  Memoria  .  .  .  elevada  al 
Exmo.  Senor  miiiistro  de  justicia,  culto  e  instrucci6n  publica.  Buenos  Aires, 
1895. 

Decreto  reglamentario  de  la  inspecci6n  general  de  justicia,  noviembre  17  de 
1908. 

Decurges,  Felix:  Las  sociedades  an6nimas,  manual  te6rico-prdctico  para  el 
fundador  de  sociedades  an6nimas  y  para  los  accionistas — breve  resena  critica  y 
comparativa,  deficiencias,  abusos,  correctives.  .  .  .  Buenos  Aires,  1907. 

Digesto  de  la  inspecci6n  general  de  justicia  de  la  Rep.  Argentina  (Sociedades 
An6nimas).    Buenos  Aires,  1909. 

L6pez,  Vicente  F.:  Las  companias  extranjeras  de  seguros  ante  la  adminis- 
traci6n  nacional.    Buenos  Aires,  1898. 

L6pez  Bancalari,  J. :  De  las  sociedades  au6nimas,  exposici6n  critica  y  comen- 
tario  del  codigo  de  comercio.    Buenos  Aires,  1896. 

Medina,  Francisco:  Las  sociedades  cooperativas,  con  una  introducci6n  por 
Adolf o  E.  Ddvila.    Buenos  Aires,  1887. 

Orgaz,  Raul  A. :  Condici6n  juridica  internacional  de  las  sociedades  an6nimas. 
C6rdoba,  1913. 

Rivarola,  M.  A.:  Sociedades  an6nimas.  Estudio  jurldico-economico  de  la 
legislaci6n  argentina  y  comparada,  con  prologo  de  L.  Melo.  Buenos  Aires, 
1918.    2  V. 

Sociedades  an6nimas  extranjeras  (Reformas  al  c6digo  de  comercio).  Buenos 
Aires,  1911. 

Varela,  Luis:  La  intervenci6n  de  los  gobiernos  en  las  sociedades  an6nimas,  el 

154 


COMMERCIAL   ASSOCIATIONS  155 

derecho  de  asociaci6n  con  fines  utiles,  la  legislacidn  de  fondo  argentina,  la 
reglamentacidn  del  poder  ejecutivo.  Legislacidn  extranjera  comparada. 
Reformas  propuestas  a  los  codigos  argentinos  civil  y  de  comercio.  Buenos 
Aires,  1908. 

Zeballos,  E.  S.:  Partnerships  and  companies  formed  abTOad  for  the  purpose 
of  trading  in  the  Argentine  Republic.  International  Law  Notes,  December, 
1919,  p.  5. 

Brazil. — Barbosa,  Ruy  &  Garga  Aranha:  Sociedades  anonimas,  Vicios  na 
sua  organizagao.    Rio  de  Janeiro,  1893. 

Martins,  Samuel:  Successdes  commerciaes.    Recife,  1914. 

Same:  Conversao  das  acgoes  nominativas  em  acgoes  ao  portador  no  direito 
commercial.    Recife,  1909. 

Momsen,  Richard  P.:  Legal  requirements  for  operations  of  foreign  and 
domestic  corporations  in  Brazil.    Rio  de  Janeiro,  1919. 

Moniz,  Salvador.  Sociedades  anonimas,  prefacio  pelo  Dr.  Clovis  Bevilaqua. 
Rio  de  Janeiro,  1914. 

Rocha,  Francisco  Jose  da:  Commandita  por  acgoes.  Rio  de  Janeiro, 
1885. 

Same:  Sociedades  em  commandita  segundo  o  codigo  commercial  do  imperio 
de  Brazil.  .  .  .  Rio  de  Janeiro,  1884. 

Spencer  Vampre:  Das  sociedades  anonimas.    Sao  Paulo,  1914. 

Chile. — Cruchaga,  Miguel:  De  la  reglamentaci6n  de  las  sociedades  an6n- 
imas  en  Chile.    Santiago,  1882. 

Mexico. — Buelna,  Eustaquio:  Estudio  sobre  sociedades  de  hecho.  Rev.  de 
Leg.  y  Jur.    Mexico,  1897.    2nd  sems.,  p.  535. 

Diaz  Mercado,  Hector:  Evolucion  de  las  sociedades  an6nimas.  lb.,  1899. 
1st  sems.  p.  478. 

Gronzdlez,  Melchor:  Sociedades  mercantiles  de  hecho.  Rev.  de  Leg.  y  Jur. 
Mexico,  1896.    1st  sems.,  p.  486. 

Gran  Granell,  Francisco:  La  raz6n  social  y  la  raz6n  comercial.  Mexico. 
Diario  de  Jurisprudencia.    V.  29,  p.  767. 

Pallares,  Jacinto:  I  Pueden  las  personas  morales  entablar  el  recurso  de 
amparo?    El  Derecho,  1895,  p.  207. 

Pardo  Emilio:  Sociedades  an6nimas  segun  el  c6digo  de  comercio.  El  Dere- 
cho.   Mexico,  1890,  p.  17. 

Sdnchez  Gavito,  Manuel:  Sociedades  an6nimas.  Rev.  de  Leg.  y  Jurisp. 
1898.    1st  sems.,  p.  7. 

Uruguay. — Ayola,  Enrique:  Sociedades  colectivas.  Coment^aios  de  los 
articulos  453  a  463  del  codigo  de  comercio.    Montevideo,  1895. 

Venezuela. — Arismendi:  Sociedades  mercantiles.    Caracas. 

The  law  of  the  Latin-American  countries  on  commercial 
associations  traces  its  origin  to  the  French  commercial  code 
and  the  later  French  legislation.  It  regards  the  stock  cor- 
poration as  a  normal  development  of  the  commercial  part- 
nership, which  is  a  legal  entity.  The  theoretical  origin  of 
the  stock  corporation  in  Anglo-American  law  is  quite  differ- 


156  LATIN- AMERICAN    COMMERCIAL   LAW 

ent.  The  partnership  not  being  regarded  as  a  legal  entity, 
the  legal  personality  of  the  corporation  is  deemed  to  be 
specially  conferred  by  the  State  through  the  grant  of  a 
charter,  analogous  to  the  municipal  corporation  or  the  old 
monopolistic  public  service  companies. 

These  historical  differences  between  the  Latin-American 
and  Anglo-American  conception  of  the  stock  corporation 
account  for  other  primary^  distinctions  between  the  two 
systems:  ^  the  Latin- American  codes  have  but  one  general 
classification  of  commercial  associations  which  include  the 
general  partnership,  the  limited  partnership,  and  the  stock 
company;  whereas  the  Anglo-American  law  regards  as 
fundamental  the  distinction  between  the  unincorporated  and 
the  incorporated  association.  The  Latin-American  stock 
company  is  organized  under  a  general  law  hke  a  partnership; 
the  Anglo-American  stock  company,  historically  regarded 
as  an  exceptional  method  for  undertaking  great  enterprises, 
required  the  special  endorsement  of  a  charter  from  a  jealous, 
if  not  suspicious,  state.  The  administrative  control  over 
corporations  in  Latin- America  contrasts  with  the  judicial 
control  characteristic  of  Anglo-American  law. 

Legal  character  of  commercial  associations 

The  legal  character  of  commercial  associations  is  explained 
from  two  opposite  points  of  view  by  two  groups  of  writers, 
namely,  the  "individualists"  and  the  ''sociahsts." 

The  former  consider  the  indi\'idual  as  a  subject  of  innate 
rights.     Society  they  regard  as  the  result  of  the  renuncia- 

1  All  the  Latin  languages  denote  by  some  single  word  both  the  partnership 
and  the  corporation.  In  Spanish  that  word  is  sociedad  which  also  means  a 
union  of  persons,  families  or  peoples;  or  a  natural  or  contractual  group  of  men 
who  have  an  end  to  prosecute  by  cooperation.  The  Spanish  word  "compahia" 
has  a  very  similar  meaning,  and  the  law  uses  each  of  these  generic  words  inter- 
changeably to  designate  either  the  partnership  or  the  corporation.  We  use  the 
English  word  "association"  as  a  substitute  for  "sociedad"  or  "compania" 
to  cover  both  groups  but,  as  the  Spanish  word  " asociacidn"  is  reserved  bj'  the 
law  to  designate  a  transient  state  of  association  wdthout  forming  a  fixed  unit,  as 
the  "sociedad"  or  the  ''compania"  implies,  we  shall  use  the  words  "momentary 
association"  or  "joint  adventure"  with  the  connotation  of  the  Spanish  legal 
term  " asodaciOn." 


COMMERCIAL   ASSOCIATIONS  157 

tion  by  each  person  of  his  prmiary  hberties  in  order  to  enjoy 
the  benefits  of  other  men's  cooperation.  Society,  they  say, 
has  been  created  for  the  protection  of  personal  rights.  In 
order,  therefore,  to  be  a  subject  of  rights,  it  is  necessary  to 
be  a  person — so  when  two  or  more  individuals  associate  for 
a  common  purpose  and  establish  a  fund  or  capital  to  carry 
it  out,  the  law^  creates  an  entity  out  of  that  association  of 
natural  persons  and  endows  it  with  the  legal  substantive 
attributes  of  a  person  possessing  rights  and  duties,  in- 
dependently of  and  even  in  opposition  to  the  rights  and 
duties  of  the  associates. 

The  "socialists,"  on  the  other  hand,  say  that  man  could 
not  renounce  any  right  in  favor  of  society,  because  the  very 
idea  of  a  right  is  inconceivable  without  the  idea  of  society; 
that  an  individual  in  isolation  exercising  rights  is  an  im- 
possibility, that  the  idea  of  right  itself  is  a  metaphysical 
conception,  because  man  naturally  lives  in  association  or 
groups  and  performs  social  functions.  If  his  aims  coincide 
or  harmonize  with  those  of  the  community,  those  aims  are 
protected,  otherwise  they  are  forbidden.  There  are,  then, 
no  rights,  but  functions.  According  to  this  theory,  when  a 
group  of  persons  establishes  a  common  fund  to  pursue  an  end 
which  is  cooperative  with  the  functions  of  the  community, 
that  end  and  the  fund  designed  to  attain  it  are  protected, 
even  against  the  individual  will  of  each  one  of  the  associates, 
so  long  as  the  conditions  necessary  to  reach  the  end  are 
deemed  satisfied. 

These  ideas  regarding  the  character  of  associations  have 
been  slowly  elaborated  and  the  codes  of  Latin- America  show 
the  uncertainty  of  the  doctrine  by  their  definition  of  the 
character  of  associations.  None  of  them,  however,  have 
thus  far  accepted  the  ''socialistic"  theory,  although  in 
various  branches  of  commercial  law  the  influence  of  that 
theory  may  be  observed. 

With  respect  to  the  character  of  commercial  associations 
the  Latin- American  codes  may  be  divided  into  the  following 
systems: 

1.  Those  which  ex]iressly  recognize  commercial  as- 


158  LATIN-AMERICAN    COMMERCIAL   LAW 

sociations  (not  "asociaciones"  or  momentary  associa- 
tions) as  legal  entities.^ 

2.  Those  which  expressly  recognize  the  character  of 
legal  entities  in  stock  corporations  {sociedades  andnirrxis) 
only.^ 

3.  Those  which  are  silent  on  the  subject.^ 

4.  Those  which  imply  in  their  definition  the  idea  of  a 
community  rather  than  that  of  an  independent  entity. 
Among  these  we  may  note  the  code  of  Colombia,^  which 
provides  that  the  firm  name  '^  expresses  the  mutual 
power  that  the  associates  give  to  one  another  to  trade 
with  and  to  bind  themselves  to  third  parties."  Ac- 
cording to  this  provision  the  association  has  no  rights 
other  than  those  of  the  associates,^  Argentina  '  and 
Uruguay  ^  provide  that  "the  firm  name  is  equivalent  to 
the  signature  of  each  one  of  the  associates;  it  binds  all 
of  them  as  if  each  had  actually  written  his  signature." 

2  Spain,  116;  Costa  Rica,  article  2  of  the  law  of  Nov.  24,  1909,  to  which 
reference  is  always  made  throughout  the  chapters  dealing  with  commercial 
associations;  Ecuador,  262;  Mexico,  89,  90;  Panama,  251;  Peru,  124;  Ven- 
ezuela, 204. 

The  legal  entity  created  by  organizing  a  mining  corporation  is  distinct  from 
its  individual  members,  whose  rights  are  confined  to  their  shares,  representing 
the  interest  they  have  in  the  profits  or  losses.  Spain,  Supremo  Tribunal, 
Nov.  16,  1893;  Gacetas  of  Jan.  1st  and  3d,  1894. 

An  association  cannot  be  considered  as  existing  when  the  question  of  its 
existence  has  been  submitted  to  the  courts.  Spain,  Supremo  Trib.,  Oct  27, 
1877;  Gaceta  of  Nov.  23,  1877. 

3  Chile,  424;  Colombia,  550;  Guatemala,  300;  Honduras,  283. 

*  The  legal  entity  of  commercial  associations  is  recognized  in  the  following 
decisions  of  the  courts  of  Brazil:  August  1,  1884;  Tribunal  de  Rela^ao  da  Corte, 
O  Direito,  v.  35,  p.  204,  and  April  20,  1886,  0  Direito,  v.  97,  p.  562  et  seq.;  by  the 
Camara  de  corte  de  Appelagao,  on  June  21,  1909,  Revista  de  Direito,  v.  13,  p.  138; 
by  the  2a  Camara  da  Corte  de  Appela^ao  on  Oct.  20,  1905,  O  Direito,  v.  29,  p.  293, 
and  August  20,  1907;  O  Direito,  v.  105,  p.  295;  by  the  Camaras  Reunidas  da 
Corte  de  Appelagao  of  Nov.  3,  1909,  Revista  de  Direito,  v.  15,  p.  332.  Carvalho 
de  Mendonga,  Tratado  de  Direito  Commercial  Brazileiro,  v.  3,  p.  80. 

5  Art.  482. 

'  It  is  presumed  that  a  partnership  does  not  exist  and,  therefore,  that  there 
is  no  legal  entity  when  the  firm  name  is  not  formed  in  accordance  with  the 
provisions  of  article  481  of  the  commercial  code;  Tribunal  Supremo  del  Dist.  del 
Padfico,  Colombia,  Sept.  21,  1895,  La  Justicia,  v.  5,  p.  1055. 

">  Art.  303.  «  Art.  455. 


COMMERCIAL   ASSOCIATIONS  159 

When  all  the  associates  have  individually  signed  a  con- 
tract, they  are  jointly  hable  just  as  if  they  had  signed 
with  the  firm  name.  This  provision,  which  is  substan- 
tially the  same  as  that  of  Bolivia,^  may  support  the 
theory  that  the  character  of  a  commercial  association 
is  that  of  a  community  rather  than  that  of  an  inde- 
pendent entity. 

The  differences  in  the  definition  of  commercial  as- 
sociations, however,  have  not  prevented  the  codes  from 
adopting  and  accepting  uniformly  the  practical  con- 
sequences of  the  theory  of  a  legal  entity. 

Consequences  derived  from  the  character  of  commercial 
associations. 
Commercial  associations  always  have: 

1.  A  name  or  firm  name;  ^° 

2.  A  domicil  independent  of  that  of  the  associates;  ^^ 

9  Art.  226. 

10  Spain,  126;  Argentina,  291,  299,  300;  Bolivia,  231;  Brazil,  article  2  of  the 
law  of  Jan.  17,  1890  and  302,  315  of  the  code  of  commerce;  Chile,  352,  365  et 
seq.;  Colombia,  467,  481,  482;  Ecuador,  227;  Costa  Rica,  articles  5,  6,  41  of 
the  law  of  Nov.  24,  1909;  Guatemala,  237,  245  to  253;  Haiti,  20,  30;  Honduras, 
220,  228  to  236;  Mexico,  95,  101  to  103;  Nicaragua,  142,  148;  Panama,  293; 
Peru,  134;  San  Salvador,  169,  177  to  185,  231;  Santo  Domingo,  21,  23,  30,  43; 
Uruguay,  395,  453;  Venezuela,  205,  302. 

11  Spain,  21;  Argentina,  291;  Bolivia,  29;  Brazil,  301;  Chile,  426;  Colombia, 
467;  Costa  Rica,  article  5  of  the  law  of  Nov.  24,  1909;  Ecuador,  263;  Guate- 
mala, 237;  Honduras,  220;  Mexico,  95;  Nicaragua,  6,  14;  Panama,  293;  Peru, 
21;  San  Salvador,  169;  Uruguay,  397;  Venezuela,  206. 

By  domicil  of  a  commercial  association  is  meant  not  the  place  where  most  of 
its  business  is  located  but  where  the  head  office  and  management  are  found. 
Colombia,  Trib.  Sup.  del  Sur  del  Tolima,  Dec.  2,  1892;  Crdnica  Judicial  del 
Tnlima,  v.  5,  p.  2114. 

The  domicil  of  an  association,  established  in  the  articles  of  organization  or 
in  its  by-laws,  is  not  changed  even  though  the  association  has  branches  in 
other  places.    Spain,  Sup.  Trib.,  June  4,  1883;  Gaceta  of  Aug.  1,  1883. 

A  contract  by  virtue  of  which  one  of  the  parties  agrees  to  do  some  service  for 
the  other,  receives  an  amount  of  money  in  order  to  perform  that  service  and 
stipulates  for  a  certain  per  centum  return  in  the  benefits  derived  from  the 
business  with  which  the  services  are  connected,  is  a  contract  of  agency  and  not  a 
partnership  because  there  are  missing  certain  essential  elcnu'nts  of  a  j)artner- 
shij),  such  as  a  firm  name  and  the  manner  in  which  the  same  should  be  used. 
Spain,  Trib.  Sup.,  Feb.  11,  1911;  6'aceto  of  Dec.  18,  1911,  p.  105. 


160  LATIN-AMERICAN    COMMERCIAL   LAW 

3.  A  nationality  that  is  also  independent  of  that  of 
the  associates.  In  Argentina,  however,  the  law  does 
not  take  into  consideration  the  nationality  of  an  as- 
sociation, but  only  its  domicil.  In  determining  nation- 
ality of  an  association,  either  one  of  two  systems  is 
followed : 

(a)  the  nationality  of  an  association  is  governed 

by  the  law  of  the  place  of  its  organization;  ^- 

(6)  the  nationality  of  an  association  is  governed 

by  the  law  of  the  place  in  which  it  has  the  main  seat 

of  its  business;  ^^ 

When  a  corporation  binds  itself  to  make  a  payment  either  in  cash  or  in 
shares  of  its  own  stock  it  entitles  the  creditor  to  demand  payment  in  cash 
because  it  is  forbidden  to  corporations  to  acquire  their  own  shares.  This  con- 
clusion holds  even  though  the  corporation  is  established  in  a  foreign  country  if 
the  case  refers  to  acts  done  or  contracts  entered  into  by  its  representatives  in 
Spain.  Spain,  Trib.  Sup.,  Oct.  19,  1910;  Gacetas  of  March  14  and  15,  1911, 
p.  110. 

12  Spain,  15;  Brazil,  301;  Chile,  468;  Colombia,  593;  Costa  Rica,  151;  law  of 
Nov.,  1909;  Guatemala,  332;  Venezuela,  293. 

The  courts  of  a  country  are  possessed  of  proper  jurisdiction  to  declare  the 
bankruptcy  of  a  foreign  corporation  which  has  its  main  business  in  the  country, 
owns  real  estate  there,  and  when  most  of  its  members  are  citizens  of  that  coun- 
try.   Spain,  Trib.  Sup.,  Jan.  17,  1912;  Gaceta  of  April  13,  1913,  p.  53. 

An  association,  the  capital  of  which  is  divided  into  shares  of  equal  value, 
which  is  managed  by  a  board  of  seven  persons  elected  eveiy  five  years  by  the 
general  meeting  of  shareholders  and  whose  purpose  is  gain,  is  a  sociedad  and- 
mina  or  corporation  in  so  far  as  concerns  acts  performed  in  Spain  and  the 
payment  of  taxes,  whatever  its  classification  may  be  according  to  the  law  of  the 
country  of  its  main  oflfice.  Spain,  Trib.  Sup.,  Oct.  17,  1910;  Gacetas  of  Dec.  18 
and  22,  1910,  p.  48. 

A  mercantile  association  is  Spanish  not  when  its  members  are  Spaniards  but 
when  it  is  incorporated  in  accordance  with  the  Spanish  law,  is  subjected  to  the 
Spanish  law  and  is  registered  in  the  commercial  registry,  complying  with  all 
other  requisites  of  the  law  to  engage  in  commerce;  those  of  Art.  151  of  the 
Code  of  Commerce  are  among  such  requisites.  Spain,  Trib.  Sup.,  Oct.  12, 
1906;  Gacetas  of  June  15  and  16,  1907,  p.  309. 

15  Argentina,  286;  San  Salvador,  299,  300. 

The  existence  of  an  association  is  governed  by  the  law  of  its  domicil. 

A  plaintiff  who  states  that  according  to  a  foreign  law  the  association  he 
represents  subsists  after  the  death  of  the  managing  partner,  is  obliged  to  prove 
the  existence  of  that  law.  Mexico,  3a  Sala  del  Supremo  Tribunal  del  Distrito 
Federal.  January  2,  1908,  Ruiz  Herndndez  v.  Mijarez.  Diario  de  Jurisp., 
V.  XVI,  p.  513. 

The  XXI  resolution  of  the  International  Congress  of  Stock  Companies  in 


COMMERCIAL   ASSOCIATIONS  161 

4.  Property  that  belongs  exclusively  to  the  associa- 
tion.^'* The  most  important  of  all  the  legal  provisions 
governing  the  relations  between  the  associates  and  third 
parties  is  derived  from  the  fact  that  the  property  of  the 
association  is  considered  as  distinct  from  that  of  the 
associates — a  rule  which  has  been  adopted  in  order  to 
increase  the  credit  of  associations  and  safeguard  their 
creditors  against  all  contingencies  that  may  arise  in  the 
individual  fortunes  of  the  associates. 

Some  of  the  consequences  of  this  distinction  are: 

(a)  the  interest  or  shares  of  the  associates  are  classi- 
fied by  law  as  personal  property,  notwithstanding 
that  most  of  the  capital  of  the  association  may  con- 
sist of  real  estate;  ^^ 

(h)  the  partnership  or  corporate  capital  is  not  com- 
mon property  but  the  exclusive  property  of  the  as- 
sociation; therefore  none  of  the  associates  may  dis- 
pose of  any  part  of  that  capital,  no  matter  how  small, 
without  being  civilly  or  even  in  some  cases  criminally 
Hable;  '' 

1900  reads :  ' '  The  nationality  of  an  association,  the  capital  of  which  is  divided 
into  shares  must  be  determined  by  the  place  where  its  main  establishment  is  or 
by  the  country  where  the  residence  of  the  association  is  fixed  by  the  by-laws." 
The  power  of  attorney  given  to  a  person  in  a  foreign  country  to  represent  a 
foreign  association  must  be  given  in  accordance  with  the  laws  of  the  place 
where  it  was  issued.  He  does  not  need  to  present  the  copy  of  the  articles  and 
by-laws  of  the  association  protocolized  in  Colombia.  Colombia,  Trib.  Sup.  del 
Dist.  Jud.  de  Panama,  June  22,  1897,  Registro  Judicial  de  Panamd,  v.  X,  p. 
119. 

"The  judge  of  the  place  where  a  corporation  'resides'  has  jurisdication  over 
questions  arising  between  such  corporation  and  its  members  whatever  the 
nationality  of  the  latter  may  be."  Argentina,  Cam.  Fed.  de  Ap.  Parand, 
June  2.3,  1913,  Jurisp.  de  los  Tribs.  Nacs.,  June,  1913,  p.  68. 

'^  Spain,  12.5,  170,  173;  Argentina,  292,  401  to  407;  Bolivia,  253  to  256,  260; 
Brazil,  289,  292,  301,  333;  Chile,  352,  375;  Colombia,  467,  493  to  505;  Costa 
Rica,  5,  6,  of  the  law  of  Nov.,  1909;  Ecuador,  261,  287;  Guatemala,  237,  254  to 
256;  Haiti,  43;  Honduras,  220,  237  to  239;  Mexico,  95,  108;  Nicaragua,  156; 
Panama,  257  to  260;  Peru,  133,  177,  180;  San  Salvador,  169;  Santo  Domingo, 
43;  Uruguay,  395;  Venezuela,  216. 

'^  Spain,  335  c.  c;  Argentina,  2352  c.  c;  Costa  Rica,  256  c.  c;  Mexico, 
689  c.  c;  Chile,  567  c.  c;  Colombia,  655  c.  c;  Panama,  327  c.  c;  Uruguay, 
462  c.  c;  V(!nozuela,  454  c.  c. 

"Spain,  135;  Argentina,  417;  Brazil,  333,  334;  ChUc,  381,  404;  Colombia, 


162  LATIN-AMERICAN    COMMERCIAL   LAW 

(c)  the  associate  capital  is  a  guaranty  for  the  as- 
sociation creditors,  excluding  absolutely  those  of  the 
associates;  the  latter  have  only  the  power  to  sub- 
stitute themselves  in  the  rights  of  their  debtors 
after  the  liquidation  of  the  association,  except  in  the 
case  of  stock  corporations,  when  the  creditors  may 
be  paid  with  shares.  ^^ 

506,  529;  Costa  Rica,  20  to  23;  Ecuador,  280;  Guatemala,  258,  281;  Hon- 
duras, 264;  Mexico,  131;  Nicaragua,  177;  Panama,  258;  Peru,  143;  San  Sal- 
vador, 189,  212;  Uruguay,  475,  476,  480;  Venezuela,  287. 

In  order  to  organize  an  association  it  is  required  that  every  one  of  the  asso- 
ciates contribute  something  to  the  common  fund.  Ecuador,  una  Sala,  Corte 
Superior  de  Quito,  June  27,  1913,  Arellano  v.  Valdivieso;  Gaceta  Jud.,  Year  XI, 
n.  25,  p.  1429. 

The  title  to  property  contributed  b>  the  associates  is  vested  in  the  associa- 
tion.   Spain,  Sup.  Trib.,  Feb.  23,  1884. 

Associates  cannot  demand  the  property  which  comprises  the  associate 
capital  so  long  as  the  division  of  that  capital  is  not  carried  out  in  accordance 
with  the  authorized  method  of  liquidation.  Ecuador,  Corte  Superior  de 
Quito,  April  24,  1913,  Valasquez  v.  Guallichico;  Gaceta  Judicial,  Year  XIII, 
n.  40,  p.  1549. 

A  de  facto  partnership  which  has  not  been  constituted  in  a  public  instru- 
ment, nor  registered  in  the  public  registry  is  not  governed  by  the  code  of  com- 
merce, but  by  the  civil  code,  according  to  which  the  ownership  of  the  property 
acquired  with  common  funds  belongs  in  common  to  the  co-owners;  if  one  of  the 
co-owners  possesses  exclusively  a  certain  part  of  the  common  property,  he 
by  no  means  acquires  title  to  it  by  lapse  of  time  even  though  in  possession  more 
than  ten  years,  because  he  lacks  good  faith  and  a  clean  title.  Spain,  Trib. 
Sup.,  May  31,  1912;  Gaceta  of  July  13,  1913,  p.  447. 

"Spain,  174;  Argentina,  417;  Bolivia,  301,  302;  Brazil,  292;  ChUe,  380; 
Colombia,  505;  Costa  Rica,  23;  Ecuador,  266;  Guatemala,  257;  Honduras, 
240,  241;  Mexico,  152;  Nicaragua,  161,  188;  Panama,  273;  Peru,  181;  San 
Salvador,  188;  Uruguay,  478;  Venezuela,  209. 

An  insurance  company  which  has  reduced  the  amount  of  its  capital  cannot 
compel  persons  who  took  a  policy  before  such  reduction  was  made  to  pay  the 
stipulated  premiums;  it  produces  the  rescission  of  the  contract  unless  the 
insured  has  agreed  to  the  reduction  of  the  capital  which  is  the  guaranty  of  all 
the  policies.  Spain,  Trib.  Sup.,  Feb.  17,  1912,  La  Polar  v.  Diaz  de  Mendoza; 
Gacetas  of  May  3  and  5,  1913,  p.  163  and  March  25,  1913,  Sociedad  Teatro 
Calder6n  de  Valladolid  v.  La  Polar;  Gacetas  of  13  and  17  of  Dec,  1913,  p.  220. 

In  spite  of  the  fact  that  an  association  is  in  liquidation  it  is  considered  as  a 
legal  entity  whose  rights  and  obligations  are  distinct  from  those  of  the  partners 
or  associates,  and  property  entered  in  the  public  registry  as  possessed  by  the 
association  is  not  affected  by  personal  liabilities  of  its  members.  Spain,  Trib. 
Sup.,  March  6,  1900;  Gaceta  of  March  18,  1900. 

In  case  of  bankruptcy  of  an  association,  the  individual  creditors  of  an  asso- 


COMMERCIAL  ASSOCIATIONS  163 

Mexico  makes  the  following  distinction:  the  above 
mentioned  rule  is  applicable  when  the  debt  of  an  as- 
sociate is  contracted  after  the  formation  of  the  associa- 
tion; but  when  it  is  contracted  before  that  time  the  in- 
dividual creditor  is  entitled  to  ask  for  the  liquidation 
of  the  association  and  to  be  paid  immediately.  This 
is  also  the  rule  in  Honduras.  ^^ 

(d)  As  the  associates  in  a  partnership  are  guarantors 
for  the  association,  the  creditors  of  the  association 
may  not  attach  individual  property  of  the  associates, 
until  they  have  exhausted  all  the  property  of  the  as- 
sociation.^^ 

5.  Legal  capacity  to  trade,  to  bind  themselves  and 
to  bind  third  parties  in  dealing  with  the  association;  -" 

6.  Capacity  to  sue  and  be  sued.  There  has  never 
been  any  doubt  as  to  this  capacity;  it  is  a  consequence 
of  the  power  of  contracting  and  acquiring  rights  and 

ciate  do  not  compete  with  those  of  the  association,  but  when  the  latter  are  paid 
off  the  former  can  enforce  their  rights  upon  the  remainder  belonging  to  asso- 
ciate debtors.    Spain,  Trib.  Sup.,  Dec.  29,  1870;  Gaceta  of  Jan.  29,  1871. 

18  Art.  240. 

"Spain,  237;  Argentina,  443;  Bolivia,  305;  Brazil,  350;  Costa  Rica,  42; 
Mexico,  151;  Nicaragua,  191;  Panama,  328;  Peru,  230;  Uruguay,  506. 

According  to  article  237  of  the  commercial  code  individual  property  of 
general  partners,  which  was  not  included  in  the  association  fund,  can  be  at- 
tached for  the  payment  of  the  associates'  liabilities  only  after  their  individual 
property  has  been  exhausted.  Spain,  Trib.  Sup.,  May  23,  1898,  Coleccion  Legis- 
laliva  de  Espa'na,  Jurisp.  Civil,  1898,  v.  II,  p.  344. 

20  Spain,  116;  Brazil,  316;  Chile,  387;  Colombia,  512;  Costa  Rica,  45,  48,  49 
of  the  above  mentioned  law;  Guatemala,  275;  Honduras,  255;  Nicaragua,  155; 
Panama,  301;  Peru,  124;  San  Salvador,  203. 

The  lack  of  agreement  among  the  associates  in  regard  to  articles  bought  by 
one  of  them,  is  not  an  obstacle  to  the  fulfillment  of  the  contract  of  purchase  and 
sale  entered  into  by  one  of  the  associates  whose  name  is  included  in  the  firm 
name.  Argentina,  Cam.  de  Apel.  Com.  Buenos  Aires,  Feb.  15,  1913,  Chedil 
Burbo  y  Cia.  v.  Camblor  Hermanos,  Jurisp.  de  los  Tribs.  Nacs.,  Feb.,  1913, 
p.  131. 

Corporations  as  legal  entities  enjoy  the  same  rights  as  individuals  in  acquir- 
ing real  estate,  when  the  general  meeting  of  the  members  of  the  board  of 
directors  has  authorized  them  to  do  so  in  accordance  with  their  by-laws  af)- 
proved  by  the  Executive  of  the  Nation.  Argentina,  Camara  2a  de  Apel.  Civ. 
Buenos  Aires,  Nov.  21,  1912,  Iturrisa  v.  Conoso,  Jur.  de  los  Tribs.  Nacs., 
Nov.,  1912,  p.  219. 


164  LATIN-AMEEICAN    COMMERCIAL   LAW 

obligations  and  in  some  of  the  commercial  codes  it  has 
been  expressly  established.  ^^ 

Method  of  establishing  commercial  associations. 

An  association  must  comply  with  two  requisites : 

1.  That  two  or  more  persons  bind  themselves  to 
place  in  a  common  fund  some  of  their  property  or  their 
industry  or  both  with  a  \dew  to  obtaining  profits; 

2.  That  the  commercial  organization  be  estabhshed 
in  accordance  with  the  provisions  of  the  commercial 
codes. 

Kinds  of  association. 

Considering  the  first  of  these  two  requisites  the  codes  of 
Spain  22  and  Peru  -^  declare  that  mutual  insurance  companies 
are  not  commercial,  because  their  purpose  is  not  to  make 
profits  but  to  distribute  the  losses  of  a  few  persons  among  a 
larger  number  of  others  similarly  situated.  The  codes  of 
Argentina,  Mexico,  Panama  and  San  Salvador  consider  these 
associations  as  commercial,  owing  perhaps  to  the  circum- 
stance that  they  generally  engage  in  commercial  transac- 
tions, although  they  do  not  directly  intend  thereby  to  profit 
financially.  The  other  codes  do  not  mention  cooperative 
associations;  their  classifications  therefore  must  be  made 
according  to  their  functions. 

In  creating  a  conmion  fund  as  the  capital  of  the  associa- 
tion the  persons  who  organize  it  may  graduate  their  habihty 
in  three  different  w^ays.     This  criterion  of  Hability  consti- 

21  Argentina,  297,  404;  Brazil,  304  and  article  19  of  decree  434  of  July  4,  1891; 
Cliile,  379,  398;  Colombia,  520  to  523;  Ecuador,  339;  Costa  Rica,  45  ib.;  Gua- 
temala, 275;  Honduras,  258;  Mexico,  124;  Nicaragua,  163;  Panama,  301;  San 
Salvador,  203;  Venezuela,  220,  293. 

22  Art.  124. 

An  association  is  mercantile  notwithstanding  that  it  was  organized  as  a  co- 
operative or  mutual  one,  when  it  possesses  capital  divided  into  shares  and 
enters  into  business  with  a  view  to  making  profits  and  to  dividing  them  among 
its  shareholders.  Spain,  Trib.  Sup.,  Oct.  6,  1914;  Gacetas  of  Jan.  9  and  11, 
1915,  p.  40. 

23  Art.  132. 


COMMERCIAL   ASSOCIATIONS  165 

tutes  the  most  important  basis  of  classification  of  associa- 
tions, namely: 

1.  Associations  in  which  all  the  members  under  a 
firm  name  are  jointly  and  severally  liable  {in  solidum) 
for  the  transactions  and  debts  of  the  association.  This 
class  is  called  ''sociedad  en  nomhre  colectivo.'^  Its  equiv- 
alent in  Anglo-American  law  is  the  general  partnership.-^ 

2.  Associations  in  which  some  of  the  members  con- 
tribute a  certain  amount  of  the  group  fund,  their  lia- 
ability  being  limited  to  the  amount  of  their  contribution, 
while  other  members  are  unlimitedly  and  jointly  liable. 
This  is  called  the  '^sociedad  en  comandila^'  which  may  be 
either  simple  or  with  shares.  It  is  equivalent  to  the 
limited  partnership  of  Anglo-American  law. 

3.  Associations  in  which  a  common  fund  is  created 
with  fixed  contributions,  called  acciones  (shares),  the 
management  of  the  fund  being  entrusted  to  a  group  of 
persons  or  directors — subject  to  removal  at  certain 
periods — who  represent  the  association.  The  liability 
of  every  member  is  hmited  to  the  amount  of  his  con- 
tribution unless  he  incurs  some  additional  responsibility 
by  his  acts.  This  type  of  association  is  the  ^^sociedad 
anonima^'  or  stock  corporation.-^ 

^^  The  fact  that  in  a  complaint  the  members  of  a  defendant  commercial 
association  were  individually  mentioned,  without  using  the  firm  name  of  the 
latter,  does  not  constitute  a  legal  defect  in  the  form  of  the  complaint,  when  the 
proceedings  show  that  the  action  is  brought  against  the  association  for  whose 
benefit  the  acts  that  originated  the  complaint  were  performed.  Argentina, 
Cam.  Fed.  de  Apel.  La  Plata,  April  9,  1913,  Fogha  y  Buffa  v.  Serralta,  Tavarella 
y  Cla,  Jurisp.  de  los  Tribs.  Nacs.,  April,  1913,  p.  56. 

The  fact  that  an  attorney  brings  a  suit  in  behalf  of  an  association  by  virtue 
of  a  power  given  individually  by  the  persons  who  form  the  association,  cannot 
serve  as  a  basis  for  a  demurrer  alleging  lack  of  personal  capacity  on  the  part 
of  the  attorney,  even  though  in  the  deed  of  power  the  circumstance  that  the 
associates  acted  in  behalf  of  the  association  was  not  mentioned.  Buenos  Aires, 
Cam.  de  Apel.  Com.,  July  15,  1913,  luri  Hermanos  v.  Serrito,  Juriap.  de  los 
Tribs.  Noes.,  July,  1913,  p.  232. 

"  Spain,  122;  Argentina,  301,  313,  372;  Bolivia,  225  to  228;  Brazil,  295,  311; 
Chile,  348,  370,  424,  470;  Colombia,  463,  4S7,  550,  596;  Costa  Rica,  2;  Ecuador, 
262,  267,  275,  285  to  287;  Guatemala,  233,  249,  300,  334;  Haiti,  19  to  29; 
Honduras,  216,  232,  283,  316;  Mexico,  89,  100,  154,  163;  Nicaragua,  141; 


166  LATIN- AMERICAN    COMMERCIAL    LAW 

Besides  these  three  classes  of  association,  which  are  con- 
sidered as  legal  entities,  the  law  also  recognizes  momentary 
associations  or  joint  adventures  and  '^ associations  in  par- 
ticipation," not  having  the  character  of  legal  entities  nor 
possessing  any  firm  name.  No  legal  formality  is  required 
for  their  formation  and  their  existence  and  conditions  may 
be  proved  by  any  legal  evidence.-^ 

Associations  of  capital  and  industry. 

Argentina, ^^  Brazil  -^  and  Uruguay-^  mention  a  special 
association  which  is  called  "association  of  capital  and  in- 
dustry." 

Panama,  297,  330,  359;  Peru,  130;  San  Salvador,  167,  231,  302;  Santo  Domingo, 
19;  Uruguay,  403,  425,  453;  Venezuela,  204. 

2«  Spain,  239  to  243;  Argentina,  395  to  402;  Bolivia,  288  to  290;  Brazil, 
325  to  328;  Chile,  507  to  511;  Colombia,  629  to  633;  Costa  Rica,  301  to  305; 
Ecuador,  346  to  351;  Guatemala,  371  to  375;  Haiti,  47;  Honduras,  216;  Mexico, 
92;  Nicaragua,  194;  Peru,  232  to  236;  San  Salvador,  331  to  336;  Santo  Do- 
mingo, 47;  Uruguay,  444;  Venezuela,  204. 

A  momentary  association  is  not  subjected  to  the  formalities  provided  for  the 
constitution  of  commercial  partnerships  or  corporations,  and  the  agreement 
between  the  associates  determines  the  purpose,  manner  of  signing,  amount 
contributed  and  conditions  of  liquidation;  such  an  association  is  not  a  legal 
entity,  lacks  a  firm  name,  associate  capital,  and  domicil;  and  its  formation, 
modification,  dissolution  and  liquidation  can  be  proved  by  all  legal  means. 
The  manager  is  supposed  to  be  the  only  owner  of  the  business  ^^ith  regard  to 
strangers.  ChUe,  Corte  de  Apel.  Iquique,  Chile,  March  16,  1896;  Gaceta  de  los 
THbs.,  1896,  p.  903. 

Momentary  associations  have  no  legal  entity  distinct  from  that  of  their 
members. 

In  a  momentary  association,  the  object  is  to  carry  on  without  firm  name,  one 
or  several  transactions,  its  members  being  jointly  liable  ^\ith  respect  to  third 
parties. 

In  an  "association  in  participation"  two  or  more  persons  have  an  interest  in 
a  business  conducted  by  one  or  several  persons  under  the  name  of  the  latter, 
whether  in  an  individual  or  a  firm  name.  Between  those  members  who  do  not 
conduct  the  business  and  third  parties  there  is  no  privity  nor  right  of  action. 

Momentary  associations  as  well  as  associations  in  participation  are  true 
associations  with  the  difference  that  they  have  not  a  firm  name  or  common 
capital  and,  therefore,  have  no  legal  entity. 

When  there  are  several  members  in  an  association  in  participation  the  one 
who  contracts  in  behalf  of  all  requires  formal  power  in  order  to  bind  the  other 
members.  Mexico,  2a  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  Jan.  8,  1908,  E.  Mar- 
quardt  y  Cia.  v.  Castellot  Hnos.,  Diario  de  Jurisp.,  v.  14,  p.  441. 

^  Arts.  383  to  391.  ^  Arts.  317  to  324.  =9  Arts.  435  to  443. 


COMMERCIAL   ASSOCIATIONS  167 

Such  an  association  may  or  may  not  adopt  a  firm  name. 
In  the  first  case  the  rules  of  general  partnership  are  appUed 
and  in  any  case  the  partner  who  contributes  the  capital  is 
unlimitedly  and  jointly  liable  for  all  the  transactions  of  the 
asssociation.  The  industrial  partner  cannot  contract  in 
behalf  of  the  association,  nor  is  he  bound  with  his  own  prop- 
erty for  the  obligations  of  the  association.  A  mere  industrial 
associate  is  not  obliged  to  pay  back  to  the  common  fund 
money  he  may  have  received  as  his  share  of  profits,  except  in 
case  of  fraud  on  his  part. 

Legal  formalities  to  constitute  a  commercial  association. 

The  organization  of  a  commercial  association  and  partici- 
pation in  the  benefits  of  the  law  for  its  protection  are  matters 
not  left  entirely  to  the  will  of  the  parties,  for  they  affect  or 
may  affect  the  community.  Consequently,  special  legal 
forms  have  been  established  in  order  to  obtain  the  benefits 
of  a  legal  entity  for  an  association.  There  are  three  systems 
which  control  these  legal  formalities: 

1.  The  organization  is  effected  by  means  of  a  public 
instrument  drawn  by  a  notary  and  duly  registered  and 
published.  ^° 

2.  The  organization  of  a  general  or  limited  partner- 
ship may  be  effected  by  means  of  a  public  or  a  private 
instrument,  but  that  of  corporations  requires  a  public 
one.  In  both  cases  the  instrument  must  be  registered 
and  published. ^^ 

'» Spain,  119;  Bolivia,  21,  231;  Chile,  350,  425,  474;  Colombia,  465,  551,  598; 
Costa  Rica,  4;  Ecuador,  326,  327;  Guatemala,  235,  300,  338;  Mexico,  93,  19; 
Nicaragua,  154,  1411;  Panama,  287,  288;  Peru,  127;  San  Salvador,  167,  231, 
307. 

The  existence  of  an  association  is  proved  by  means  of  the  public  deed  of 
organization.  Mexico,  2a  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  January  8,  1908, 
E.  Marquardt  y  Cia.  v.  Castellot  Hnos.,  Diario  de  Jurisp.,  v.  14,  p.  441. 

Article  553  of  the  code  of  commerce  of  Colombia  required  that  domestic 
as  well  as  foreign  corporations  be  authorized  by  a  decree  of  the  government, 
before  starting  business,  but  now  law  124  of  1888  estabUshed  a  new  system; 
the  authorization  of  the  Government  is  no  longer  necessary;  corporations  have 
only  to  protocolize  their  articles  and  by-laws.  Colombia,  Tribunal  Sup.  del 
Dist.  Norte  d(!  Tolima,  Jan.  15,  1892,  Cronica  Jud.  del  Tolima,  v.  5,  p.  2122. 

"  Argentina,  289,  293,  294;  Haiti,  39,  40,  42. 


168  LATIN-AMERICAN    COMMERCIAL   LAW 

3u  The  organization  may  be  effected  by  means  of 
either  a  private  or  a  pubhc  instrument  which  must 
be  registered  and  pubhshed.^^ 
In  Argentina  ^^  and  Uruguay  ^■^  the  organization  of  a  com- 
mercial association  can  be  effected  orally  when  the  amount 
of  its  capital  is  not  over  one  thousand  pesos.^^ 

All  contracts  which  amend,  supplement  or  modify  the 
articles  of  organization  of  a  commercial  association  require 
the  same  legal  formalities  as  the  original  contract.  ^^ 

Effects  of  the  non-fulfillment  of  legal  formalities. 

There  are  six  different  systems  with  respect  to  the  effects 
of  failure  to  comply  with  the  legal  requisites  of  form  in  the 
organization  of  an  association.    They  are  as  follows: 

First  system.      The  contract  is  valid  between  the 
associates,  but  void  so  far  as  concerns  actions  against 

Even  though  an  association  is  of  the  kind  that  must  be  organized  by  means 
of  a  public  instrument,  the  lack  of  this  requisite  does  not  prevent  accomplished 
facts  from  producing  their  effects,  when  in  any  way  the  existence  of  the  asso- 
ciation is  proved.  Argentina,  Camara  I  de  Apel.  de  lo  CivU,  Buenos  Aires, 
Oct.  30,  1913,  De  la  Cuesta  v.  Bunge,  Jurisp.  de  los  Tribs.  Noes.,  Oct.,  1913, 
p.  203. 

32  Brazil,  300  to  302;  Santo  Domingo,  39,  40,  42;  Uruguay,  393. 

3'  Art.  289.  ^*  Art.  393. 

3^  An  association  is  legally  organized  even  though  only  a  private  instrument 
is  executed,  and  persons  contracting  with  such  association  can  compel  it  to 
comply  with  its  obligations.  Spain,  Trib.  Sup.,  Dec.  2,  1902;  Gaceta  of  Jan.  12, 
1903,  p.  31. 

39  Spain,  119;  Argentina,  295;  Bolivia,  232;  Chile,  350;  Colombia,  465; 
Costa  Rica,  article  4  of  law  of  Nov.  24,  1909;  Ecuador,  330;  Guatemala,  235; 
Haiti,  46;  Honduras,  218;  Mexico,  94;  Panama,  289;  Peru,  127;  San  Salvador, 
167;  Santo  Domingo,  46;  Uruguay,  396;  Venezuela,  305. 

When  a  commercial  association  amplifies  its  scope  by  engaging  in  new  lines 
of  business,  it  is  necessary  to  execute  a  new  instrument  stating  these  modifica- 
tions, even  though  the  capital  remains  unchanged;  and  the  association  is  con- 
sidered as  a  new  one  for  the  payment  of  taxes  on  its  incorporation.  Spain, 
Trib.  Sup.,  Nov.  8,  1906;  Gaceta  of  July  22,  1907,  p.  361. 

An  association  is  extinguished  ipso  facto  and  must  be  liquidated  when  the 
period  of  its  duration  has  elapsed.  The  members  of  an  association  can,  before 
the  expiration  of  the  established  period,  agree  to  an  extension  of  the  same;  but 
it  is  necessary  to  execute  the  agreement  in  a  public  instrument  with  all  legal 
requisites  for  the  organization  of  an  association.  Spain,  Trib.  Sup.,  July  8, 
1903;  Gaceta,  Oct.  6,  1903,  p.  106. 


COMMERCIAL   ASSOCIATIONS  169 

third  parties ;  the  latter  may  enforce  their  rights  against 
the  directors.  All  stipulations  not  included  in  the 
public  instrument  which  contains  the  articles  of  organi- 
zation are  void.^^ 

Second  system.  As  to  the  associates  the  contract  is 
valid  with  respect  to  the  past  but  not  to  the  future; 
that  is,  every  associate  may  at  any  time  ask  for  the 
dissolution  of  the  association,  but  he  must  abide  by  the 
stipulations  contained  in  the  contract.  Third  parties 
may  take  advantage  of  the  contract  of  association 
against  the  association  itself  or  against  its  members ;  but 
the  associates  cannot  avail  themselves  of  the  existence 
of  the  association  as  a  defense  against  third  parties,  who 
as  defendants  are  only  liable  according  to  civil  law  to 
return  what  they  have  received  in  case  they  do  not 
comply  with  their  obligations.^^ 

Third  system.  The  contract  is  entirely  void ;  if  it  has 
been  embodied  in  a  private  instrument,  its  only  effect 
is  that  the  associates  can  be  compelled  to  execute  the 
contract  in  a  public  deed.^^ 

Fourth  system.  The  contract  is  void  as  between  the 
associates;  third  parties  can  bring  their  actions  against 
each  of  the  associates,  who  are  jointly  liable.  If  the 
contract  is  embodied  in  a  private  instrument  the  asso- 
ciates can  be  compelled  to  execute  a  public  instru- 
ment.^" 

Fifth  system.  The  contract  is  void  between  the  con- 
tracting parties,  but  they  are  jointly  liable  with  respect 
to  third  parties.  ^^ 

"  Spain,  119, 120;  Peru,  127, 128. 

See  note  35,  decision  of  Dec.  2,  1902. 

3«  Argentina,  296,  297;  Brazil,  303,  304;  Ecuador,  331;  Uruguay,  399,  400. 

The  existence  of  a  partnership  can  be  proved  by  the  admission  of  one  of  the 
members  thereof.  Buenos  Aires,  Cam.  Fed.  de  Apel.  de  La  Plata,  May  6, 
1914,  Jurisp.  de  los  Tribs.  Noes.,  May,  1914,  p.  52. 

'9  Bolivia,  235,  236. 

«  Chile,  350,  351,  357;  Colombia,  468,  472;  Guatemala,  236,  239;  Honduras, 
219,  222;  Panama,  287,  296;  San  Salvador,  170,  171. 

*'  Costa  Rica,  8;  Haiti,  41;  Mexico,  96,  97;  Santo  Domingo,  41. 


170  LATIN-AMERICAN    COMMERCIAL    LAW 

Sixth  system.  The  contract  is  entirely  void  as  to  all 
parties.^^ 

Prescription  or  statute  of  limitations. 

Regarding  this  matter,  the  following  systems  may  be 
noted: 

System  of  Spain.  Actions  by  associates  against  the 
association  and  \'ice  versa  are  barred  by  prescription 
after  three  years,  counting  from  the  date  of  inscription 
in  the  commercial  registry,  from  the  separation  of  the 
associate  or  from  the  dissolution  of  the  association,  as 
the  case  may  be.  The  right  to  collect  di\'idends  or 
payments  due  on  account  of  profits  or  of  a  part  of  the 
capital  belonging  to  an  associate  is  barred  by  prescrip- 
tion after  five  years,  counting  from  the  date  on  which 
the  payment  was  ordered. 

Actions  against  managers  of  associations  are  barred 
after  four  years,  counting  from  the  time  they  give  up 
their  positions.''^ 

Mexico  '*'*  and  Panama  ^^  follow  the  same  system,  the 
only  difference  being  that  the  prescriptive  period  is,  in 
all  these  cases,  five  years  in  Mexico  and  three  in  Pan- 
ama. 

System  of  Chile.  Actions  are  subject  to  special 
limitation  only  when  they  are  brought  against  associates 
who  are  non -liquidators.  The  period  of  limitation  in 
that  case  is  five  years  after  the  inscription  in  the  regis- 

*^  Nicaragua,  154. 

«  Spain,  947,  949;  Peru,  958,  960. 

Actions  by  commercial  associations  against  their  members  for  the  pay- 
ment of  the  amount  of  their  contribution  or  subscription  are  barred  by  limita- 
tion according  to  rules  governing  limitation  of  actions.  Spain,  Trib.  Sup., 
March  25,  1915;  Gacetas  of  15  and  16  Oct.,  1915,  p.  250. 

Besides  the  stipulation  for  a  certain  per  centum  of  the  profits  of  a  partnership 
in  favor  of  an  employee  of  the  firm,  the  employee  may  validly  and  independ- 
ently agree  with  some  of  the  partners  to  have  another  per  centum  of  the 
profits  belonging  to  said  partners.  The  actions  of  the  employee  for  the  portion 
of  profits  to  which  he  is  entitled  is  not  barred  by  limitation  by  the  lapse  of 
five  years  if  the  partnership  has  not  yet  been  liquidated.  Spain,  Trib.  Sup., 
July  13,  1910;  Gaceta  of  Oct.  13,  1910,  p.  37. 

"  Art.  1045.  «  Art.  1652. 


COMMERCIAL   ASSOCIATIONS  171 

try  and  publication  of  the  deed  of  dissolution  of  the 
association.  This  prescription  does  not  arise  when  the 
associates  themselves  effect  the  liquidation  or  in  case 
of  bankruptcy  of  the  association.  Actions  of  creditors 
against  liquidators  and  those  of  associates  among  them- 
selves are  barred  by  the  lapse  of  time  fixed  by  the 
civil  code."*^ 

System  of  Argentina.  Actions  arising  out  of  the 
articles  of  association  or  out  of  transactions  of  the 
association  are  barred  after  a  period  of  three  years, 
provided  the  contract  of  association  has  been  legally 
published.  That  period  must  be  counted  from  the  day 
when  the  obligation  became  due,  or  from  the  date  when 
the  deed  of  dissolution  or  liquidation  of  the  association 
was  published,  when  the  obligation  is  not  due.  In 
regard  to  obligations  derived  from  the  liquidation  of 
the  association  the  period  runs  from  the  date  on  which 
the  final  balance  sheet  was  approved. ^^ 

System  of  Venezuela.  The  provisions  of  the  code  of 
Venezuela  differ  essentially  in  many  respects  from  the 
other  systems.  The  joint  liability  of  associates  and 
their  successors  ceases  after  five  years,  counting  from 
the  dissolution  of  the  association  and  from  the  proper 
publication  of  the  corresponding  deed.  This  provision 
is  not  applicable  when  the  termination  of  the  association 
is  due  to  bankruptcy.  After  the  period  of  prescription 
has  been  interrupted  by  the  institution  of  a  judicial 
action  against  the  debtor  or  debtors,  a  new  period  begins 
which  lasts  for  the  regular  period  of  limitation. 

When  the  five  years  above  referred  to  have  elapsed, 
the  creditors  have  a  right  of  action  against  the  liquida- 
tors up  to  the  total  amount  of  the  associate  funds  still 
undivided,  and  against  every  one  of  the  associates  in 
proportion  to  the  amount  they  may  have  received  as 
capital  and  profits  in  the  liquidation. 

«  Chile,  419  to  423;  Colombia,  545  to  549;  Costa  Rica,  33;  Guatemala,  296 
to  299;  Haiti,  64;  Honduras,  279  to  282;  San  Salvador,  227  to  230;  Santo 
Domingo,  64;  in  Uruguay  four  years  is  the  period  of  limitation,  1019. 

"  Art.  848. 


172  LATIN- AMERICAN    COMMERCIAL    LAW 

Should  the  credit  mature  after  the  dissolution  of  the 
association  the  period  of  five  years  begins  when  the 
credit  becomes  due. 

Liquidators  who  have  paid  liabilities  of  the  associa- 
tion with  their  personal  funds  have  no  more  right  to  be 
paid  than  any  other  creditors. 

Method  of  settling  differences  arising  among  the  associ- 
ates. 

The   Latin-American   codes   may  be   divided  into   four 
groups : 

L  That  which  provides  for  a  compulsory  arbitration 
of  all  differences.'*^ 

2.  That  which  requires  a  special  stipulation  in  the 
articles  of  organization  as  to  whether  or  not  the  differ- 
ences must  be  arranged  by  arbitrators."*^ 

3.  That  of  Chile  to  the  same  effect,  adding  that  in 
the  absence  of  any  stipulation  in  the  articles  of  organi- 
zation, it  is  taken  for  granted  that  the  settlement  must 
be  made  by  arbitrators. 

4.  That  of  the  other  codes  which  leave  this  matter 
to  the  discretion  of  the  parties. 

*8  Bolivia,  306;  Brazil,  294;  Haiti,  51;  Nicaragua,  155;  Uruguay,  511. 
«  Colombia,  467;  Guatemala,  237;  Honduras,  220. 


CHAPTER  X 

Commercial  Associations  (2) 

general  partnership 

(Sociedad  Colectwa) 

Characteristics  of  a  general  partnership. 

Perhaps  the  oldest  form  of  commercial  association,  is  that 
in  which  the  associates  place  their  property  and  their  in- 
dustry or  either  of  these  elements  in  a  common  fund  in  order 
to  obtain  and  share  the  resulting  benefit.  The  characteristic 
feature  of  this  association  is  that  the  transactions  are  carried 
on  under  a  common  name,  called  the  firm  name  {razon 
social)  and  that  all  the  associates  are  jointly  and  unlimitedly 
liable  for  the  transactions  of  the  association,^  This  type 
of  association  is  known  as  the  general  partnership  {sociedad 
colectwa  or  sociedad  en  nomhre  colectivo). 

The  firm  name. 

The  general  partnership  must  transact  business  under  the 
name  either  of  all  its  members,  or  of  several  or  of  only  one  of 
them,  it  being  necessary  to  add  in  the  last  two  cases  the 
words  ''and  Company  "  {y  Compania) .  The  collective  name 
is  the  firm  name  or  common  signature,  in  which  the  name  of 
a  person  not  a  partner  cannot  be  included. 

Those  who,  although  not  members  of  the  firm,  allow  their 
names  to  be  included  in  the  firm  name  are  subject  to  joint 
and  several  liability  for  firm  debts,  besides  any  penal  liability 
that  may  be  applicable.^ 

^  The  code  of  commerce  does  not  authorize  the  establishment  of  combined 
associations  possessing  at  the  same  time  the  character  of  partnerships  and 
corporations.  Colombia,  Trib.  Sup.  del  Dist.  del  Pacifico,  Dec.  16,  1898,  Ln 
Juslicia,  V.  5,  p.  1459. 

"Spain,  126,  127;  Argentina,  299,  .30.3;  Bolivia,  226,  238;  Brazil,  .315,  31t); 

173 


174  LATIN-AMERICAN    COMMERCIAL   LAW 

After  the  partnership  is  dissolved  the  use  of  its  firm  name 
is  a  forgery,  and  the  inclusion  in  it  of  the  name  of  a  person 
not  a  partner  is  a  fraud  (estafa).^ 

Unlimited  and  joint  liability  of  general  partners. 

All  the  members  of  a  general  partnership,  whether 
managing  partners  or  not,  are  personally  and  jointly  and 
severally  liable  with  all  their  property  for  transactions 
carried  on  and  debts  incurred  in  the  name  and  for  the  ac- 
count of  the  partnership,  when  undertaken  under  the  firm 
name  and  by  a  person  authorized  to  use  it.^ 

Any  stipulation  made  with  a  view  to  avoiding  this  unlim- 
ited and  joint  and  several  liability  is  void.^ 

Nevertheless,  in  Argentina,^  Bolivia,^  Nicaragua,^  and 
Uruguay,^  a  limited  partner  can  be  admitted.  In  our 
opinion,  however,  such  admission  changes  the  character  of 
the  partnership  into  a  "comandita"  or  limited  partnership, 
as  in    Panama,   where   the   law   provides  ^°   that    in   such 

Chile,  365  to  370;  Colombia,  481  to  487;  Costa  Rica,  42;  Ecuador,  267,  269, 
270;  Guatemala,  245  to  249;  Haiti,  20  to  22;  Honduras,  228  to  232;  Mexico, 
100  to  103;  Nicaragua,  142,  143;  Panama,  297  to  300;  Peru,  134-135;  San 
Salvador,  177  to  181;  Santo  Domingo,  20,  21;  Uruguay,  402,  453-454;  Ven- 
ezuela, 213,  214,  217. 

The  firm  name  must  be  formed  by  the  names  of  all  the  associates  or  by  the 
name  of  one  of  them,  adding  the  words  "y  compania,"  Brazil,  Decree  No.  916 
of  Oct.  24,  1890,  article  3. 

There  is  a  presumption  that  there  is  no  partnership  or  a  legal  entity  of  that 
character,  when  the  firm  name  is  not  constituted  in  accordance  with  the 
provisions  of  article  481  of  the  commercial  code.  Colombia,  Trib.  Sup.  del 
Dist.  del  Pacifico,  Sept.  21,  1895,  La  Justida,  v.  5,  p.  1055. 

» Chile,  367;  Colombia,  484;  Guatemala,  247;  Honduras,  230;  Panama,  298; 
San  Salvador,  179. 

*  Spain,  127;  Argentina,  302;  Bolivia,  238;  Brazil,  316;  Chile,  370;  Colombia, 
487;  Costa  Rica,  42;  Ecuador,  269;  Guatemala,  249;  Haiti,  22;  Honduras,  232; 
Mexico,  100;  Nicaragua,  143;  Panama,  327;  Peru,  135;  San  Salvador,  181; 
Santo  Domingo,  22;  Uruguay,  454;  Venezuela,  214. 

Partners  of  a  general  partnership  are  unlimitedly  liable  with  all  their  prop- 
erty for  the  obligations  of  the  firm.  Spain,  Trib.  Sup.,  June  23,  1903;  Gaceta 
of  Sept.  3  and  4,  1903,  p.  70. 

5  Chile,  370;  Colombia,  487;  Guatemala,  249;  Honduras,  252;  Panama,  327; 
San  Salvador,  181;  Uruguay,  456;  Venezuela,  214. 

«  Art.  312.  '  Art.  243.  »  Art.  146. 

'Art.  464.  1"  Art.  327. 


COMMERCIAL   ASSOCIATIONS  175 

a  case  the  word   "limitada''  must  be  added   to  the  firm 
name. 

Cases  in  which  the  use  of  the  firm  name  does  not  bind  the 
partners. 

The  use  of  the  firm  name  does  not  bind  the  general  part- 
ners when  employed  by  a  non-managing  partner  or  a  person 
not  authorized  to  use  it.  With  respect  to  this  point,  however, 
we  find  five  different  systems  in  Latin- America: 

1.  System  of  Spain.  The  rule  is  absolute;  the  part- 
nership is  not  responsible  for  the  use  of  the  firm 
name  by  unauthorized  persons. ^^ 

2.  System  of  Argentina.  An  unauthorized  person,  in 
using  the  firm  name,  can  bind  the  partnership  when  his 
name  is  included  in  that  of  the  firm — -the  right  of  the 
partnership  to  recover  damages  arising  therefrom  being 
reserved.  ^2 

3.  System  of  Chile.  When  a  non-authorized  partner 
uses  the  firm  name  the  partnership  is  not  bound,  unless 
it  has  derived  some  benefit  therefrom,  in  which  case  the 
liability  is  limited  to  the  amount  of  such  benefit." 

4.  System  of  Colombia.  The  partnership  in  that  case 
can  only  be  held  liable: 

(a)  if  the  other  contracting  party  proves  that  the 
partnership  has  fulfilled  other  obligations  contracted 
in  the  same  form; 

(6)  if  the  obligation  brought  some  benefit  to  the 
partnership,  in  which  case  the  liability  is  limited  to 
the  amount  of  such  benefit.  ^^ 

5.  System  of  Panama.  Panama  adopts  a  combined 
system,  for  the  partnership  maybe  bound  in  two  cases: 

(a)  when  the  name  of  the  person  who  used  the  firm 
name  was  included  in  it,  and  ^'^ 

(6)  when  the  obligation  has  brought  some  benefit 

"  Spain,  128;  Mexico,  105;  Peru,  136. 

'''Argentina,  305;  Bolivia,  239;  Costa  Rica,  50;  Nicaragua,  143;  Uruguay, 
457. 

"  Chile,  373 ;  Guatemala,  252 ;  Honduras,  235 ;  San  Salvador,  184. 
"  Colombia,  491.  '*  Panama,  317,  318. 


176  LATIN-AMERICAN    COMMERCIAL    LAW 

to  the  partnership,  in  which  case  its  HabiUty  is  lim- 
ited to  the  amount  of  the  benefit. 
In  some  countries  the  partnership  is  not  bound  by 

the  managing  partners,  even  though  they  use  the  firm 

name, 

(a)  when  they  do  so  in  transactions  that  are  known 
to  be  entirely  outside  the  line  of  business  of  the  part- 
nership; ^^ 

(6)  when  besides  that  fact  the  other  party  to  the 
transaction  knows  that  circumstance,  yet  notwith- 
standing, enters  into  the  contract.  ^^ 

Requisites  of  the  partnership  agreement. 

The  codes  differ  in  their  requirements  as  to  the  statements 
that  must  be  mcluded  in  the  instrument  of  organization  of  a 
partnership.  We  append  a  list  of  the  facts  required  to  be 
stated  in  one  or  more  of  the  Latin-.Ajnerican  countries, 
mentioning  in  the  footnotes  the  countries  exacting  the 
specific  requirement. 

1.  Name  and  domicil  of  the  partners; 

2.  Firm  name  of  the  partnership; 

3.  Name  of  the  managing  partner  who  may  use  the 
firm  name; 

4.  Amount  contributed  by  every  partner; 

5.  Period  of  duration  of  the  partnership; 

The  foregoing  five  items  are  required  by  all  the  codes. 

6.  Line  of  business  of  the  partnership;  ^^ 

"  Argentina,  302;  Brazil,  316;  Costa  Rica,  49;  Uruguay,  454. 

When  it  has  been  proved  that  the  manager  of  a  partnership  has  used  the 
firm  name  in  transactions  beyond  the  scope  of  the  partnership,  without  being 
authorized  by  the  partners  or  without  the  partnership  deriving  a  benefit  from 
those  transactions,  only  the  manager  is  bound  thereby.  Brazil,  Trib.  de  Jus- 
ticia  de  S.  Paulo,  June  11,  1895,  and  August  6,  1896,  Gazeta  Juridica,  v.  12, 
pp.  184,  189,  and  Revisla  Mensal,  v.  1,  pp.  167,  168. 

The  sale  of  real  estate  belonging  to  a  partnership,  made  by  its  manager  with- 
out proper  authority,  when  the  buyer  knew  that  circumstance  and  still  ac- 
cepted it,  binds  the  partner  alone  in  damages  and  not  the  partnership.  Spain, 
Trib.  Sup.,  Oct.  25,  1873;  Gaceta  of  Nov.  1,  1873. 

"  Chile,  374;  Guatemala,  253;  Honduras,  236;  San  Salvador,  185. 

18  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Guatemala, 
Honduras,  Mexico,  Panama,  San  Salvador,  Uruguay,  Venezuela. 


COMMERCIAL   ASSOCIATIONS  177 

7.  Proportionate  shares  of  benefits  and  losses  accru- 
ing to  the  respective  partners;  ^^ 

8.  Domicil  of  the  partnership;  ^° 

9.  Form  in  which  the  liquidation  must  be  made;  ^^ 

10.  Amount  of  money  that  each  partner  is  allowed 
to  draw  annually  for  his  personal  expenses;  ^^ 

11.  Whether  the  differences  arising  between  the 
partners  are  or  are  not  to  be  settled  by  arbitrators;  ^^ 

12.  Cases  in  which  the  partnership  must  be  dissolved 
before  the  termination  of  the  period  of  its  duration;  ^'^ 

13.  The  compensation  to  be  paid  to  managers;  ^^ 

14.  Manner  and  periods  in  which  an  inventory,  a 
balance  sheet  and  a  distribution  of  profits  must  be 
made;  ^^ 

15.  Form  in  which  announcements  and  publications 
concerning  the  partnership  must  be  made.^^ 

'^  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Guatemala,  Honduras, 
Mexico,  Nicaragua,  Uruguay. 

2"  Argentina,  Chile,  Colombia,  Guatemala,  Honduras,  Mexico,  Nicaragua, 
Panama,  San  Salvador. 

2^  Argentina,  Chile,  Colombia,  Guatemala,  Honduras,  Mexico,  Panama, 
Uruguay. 

"'^  Chile,  Colombia,  Guatemala,  Honduras,  Nicaragua. 

^^  Bolivia,    Brazil,    Chile,    Colombia,    Guatemala,    Honduras,    Nicaragua. 

When  in  the  articles  of  organization  of  a  partnership  the  formation  of  a 
board  of  arbitrators  for  deciding  questions  arising  between  the  partners  is 
established,  all  differences  about  the  character  of  the  associates  or  about  any 
other  point  are  subject  to  the  cognizance  of  that  board.  Buenos  Aires,  Camara 
de  Apel.  Com.,  Feb.  25,  1913,  Padr6  v.  Bodr6  y  Hedilla,  Jur.  de  los  Tribs. 
Noes.,  Feb.,  1913,  p.  138. 

All  differences  arising  between  partners  during  the  life  of  the  partnership, 
whatever  their  character,  must  be  decided  by  arbitrators,  unless  otherwise 
stipulated  in  the  articles  of  organization  of  the  association.  Argentina,  Cam. 
II  de  Apel.  Civil,  Buenos  Aires,  Sept.  2,  1913,  Canepa  v.  Velez,  Jurisp.  de  los 
Tnbu.  Nacs.,  Sept.,  1913,  p.  261. 

^*  Mexico,  Panama.  '^^  Spain,  Peru.  ^^  Panama. 

"  Panama. 

The  articles  of  the  codes  relating  to  the  above  mentioned  countries  are  as 
follows: 

Spain,  125;  Argentina,  291;  Bolivia,  231;  Brazil,  302;  Chile,  352;  Colombia, 
467;  Costa  Rica,  5;  Ecuador,  327;  Guatemala,  237;  Haiti,  43;  Honduras,  220; 
Mexico,  95;  Nicaragua,  155;  Panama,  293;  Peru,  133;  San  Salvador,  169; 
Santo  Domingo,  43;  Uruguay,  395;  Venezuela,  302. 

In  a  judicial  case  in  which  the  rescission  of  a  contract  of  partnership  is  de- 


178  LATIN- AMERICAN    COMMERCIAL    LAW 

Employees  and  partners. 

When  a  person  renders  services  to  the  partnership  not  on 
the  basis  of  equality  with  the  partners,  but  as  a  subordinate, 
either  under  contract  or  as  a  term  of  the  partnership  agree- 
ment, but  not  as  a  member  of  the  firm,  he  cannot  be  consid- 
ered as  a  partner,  notwithstanding  the  fact  that,  as  a  com- 
pensation for  his  services,  he  receives  a  part  of  the  profits.  ^^ 

Composition  of  the  firm  capital. 

The  contribution  of  a  partner  may  consist  of  patents, 
privileges,  concessions,  artcraft,  industry,  cash,  credits,  or 
property  of  any  kind;  if  it  is  personal  or  real  property,  rules 
must  be  fixed  for  its  valuation,  if  no  value  has  been  assigned 
to  it  by  mutual  agreement.  ^^ 

Management. 

As  a  consequence  of  the  fact  that  all  the  partners  are 
jointly  liable  for  transactions  carried  on  under  the  firm  name, 
all  of  them  have  a  right  to  share  in  the  management  of  the 
common  affairs,  unless  they  vest  that  right  in  one  or  more  of 
their  associates;  in  that  case  these  alone  represent  the 
partnership.  ^° 

If  the  management  of  a  partnership  has  not  been  entrusted 
by  special  stipulation  to  one  or  more  of  the  associates,  all  of 

manded,  provided  the  amount  of  capital  contributed  by  the  partners  is  over 
one  thousand  pesos  and  the  contract  was  not  executed  in  a  public  instrument, 
the  judge  must  confine  himself  to  declaring  the  nullity  of  the  contract  without 
taking  into  consideration  other  issues.  Argentina,  Camara  Federal  de  Apel. 
C6rdoba,  Sept.  16,  1913,  lolde  v.  Roldano,  Jurisp.  de  los  Tribs.  Nacs.,  Sept., 
1913,  p.  119. 

^  Costa  Rica,  54;  Ecuador,  271 ;  Uruguay,  462;  Venezuela,  211.  See  note  43, 
Decision  of  July  13,  1910. 

29  Spain,  172;  Argentina,  406;  Bolivia,  231;  Brazil,  287;  Chile,  376;  Colombia, 
493;  Guatemala,  254;  Honduras,  237;  Mexico,  95;  Panama,  302;  Peru,  179; 
San  Salvador,  169;  Uruguay,  395;  Venezuela,  212. 

^^  The  legal  presumption  that  the  partners,  by  the  mere  fact  of  their  or- 
ganizing the  partnership  constitute  themselves  agents  of  one  another,  giving 
to  one  another  the  power  to  bind  themselves  unlimitedly  and  jointly,  is  an 
exception  to  the  general  rules  of  law,  which  has  been  established  to  help  the 
diffusion  of  credit.  Brazil,  Rio  de  Janeiro,  Camara  Civ.  da  Corte,  June  16, 
1898,  Revista  de  JuHsp.,  v.  3,  pp.  336,  339. 


COMMERCIAL   ASSOCIATIONS  179 

them  have  the  power  to  transact  business  and  the  partners 
present  must  reach  an  agreement  with  respect  to  all  contracts 
or  obligations  that  may  concern  the  copartnership.  If  there 
is  no  agreement  between  the  partners  or  the  managers,  the 
codes  follow  different  systems,  namely: 

System  of  Argentina.  The  decision  of  questions  which 
do  not  modify  the  articles  of  organization  of  the  part- 
nership or  which  are  not  beyond  its  scope,  is  made  by 
majority  of  votes,  the  votes  being  counted  by  the 
amount  of  capital  represented.^^ 

The  code  of  Mexico  provides  also  that  when  a  single 
person  represents  the  majority  interest,  the  vote  of  at 
least  one  other  partner  must  be  added. 

System  of  Chile.  Decisions  in  matters  which  do  not 
aflfect  the  articles  of  organization  or  the  scope  of  the 
association  can  be  made  b}'  majority  of  votes,  counting 
the  number  of  voters ;  if  one  more  than  half  the  number 
of  votes  is  not  obtained  the  proposed  contract  or  act  can- 
not be  entered  into  or  carried  out.^^ 

System  of  Spain.  The  law  does  not  provide  for  any 
special  method  of  settling  differences  between  the 
partners  in  the  matter  of  management.  It  requires  only 
that  they  agree.  Nevertheless,  taking  into  considera- 
tion the  character  of  a  general  partnership,  it  has  been 
inferred  that  in  case  opinion  is  not  unanimous,  the 
decision  is  to  be  made  by  a  plurality  of  votes.  ^^ 

Character  and  functions  of  managers  of  commercial  asso- 
ciations. 

Managers  of  commercial  associations  are  considered 
factors,  and  all  that  has  been  said  in  regard  to  the  latter  is 
applicable  to  the  former.  Nevertheless,  if  the  appointment 
of  the  manager  is  made  as  one  of  the  stipulations  of  the 
partnership  contract,  he  cannot  be  removed  in  case  his  ad- 

'1  Argentina,  412;  Brazil,  331;  Mexico,  121;  Uruguay,  473. 
32  Chile,  386,  300;  ColomlMa,  514,  515;  Guatemala,  266,  267;  Honduras,  249, 
250;  Panama,  313;  San  .Salvador,  197,  198. 

''Spain,  129;  Bolivia,  237;  Me.xico,  113,  114;  Peru,  137. 


180  LATIN-AMERICAN    COMMERCIAL   LAW 

ministration  is  bad  and  injurious  to  the  partnership.  In 
that  case  the  other  partners  can  appoint  a  co-manager  to 
supervise  all  the  transactions  or  else  the}''  can  demand  the 
rescission  of  the  contract  before  the  proper  court.  ^^ 

Under  these  circumstances,  in  Argentina/^  Ecuador  ^^ 
and  Uruguay,  ^^  a  manager  can  be  removed  during  the  life 
of  the  association  for  legal  cause,  but  the  partners  cannot 
appoint  a  co-manager. 

In  Panama  ^^  managers,  in  the  case  mentioned  above,  can 
be  removed  by  unanimous  consent  of  all  the  partners. 

There  is  one  case  in  which  the  minority  prevails  in  matters 
of  administration,  at  least  in  Spain  ^^  and  Peru;  ^°  and  that  is, 
when  one  of  the  managers  expresses  his  opinion  against  the 
contracting  of  a  new  obligation.  If  the  obligation  is  con- 
tracted, in  spite  of  that  opinion,  the  contract  is  binding, 
but  the  manager  or  managers  who  contracted  it  are  liable  for 
any  loss  that  the  partnership  may  suffer  thereby. 

In  Chile"^^  Colombia,^-  Guatemala, ^^  Honduras,'*^  Pan- 
ama '^^  and  San  Salvador,  ^^  each  of  the  co-partners  has  a 
privilege  to  oppose  any  act  or  contract  proposed  by  another, 
unless  it  refers  to  the  mere  preservation  of  common  property. 
Such  opposition  suspends  temporarily  the  execution  of  that 
act  or  contract  until  the  majority  of  the  partners  decides 

34  Spain,  132;  Bolivia,  258;  Colombia,  525;  Guatemala,  277;  Honduras,  260; 
Mexico,  116;  Nicaragua,  166;  Peru,  140;  San  Salvador,  207. 

When  in  the  articles  of  organization  of  a  partnership  it  was  stipulated  that 
every  partner  was  a  manager  and  could  give  a  power  of  attorney  to  represent 
the  association,  a  power  given  by  some  of  the  partners  to  an  attorney  to  repre- 
sent the  partnership  in  a  suit  is  valid.  Spain,  Trib.  Sup.,  May  31,  1890; 
Gaceta  of  Oct.  14,  1890. 

A  person  who  contracts  in  behalf  of  a  partnership  can  deny  that  he  has  any 
individual  liability  by  proving  that  he  was  authorized  to  enter  into  the  con- 
tract by  his  co-partners  or  that  it  was  included  within  his  powers  as  representa- 
tive of  the  association.  Buenos  Aires,  Cam.  de  Apel.  Com.,  Sept.  27,  1913, 
Cataneo  v.  Cardey,  Jurisp.  de  los  Tribs.  Nacs.,  Sept.,  1913,  p.  413. 

It  is  admitted  that  the  manager  of  a  partnership  can  appoint  a  representa- 
tive who  may  represent  the  partnership  in  the  courts.  Colombia,  Trib. 
Sup.  del  Distrito  de  Bolivar,  July  13,  1892,  Gaceta  Judicial,  v.  6,  p.  545. 

"  Art.  409.  36  Art.  280.  ^  Art.  471. 

'8  Art.  303.  39  Art.  130.  «  Art.  138. 

"  Arts.  388  to  391.  «  Arts.  513  to  516.  «  Arts.  265  to  268. 

"  Arts.  248  to  251.  «  Arts.  311  to  314.  «  Arts.  196  to  199. 


COMMERCIAL    ASSOCIATIONS  181 

whether  the  act  or  contract  is  advisable.  The  decision  of  the 
majority  binds  the  minority  only  when  it  concerns  mere 
administrative  matters  or  acts  within  the  scope  of  the 
association.  Should  there  be  more  than  two  opinions  and 
none  of  them  is  supported  by  one  more  than  half  the  number 
of  votes,  the  managers  must  refrain  from  undertaking  the 
transaction. 

If,  notwithstanding  the  opposition  of  one  or  more  asso- 
ciates, the  transaction  is  undertaken,  the  partners  are  bound 
thereby,  but  the  associate  who  entered  into  the  act  or  con- 
tract is  liable  in  damages. 

Privileges  of  the  partners. 

As  a  natural  consequence  of  the  character  of  a  partnership 
its  members,  besides  other  privileges  derived  from  the  con- 
tract of  organization,  have  the  following: 

1.  To  divide  among  themselves  the  profits  obtained 
in  proportion  to  the  amount  of  their  contribution,  un- 
less otherwise  stipulated.  ^^ 

Share  of  profits  of  the  partner  who  contributes  his  serv- 
ices (socio  industrial).  When  in  the  partnership  agree- 
ment the  share  of  the  profits  to  be  received  by  partners 
who  have  contributed  their  services  only  has  not  been 
provided  for,  they  must  receive  their  share  in  the  follow- 
ing proportion: 

(a)  in  Spain, ^  Argentina,''^  Brazil, ^°  Chile, ^^  Colom- 
bia, ^^  Guatemala,  ^^  Honduras,  ^^  Peru  ^^  and  Uru- 
guay, ^^  the  same  amount  as  the  partner  who  contrib- 
uted the  least  capital; 

(6)  in  Mexico,"  they  receive  the  proportion  stated 
above,  but  if  there  are  several  partners  of  that  kind, 
half  of  all  the  profits  must  be  divided  among  them; 

"  Spain,  140;  Argentina,  291;  Bolivia,  292;  Brazil,  330;  Chile,  382;  Colombia, 
507;  Costa  Rica,  17;  Ecuador,  261;  Guatemala,  259;  Honduras,  242;  Mexico, 
126;  Panama,  267;  Peru,  148;  San  Salvador,  190;  Uruguay,  470. 

«  Art.  140.  «  Art.  387.  ^  Art.  330. 

"  Art.  383.  ^^  Art.  508.  "  Art.  260. 

"  Art.  242.  «  Art.  148.  "  Art.  470. 

"  Art.  126. 


182  LATIN-AMERICAN   COMMERCIAL   LAW 

(c)  in  Nicaragua,  the  average  profit  divided  among 
those  who  contributed  capital;  ^^ 

{d)  in  San  Salvador  ^^  the  portion  assigned  by 
arbitrators. 

2.  To  inspect  the  management  and  the  bookkeeping, 
and  to  make  all  objections  they  may  consider  proper  in 
the  common  interest,  in  accordance  with  the  partnership 
agreement  or  with  the  general  principles  of  law.^° 

3.  To  be  paid  by  the  partnership  the  expenses  they 
may  have  incurred  and  the  damages  they  may  have 
sustained  as  a  direct  or  indirect  consequence  of  the 
common  transactions  in  their  charge;  but  not  to  be  paid 
any  indemnity  for  damages  sustained  by  the  partners 
arising  out  of  some  fault  of  their  own  or  out  of  un- 
foreseen events,  or  in  other  cases  independent  of  the 
partnership  transactions  they  were  carrying  out." 

4.  To  engage  in  or  undertake  any  mercantile  occupa- 
tion or  transaction,  provided  it  is  not  of  the  same  charac- 
ter as  the  business  in  which  the  partnership  is  engaged, 
unless  there  is  a  special  stipulation  to  the  contrary.^^ 

5.  To  retain  any  profits  they  may  obtain  from  ex- 
traneous commercial  occupations  or  transactions  they 
may  undertake,  without  sharing  them  with  the  partner- 
ship nor  binding  it  thereby.^^ 

Obligations  of  partners. 

All  the  members  of  a  general  partnership  are  obliged: 

1.  To  pay  into  the  common  fund  the  amount  of 
capital  they  agreed  to  contribute.^^ 

«» Art.  171.  «9  Art.  191. 

""Spain,  133;  Bolivia,  242;  Brazil,  290;  Costa  Rica,  22;  Chile,  403;  Colom- 
bia, 528;  Honduras,  263;  Mexico,  123;  Panama,  270;  Peru,  141;  San  Salvador, 
210;  Uruguay,  392. 

"1  Spain,  142;  Argentina,  414;  Bolivia,  297;  Nicaragua,  174;  Panama,  319; 
Peru,  150;  Uruguay,  475. 

82  Spain,  137;  .Argentina,  309;  Bolivia,  240;  Chile,  404;  Colombia,  529; 
Ecuador,  272;  Guatemala,  281;  Honduras,  264;  Mexico,  131;  Peru,  145;  San 
Salvador,  212;  Uruguay,  461;  Venezuela,  219. 

«'  Spain,  134;  Bolivia,  298;  Peru,  142. 

8^  Spain,  170;  Argentina,  404;  Bolivia,  253  to  256;  Brazil,  289;  Chile,  378; 


COMMEECIAL   ASSOCIATIONS  183 

In  cases  where  the  partnership  agreement  is  silent  as 
to  the  date  on  which  the  contribution  must  be  paid,  a 
demand  before  a  notary  or  judge  is  necessary  in  order 
to  establish  when  a  partner  is  in  default  in  complying 
with  this  obligation.  To  avoid  that  annoying  proceed- 
ing, some  countries  have  enacted  special  provisions  to 
supply  the  silence  of  the  contracting  parties,  as  follows : 
(a)  the  codes  of  Chile,^^  Colombia,^*'  Guatemala/'' 

Honduras  ^^  and  San  Salvador  ^^  provide  that  the 

payment  must  be  made  at  the  time  the  contract  is 

signed; 

(6)  those  of  Argentina  ^^  and  Uruguay  ^^  provide 

that  it  must  be  made  on  the  day  the  contract  is 

signed : 

(c)  that  of  Costa  Rica  ^^  provides  that  it  must  be 
made  within  three  days  after  the  execution  of  the 
contract; 

(d)  Spain  ^^  and  Peru  ^^  require  the  payment  to  be 
made  at  the  time  of  the  opening  of  the  cashier's  office. 

2.  To  share  equally  the  losses  of  the  enterprise.^^ 
Partners  who  contribute  services  only  are  not  obliged 
to  bear  losses,  unless  otherwise  stipulated.^^ 

3.  To  guarantee  the  title  to  property  contributed  by 
them  in  case  of  eviction  and  the  payment  of  credits 
(choses  in  action)  contributed  by  them  to  the  common 
fund." 

Colombia,  495;  Costa  Rica,  13;  Guatemala,  255;  Honduras,  238;  Mexico,  108; 
Nicaragua,  163;  Panama,  293;  Peru,  178;  San  Salvador,  186;  Uruguay,  466. 

«^  Art.  378.  8«  Art.  495.  s^  Art.  255. 

<«  Art.  238.  «8  Art.  186.  ™  Art.  403. 

'1  Art.  465.  "  Art.  13.  "  Art.  171. 

'<  Art.  178. 

"Spain,  141;  Argentina,  408;  Bolivia,  293;  Chile,  382;  Colombia,  507; 
Costa  Rica,  17;  Guatemala,  259;  Honduras,  243;  Mexico,  126;  Nicaragua,  172; 
Panama,  299;  Peru,  149;  San  Salvador,  190;  Uruguay,  470. 

'« Spain,  140;  Argentina,  387;  BrazQ,  330;  Chile,  383;  Colombia,  508;  Gua- 
temala, 260;  Honduras,  242;  Mexico,  126;  Nicaragua,  171;  Peru,  148;  San 
Salvador,  191;  Uruguay,  470. 

"  Argentina,  407;  Colombia,  497,  499;  Costa  Rica,  15;  Mexico,  108;  Nicara- 
gua, 164;  Uruguay,  469;  Venezuela,  212. 

When  one  of  the  partners  contributes  a  credit  to  the  common  funds,  its 


184  LATIN-AMERICAN   COMMERCIAL   LAW 

Disabilities. 

Partners  are  forbidden: 

1.  To  apply  the  funds  of  the  partnership  or  to  use  the 
firm  name  for  business  on  their  own  accoimt.^^ 

2.  To  engage  in  transactions  on  their  own  account 
without  the  previous  consent  of  the  co-partners,  when 
the  association  is  not  confined  to  a  specified  business.^^ 

3.  To  draw  from  the  common  funds  a  larger  amount 
than  has  been  assigned  to  each  partner  for  his  personal 
expenses.^" 

4.  To  demand  the  delivery  of  the  amount  they  have 
contributed  to  the  common  funds  before  the  Hquidation 
of  the  enterprise.^^ 

5.  To  assign  their  interest  in  the  partnership  or  sub- 
sitiute  another  person  in  their  stead  without  the  previous 
consent  of  their  co-partners.^^ 

Mexico  provides,  furthermore,  that  in  case  a  partner 
wishes  to  dispose  of  his  interest,  his  co-partners  have  a 

amount  must  not  be  credited  to  his  account  until  it  has  been  collected.  If  the 
credit  could  not  be  cashed,  or  if  the  partner  refuses  to  cash  it,  he  is  responsible 
to  the  partnership  for  its  amount.  Buenos  Aires,  Camara  II  de  Apel.  civil, 
Sept.  2,  1913,  Ciarmone  y  Cowi  v.  Giannone,  Jurisp.  de  los  Tribs.  Noes., 
Sept.,  1913,  p.  255. 

'8  Spain,  135;  Argentina,  415;  Brazil,  333;  Chile,  404;  Colombia,  529;  Costa 
Rica,  20;  Guatemala,  281;  Honduras,  264;  Mexico,  131;  Nicaragua,  169; 
Panama,  321;  Peru,  143;  San  Salvador,  212;  Uruguay,  476;  Venezuela,  287. 

"Spain,  136;  Argentina,  308;  Bolivia,  241;  Chile,  404;  Colombia,  529; 
Costa  Rica,  55;  Ecuador,  272,  273;  Guatemala,  281;  Honduras,  264;  Panama, 
321;  Peru,  144;  San  Salvador,  212;  Uruguay,  460;  Venezuela,  218,  219. 

The  circumstance  that  article  137  of  the  code  of  commerce  forbids  a  partner 
to  engage  in  the  same  kind  of  trade  in  which  the  partnership  deals,  is  not  proof 
that  a  partner  has  not  actually  engaged  in  such  trade.  If  he  has  done  so  he  is 
responsible  to  the  partnership,  but  the  latter  is  not  bound  with  respect  to  the 
party  contracting  with  him.  Spain,  Trib.  Sup.,  Oct.  21,  1904;  Gacetas  of 
Nov.  16  and  18,  1904,  p.  302. 

80  Spain,  139;  Argentina,  416;  Bolivia,  299;  Chile,  404;  Colombia,  329; 
Costa  Rica,  21;  Guatemala,  281;  Honduras,  264;  Panama,  322;  Peru,  147;  San 
Salvador,  212;  Uruguay,  477. 

81  Chile,  381;  Colombia,  505;  Guatemala,  258;  Honduras,  241 ;  San  Salvador, 
189. 

82  Spain,  143;  Argentina,  418;  Bolivia,  262;  Brazil,  334;  Chile,  404;  Colombia, 
529;  Costa  Rica,  22;  Guatemala,  281;  Honduras,  264;  Mexico,  106;  Nicaragua, 
175;  Panama,  325;  Peru,  151;  San  Salvador,  212;  Uruguay,  480. 


COMMERCIAL   ASSOCIATIONS  185 

preference  in  purchasing  it,  if  they  pay  an  amount  equal 
to  that  offered  by  some  one  else  (derecho  al  tanto). 

Special  disabilities  of  industrial  co-partners. 

A  partner  who  contributes  his  services  only  {socio  indus- 
trial) cannot  engage  in  business  unless  expressly  permitted 
to  do  so  by  his  co-partners.  In  reference  to  this  prohibition 
the  codes  may  be  divided  into  two  groups: 

(a)  those  which  make  the  disability  absolute;  ^^ 
(6)  those  which  prohibit   the  partner  from  under- 
taking trade  or  transactions  that  may  distract  him  from 
the  business  of  the  partnership.^^ 

Liabilities  of  partners. 

The  liabilities  of  a  partner  are: 

1.  In  case  a  partner  is  in  default  in  paying  his  contri- 
bution, the  co-partners  may  bring  an  action  for  the 
rescission  of  the  contract  or  for  payment,  and,  in  both 
cases,  for  the  payment  of  damages.^^ 

2.  In  case  a  partner  applies  the  common  funds  or 
uses  the  firm  name  for  business  on  his  own  account, 
he  forfeits  to  the  partnership  all  benefits  he  may  derive 
from  the  transaction  or  transactions  thus  undertaken; 
and  the  rescission  of  the  contract  may  be  demanded, 
so  far  as  he  is  concerned,  without  prejudice  to  the  duty 
of  returning  the  funds  he  may  have  used  and  making 
good  to  the  partnership  the  losses  and  damages  it  may 
have  suffered  thereby.^^ 

Brazil  provides,  furthermore,  that  the  partner  must 

*' Spain,  138;  Argentina,  384;  Mexico,  112;  Nicaragua,  170;  Peru,  142. 

**  Chile,  406;  Colombia,  531;  Costa  Rica,  57;  Guatemala,  283;  Honduras, 
266;  San  Salvador,  214. 

85  Spain,  170,  171;  Argentina,  405;  Bolivia,  256;  Brazil,  289;  Chile,  379; 
CoIoml)ia,  498;  Costa  Rica,  14;  Ecuador,  280;  Guatemala,  256;  Honduras,  239; 
Mexico,  111;  Nicaragua,  163;  Peru,  178;  San  Salvador,  187;  Uruguay,  466. 

8«  Spain,  135;  Argentina,  419;  Bolivia,  260;  Brazil,  333,  336;  Chile,  404; 
Colombia,  529;  Costa  Rica,  20,  28,  52;  Guatemala,  281;  Honduras,  264; 
Mexico,  131;  Nicaragua,  169;  Panama,  321;  Peru,  143;  San  Salvador,  212; 
Uruguay,  477. 


186  LATIN-AMERICAN    COMMERCIAL   LAW 

pay  back  four  times  the  amount  he  applied  to  his  own 
business. 

3.  In  case  a  partner  draws  a  larger  amount  of  money 
than  that  which  has  been  assigned  to  him,  he  is  com- 
pelled to  refund  it  just  as  if  he  had  not  fully  paid  in  the 
amount  of  his  contribution  to  the  partnership.^^ 

When  it  is  not  possible  to  compel  a  partner  to  refund 
the  excess  money  he  has  drawn,  Argentina,  Chile, 
Colombia,  Guatemala  and  Uruguay  authorize  his  co- 
partners to  withdraw  a  proportionate  amount  of  their 
interest,  thereby  reducing  the  capital  of  the  partnership. 

4.  In  case  a  partner  has  undertaken  some  transac- 
tion for  his  own  account,  where  the  business  of  the 
partnership  is  undefined,  without  the  previous  consent 
of  his  co-partners,  he  must  turn  in  to  the  common  fimds 
any  profit  he  may  have  derived  from  such  transaction, 
but  must  personally  suffer  the  loss,  should  there  be  any.^^ 

In  Ecuador  the  action  to  compel  a  partner  to  turn  in 
to  the  common  funds  any  profits  or  to  pay  any  losses, 
lapses  after  three  months  from  the  day  on  which  the 
other  partners  obtained  knowledge  of  such  transactions. 

5.  In  case  some  damage  is  incurred  by  the  partner- 
ship due  to  fraud,  abuse  of  powers,  or  gross  negligence 
on  the  part  of  one  of  the  partners,  he  is  obliged  to  make 
it  good  should  the  partners  so  require,  unless  there  has 
been  an  act  of  approval,  or  an  express  or  implied  ratifi- 
cation.^^ 

6.  When,  in  spite  of  the  opposition  of  the  majority  of 
the  partners  some  of  them  engage  in  an  act  or  enter  into 
a  contract  which  was  opposed,  the  latter  are  obliged 
to  indemnify  the  partnership  for  any  loss  it  may  sustain. 

87  Spain,  139;  Argentina,  416;  Bolivia,  299;  Chile,  404;  Colombia,  529; 
Guatemala,  291;  Honduras,  264;  Panama,  322;  Peru,  144;  San  Salvador,  212; 
Uruguay,  477. 

88  Spain,  136;  Argentina,  308;  Chile,  404;  Colombia,  529;  Costa  Rica,  55,  56; 
Ecuador,  274;  Guatemala,  281;  Honduras,  264;  Peru,  144;  San  Salvador,  212; 
Uruguay,  460;  Venezuela,  220. 

89  Spain,  144;  Argentina,  413;  Bolivia,  300;  Brazil,  316;  Mexico,  115,  131; 
Nicaragua,  173;  Peru,  152;  Uruguay,  474. 


COMMERCIAL   ASSOCIATIONS  187 

Admission  of  a  new  partner. 

If  a  new  partner  is  admitted,  the  old  partners  are  re- 
sponsible for  the  liabilities  of  the  partnership  contracted 
before  his  admission,  even  though  the  firm  name  is  changed 
thereby.  A  stipulation  to  the  contrary  is  without  effect  as 
to  third  parties. ^° 

9"  Ecuador,  294;  Costa  Rica,  43;  Venezuela,  207. 


CHAPTER  XI 

Commercial  Associations  (3) 
corporations  and  manner  of  establishing  them 

Origin  of  commercial  corporations. 

With  the  development  of  modern  science  and  industry 
and  the  necessity  for  obtaining  vast  amounts  of  money 
for  the  building  and  operation  of  railways,  canals,  steamship 
lines  and  other  prodigious  enterprises,  the  partnership  has 
proved  a  form  of  association  altogether  inadequate,  since  it  is 
necessary  to  have  mutual  confidence  among  the  persons 
that  form  the  association;  hence  the  number  of  associates 
could  not  be  very  large  nor  could  the  duration  of  the  enter- 
prise last  longer  than  the  average  period  that  a  man  can 
depend  upon  his  personal  energy  and  efficiency. 

To  meet  the  new  necessities  a  new  type  of  association  was 
created,  or  rather  a  form  developed,  such  as  existed  in  Italy 
during  the  latter  part  of  the  Middle  Ages,  in  which  the 
capital  contributed  and  not  the  personal  character  of  the 
associates  was  the  primary  consideration.  This  capital  was 
managed  by  a  group  of  directors  or  administrators,  whose 
powers  were  revocable  at  the  will  of  the  associates;  and  the 
latter  had  nothing  to  fear  for  their  personal  wealth  since 
their  liability  for  the  result  of  common  transactions  was 
limited  to  the  amount  of  their  contribution. 

The  supervision  of  corporations. 

The  partnership  was  then  called  an  "association  of  per- 
sons," while  the  corporation  was  called  an  ''association  of 
capital."  The  members  of  the  former  were  called  ''part- 
ners" (socios)  and  their  contribution  "interest"  (parte  or 
aportacion);  the  associates  of  the  latter  were  called  "share  " 
or    "stockholders"    (accionisias)    and     their    contribution 

188 


COMMERCIAL   ASSOCIATIONS  189 

"shares  "  {acetones).  The  idea  of  a  personal  association  was 
so  foreign  to  the  corporation  that  in  many  cases  the  persons 
who  have  an  interest  in  the  corporate  business  of  the  latter 
do  not  know  each  other. 

The  limitation  of  the  liability  of  the  associates,  the  great 
number  of  persons  usually  interested  in  a  corporation,  the 
fact  that  these  persons  may  live  at  great  distances  and, 
therefore,  cannot  personally  exercisec  ontrol  over  the  man- 
agement of  the  common  funds  in  which  they  perhaps 
represent  but  a  very  small  proportion,  suggested  from  the 
beginning  the  idea  that  the  government  ought  to  supervise 
directly  the  establishment  and  operation  of  corporations,  in 
order  to  prevent  fraudulent  practices  by  which  a  great 
number  of  persons  might  suffer  damage  and  become  dis- 
couraged in  participating  in  enterprises  of  importance  for 
the  general  welfare. 

It  was  soon  discovered  that  the  interference  of  the  Govern- 
ment did  not  create  that  security  which  was  hoped  for,  but 
on  the  contrary  proved  in  many  cases  an  obstacle  to  the 
freedom  of  commerce  and  a  handicap  without  corresponding 
benefit.  Therefore,  the  system  was  changed  and  instead  of 
government  interference,  the  desired  object  was  sought  in 
great  publicity  for  every  important  act  of  the  corporate 
administration  in  order  to  enable  interested  persons  and  the 
public  in  general  to  ascertain  the  most  important  acts  of  the 
management  of  the  corporation  and  thus  safeguard  their 
interests. 

Among  the  countries  of  Europe,  England,  France  and 
Spain  have  abolished  every  form  of  governmental  inter- 
ference; and  in  America,  Cuba,  Porto  Rico,^  Costa  Rica,^ 
Mexico,^  Peru,'^  Santo  Domingo  ^  and  Venezuela,^  have 
adopted  the  principle  of  the  most  complete  liberty  and  at 
the  same  time  the  most  ample  publicity.    But  in  some  of  the 

'  Spain,  117.  «  Art  4  of  the  law  of  Nov.  24,  1909.  '  Art.  166. 

*  Art.  125. 

'Art.  37.     Borchard,  Guide  to  Law  and  Legal  Literature  of  Argentina, 
Brazil  and  Chile,  p.  87. 
» Art.  233. 


190  LATIN-AMERICAN   COMMERCIAL   LAW 

Spanish-American   countries,    the   old   system   of   govern- 
mental authorization  still  prevails. 

Argentina. 

In  Argentina,  domestic  corporations  cannot  be  finally 
established  until  the  Executive  has  granted  authorization 
therefor.  This  authorization  is  granted  when  the  establish- 
ment, organization,  and  by-laws  of  the  corporations  are  in 
accordance  with  the  provisions  of  the  commercial  code,  and 
their  object  is  not  contrary  to  public  policy.^ 

Bolivia. 

Before  commencing  business,  corporations  must  frame 
their  by-laws,  which,  together  with  the  articles  of  incorpora- 
tion, are  subjected  to  the  inspection  and  approval  of  a  com- 
mercial judge.^  By  article  5  of  the  decree  of  March  25, 1887, 
corporations  are  legally  constituted  by  means  of  an  Executive 
authorization  issued  by  the  Minister  of  Industry.  In  order 
to  obtain  this  authorization,  the  following  documents  must 
be  presented: — authentic  copies  of  the  articles  of  incorpora- 
tion, of  the  by-laws,  of  the  minutes  of  the  meeting  in  which 
the  corporation  was  organized,  showing  the  names  of  the 
board  of  directors  and  a  certificate  evidencing  the  payment 
of  a  part  of  each  share. 

Brazil. 

Article  1  of  the  Federal  Act  of  January  17,  1890,  provides 
great  liberty  in  the  establishment  of  corporations.  They 
require  no  governmental  authorization,  except  in  the  case  of 
banks  and  credit  institutions,  corporations  dealing  in  food 
supplies,  and  foreign  corporations,  which  require  govern- 
mental authorization  in  order  to  do  business  in  the  republic. 
The  requisites  for  obtaining  this  authorization  are  as 
follows : 

1.  The  by-laws  must  declare  the  maximum  period, 
never  more  than  two  years  from  the  date  of  the  authori- 

"  Art.  318.  8  Art.  247. 


COMMERCIAL   ASSOCIATIONS  191 

zation,  within  which  a  corporation  engaged  in  banking  is 
to  invest  at  least  two- thirds  of  its  capital  in  the  country; 

2.  These  corporations  are  subject  to  the  law  of 
Brazil  in  all  matters  concerning  the  legal  relations  of  the 
corporation  with  its  creditors,  stockholders  and  other 
interested  persons  domiciled  in  Brazil;  occasional 
absences  do  not  impair  domicil; 

3.  The  authorization  having  been  obtained,  corpora- 
tions must  comply  with  the  general  requirements  of  the 
law  for  their  establishment,  under  penalty  of  the  nullity 
of  the  proceeding. 

Chile. 

Corporations  are  constituted  by  virtue  of  a  Presidential 
decree  authorizing  them. 

This  authorization  is  equally  necessary  to  modify  the  by- 
laws, to  extend  the  term  of  corporations  established  for  a 
limited  period,  and  to  dissolve  them  before  the  expiration  of 
their  term,  and  in  other  cases  provided  for  by  the  law.^ 

A  petition  to  organize  a  corporation  is  not  to  be  considered 
unless  it  is  signed  by  a  number  of  subscribers  representing  at 
least  a  third  part  of  the  shares  into  which  the  capital  is 
divided,  and  accompanied  by  an  authentic  copy  of  the 
articles  of  incorporation  approved  at  a  general  meeting  of 
subscribers.  ^** 

The  code  forbids  the  authorization  of  corporations  which 
are  contrary  to  public  poUcy,  to  law  or  to  good  morals.  ^^ 

It  is  equally  forbidden  to  extend  the  Executive  authoriza- 
tion to  corporations  when  it  appears  that  the  created  capital 
is  not  real,  that  its  collection  is  not  sufficiently  assured,  that 
it  is  not  large  enough  for  the  magnitude  of  the  enterprise,  or 
that  the  management  of  the  corporation  does  not  guarantee 
good  administration  or  afford  the  shareholders  means  of 
supervising  the  activities  of  the  manager  and  the  privilege 
of  learning  how  the  corporate  funds  are  invested.  ^^ 

The  establishment  of  a  corporation  of  indefinite  duration 

» Art.  427.  i«  Art.  428.  "  Art.  429. 

"  Art.  430. 


192  LATIN-AMERICAN    COMMERCIAL   LAW 

must  not  be  authorized,  except  when  the  enterprise  in  which 
it  is  engaged  has  by  its  nature  a  fixed  and  known  term.^^ 

In  his  authorization  the  President  fixes  a  period  within 
which  the  portion  of  the  corporate  funds  with  which  he  deems 
it  necessary  to  begin  business  must  be  paid  in,  and  also  the 
period  within  which  the  shares  needed  to  complete  the  cor- 
porate capital  must  be  sold.  He  also  fixes  the  portion  of  the 
profits  or  assets  that  must  constitute  the  reserve  fund,  if  it 
has  not  been  fixed  in  the  by-laws  or  if  in  the  judgment  of 
the  President  it  is  not  sufficiently  large. 

The  value  of  shares  issued  for  a  past  consideration  in 
favor  of  some  members  and  of  shares  which  represent  the 
interest  of  persons  who  contribute  their  services  only  must 
not  be  taken  into  consideration  in  fixing  the  portion  of  the 
capital  with  which  the  corporation  may  begin  business. ^^ 

Upon  its  being  proved  that  there  is  in  the  treasury  of  the 
corporation  the  amount  above  mentioned,  the  President 
issues  a  decree  stating  that  the  corporation  has  been  legally 
organized  and  naming  the  date  on  which  business  must  be 
commenced.  ^^ 

If  the  terms  set  have  lapsed  and  the  cash  proportion  fixed 
has  not  been  paid  in  or  the  subscription  of  the  capital  has 
not  been  completed,  or  the  corporation  has  not  begun  busi- 
ness, the  authorization  becomes  ineffective,  unless  the  Presi- 
dent, in  the  first  case,  reduces  the  portion  of  cash  which  must 
be  paid  in,  or,  in  the  second  case,  allows  the  corporation  to 
reduce  its  capital,  or,  in  the  third,  grants  an  extension.  ^^ 

Colombia. 

The  system  of  Chile  has  been  adopted  in  Colombia.  In 
addition,  corporations  organized  to  engage  in  an  enterprise 
of  public  utility,  need  to  be  authorized  by  an  act  of  the  legis- 
lature.^^ 

Ecuador. 

The  authorization  of  the  legislature  is  necessary  to  estab- 

"  Art.  43L  "  Art.  433.  i*  Art.  334. 

'«  Art.  435.  "  Arts.  553.  593. 


COMMERCIAL   ASSOCIATIONS  193 

lish  corporations  or  limited  partnerships,  a  portion  of  whose 
capital  is  divided  into  shares,  when  said  corporations  or 
limited  partnerships  are  organized  to  construct  general 
roads,  canals  for  navigation,  railroads,  or  public  utility 
enterprises  requiring  public  franchises.  ^^ 

Other  corporations  or  limited  partnerships  with  shares 
cannot  be  established  without  the  approval  of  the  judge  of 
the  commercial  court.  Banking  corporations  are  subject 
to  the  provisions  of  the  banking  laws. 

Approval  is  also  necessary  to  extend  the  term  of  companies 
established  for  a  limited  period  and  to  dissolve  them  before 
expiration  of  the  term  in  cases  provided  for  by  the  law.^^ 

Guatemala  -^  and  Honduras  -^  follow  the  same  system  as. 
Chile  with  the  difference  that  the  persons  who  sign  the  ap- 
plication to  the  Government  must  represent  at  least  two- 
thirds  of  the  capital. 

Haiti. 

A  corporation  can  be  established  only  by  the  authoriza- 
tion of  the  President  of  Haiti,  after  approval  of  its  articles. ^^ 

In  Mexico,  the  law  of  March  19, 1897,  as  amended  by  the 
law  of  June  19,  1903,  governs  all  matters  relating  to  banks  of 
issue  (hancos  de  emision)  mortgage  banks  (bancos  hipote- 
carios)  and  bancos  refaccionarios  or  banks  of  finance  or  pro- 
motion, issuing  treasury  bonds  to  cover  loans  to  industry 
and  agriculture  for  short  terms,  but  longer  than  the  usual 
commercial  loan.  These  institutions  as  well  as  warehouses 
of  deposit  can  only  be  established  by  special  concession  to 
individuals  or  corporations;  but  the  operation  thereof  can 
only  be  undertaken  by  a  corporation  duly  organized  in  the 
Republic. 

The  number  of  individuals  to  whom  a  concession  can  be 
granted  must  not  be  less  than  three;  within  four  months  after 
the  concession,  they  must  show  that  the  corporation  which 

«  Art.  288.  18  Art.  289.  20  Arts.  303  to  307. 

='  Arts.  286  to  290.  "  Art.  137. 


194  •    LATIN-AMERICAN    COMMERCIAL   LAW 

is  to  carry  on  the  business  has  been  organized  and  the  con- 
cession transferred  to  it.  Associations  for  banking  purposes 
must  comply  the  following  requisites:  (a)  the  number  of 
shareholders  must  be  not  less  than  seven;  (h)  the  capital 
cannot  be  less  than  a  million  pesos;  (c)  the  capital  must  be 
wholly  subscribed  and  fifty  per  cent  of  it  must  have  been 
paid  in,  the  increase  or  decrease  thereof  having  to  be  sanc- 
tioned by  the  Minister  of  Finance;  (d)  the  domicil  of  the 
bank  must  be  at  the  place  in  Mexico  where  the  main  house 
{casa  matriz)  of  the  institution  is  established;  (e)  the  shares 
must  be  in  a  person's  name  so  long  as  they  are  not  fully 
paid;  (/)  a  reserve  fund  must  be  created  with  ten  per  cent 
of  the  yearly  net  profits,  until  it  reaches  at  least  a  third  of 
the  corporate  capital ;  ig)  the  organizing  basis  of  the  associa- 
tion and  its  by-laws  must  be  submitted  to  the  approval  of 
the  Minister  of  Finance  before  the  bank  commences  business, 
to  determine  its  compliance  with  the  provisions  of  the  code 
of  commerce  and  the  law  of  credit  institutions;  ih)  there 
must  be  deposited,  in  government  bonds,  in  the  Treasurj"" 
of  the  Nation  or  in  the  Banco  Nacional  de  Mexico  at  least 
twenty  percent  of  the  amount  which  the  bank  must  have 
in  cash  to  commence  business.  ^^ 

The  federal  constitution  drafted  in  Quaretaro  in  1917 
provides  that  there  shall  be  a  single  bank  of  issue  for  bills, 
controlled  by  the  federal  government. ^^ 

Nicaragua. 

In  order  to  establish  a  corporation,  it  is  necessary  that 
its  articles  be  approved  by  the  Government.  When  the 
purpose  of  the  corporation  is  to  establish  banks  of  issue,  to 
construct  national  roads,  railroads  or  canals,  or  when  it 
solicits  a  franchise  or  charter  that  the  legislature  must  grant, 
an  act  of  Congress  is  necessary  for  the  estabUshment  of  the 
corporation.^^ 

San  Salvador. 
When  a  concession  is  granted  to  a  corporation,  its  regu- 

23  Arts.  1  to  14.  24  Art.  28.  "  Art.  148. 


COMMERCIAL    ASSOCIATIONS  195 

lations  and  by-laws  must  be  submitted  to  the  Government 
for  approval.'-*' 

Uruguay. 

A  corporation  requires  the  authorization  of  the  execu- 
tive, and  when  it  is  designed  to  operate  a  franchise,  it  also 
requires  the  approval  of  the  legislature.^ 

Characteristic  features  of  corporations. 

The  fundamental  and  distinguishing  characteristics  of 
stock  corporations,  when  compared  with  other  forms  of  com- 
mercial association,  are  four: 

1.  The  liability  of  the  members  for  all  obligations  and 
losses  of  a  stock  corporation  is  limited  to  the  amount  or 
share  that  they  bound  themselves  to  contribute.  All 
liabilities  for  the  obligations  contracted  and  for  the 
management,  incurred  by  persons  legally  authorized 
thereunto  by  articles  and  by-laws,  lie  upon  the  corporate 
capital  and  the  accrued  profits.-^ 

2.  The  directors  are  not  necessarily  appointed  at  the 
beginning  in  the  articles  of  incorporation  or  in  the  by- 
laws; even  when  they  are  so  appointed,  their  functions 
are  only  for  a  certain  period  and  they  must  be  succeeded 
by  those  elected  by  the  majority  of  the  stockholders 
at  the  general  meetings.  These  directors  are  the  agents 
of  the  corporation.-^ 

3.  The  stockholders  are  not  allowed  to  inspect  the 
books  and  correspondence  freely  as  in  the  case  of  part- 
nerships, except  at  the  time  and  under  the  conditions 
established   in   the  by-laws  and  regulations,   because 

2"  Art.  240.  2'  Art.  405. 

2«  Spain,  153,  154;  Argentina,  313,  315;  Bolivia,  249;  Brazil,  article  2  of  law  of 
Jan.  17,  1890;  Chile,  424;  Colombia,  550;  Costa  Rica,  67;  Guatemala,  300; 
Honduras,  283;  Mexico,  163;  Nicaragua,  151;  Panama,  362;  Peru,  161,  162; 
San  iSalvador,  253;  Santo  Domingo,  33;  Uruguay,  403-410;  Venezuela,  204. 

29  Spain,  122,  155;  Argentina,  335,  336;  Bolivia,  248;  Brazil,  9,  law  of  Jan.  17, 
1890;  Chile,  424,  457;  Colombia,  550,  582;  Costa  Rica,  67;  Ecuador,  286; 
Guatemala,  321;  Haiti,  31;  Honduras,  283,  304;  Me.xico,  187;  Nicaragua,  141; 
Panama,  438;  Peru,  130,  163;  San  Salvador,  259;  Santo  Domingo,  31 ;  Uruguay, 
405;  Venezuela,  228. 


196  LATIN-AMERICAN    COMMERCIAL   LAW 

secrecy,  so  indispensable  in  commerce,  would  be  im- 
possible and  competitors  might  have  constant  oppor- 
tunity to  become  acquainted  with  competitive  informa- 
tion ruinous  to  the  corporation. ^° 

Costa  Rica  creates  an  exception  to  this  rule  by  pro- 
viding that  every  shareholder  or  group  of  sharehold- 
ers who  represents  one-tenth  of  the  incorporated  cap- 
ital may  demand  that  the  condition  of  the  corporation 
be  examined  and  reported,  provided  the  petitioners 
deposit  their  shares  in  court  with  the  amount  neces- 
sary to  pay  the  expenses  of  the  examination.  This 
affords  wide  protection  to  minority  interests. ^^ 

In  Venezuela, ^^  the  managers  must  allow  the  share- 
holders, at  any  time,  to  inspect  the  shareholders' 
transfer  book  and  the  minute  book. 

4.  The  corporation  has  no  firm  name;  its  name  must 
be  taken  from  its  object  and  purposes.  This  name  is 
the  property  of  the  corporation  and  cannot  legally 
be  used  by  any  other  corporation.^^ 

Legal  form  of  the  articles  of  incorporation. 

There  are  three  systems  with  respect  to  the  legal  form  of 
the  articles  of  incorporation,  namely: 

1.  System  of  Spain.  The  articles  of  incorporation 
must  be  embodied  in  a  pubhc  instrument,  that  is  to  say, 
drafted  by  or  before  a  notary  public  who  incorporates 
in  his  notary's  book  every  clause  of  the  contract. ^^ 

3"  Spain,  158;  Argentina,  340,  360;  Bolivia,  296;  Brazil,  16  ib;  Chile,  462; 
Colombia,  587;  Ecuador,  309;  Guatemala,  326;  Honduras,  309;  Mexico,  199; 
Nicaragua,  167,  168;  Panama,  456;  Peru,  166;  Venezuela,  248.  The  share- 
holders of  a  corporation  have  no  right  to  examine  the  administration  of  same, 
nor  make  any  inquiry  in  regard  to  it,  except  at  the  time  and  in  the  form  pro- 
vided for  in  its  by-laws.  Cuba,  Trib.  Sup.  Havana  August  21,  1902,  No.  43. 
Jurisp.  del  Trib.  Sup.,  v.  14,  p.  127. 

»i  Art.  108.  32  Art.  248. 

«  Spain,  152;  Argentina,  314;  Bolivia,  248;  Brazil,  2  ib.;  Chile,  424;  Colom- 
bia, 550;  Costa  Rica,  67;  Ecuador,  285;  Guatemala,  300;  Haiti,  29,  30;  Hon- 
duras, 283;  Mexico,  163  to  165;  Nicaragua,  148;  Panama,  259;  Peru,  160;  San 
Salvador,  231;  Santo  Domingo,  29,  30;  Uruguay,  404;  Venezuela,  205. 

"Spain,   119;  Argentina,  289;   Bolivia,  231;  Chile,  350;  Colombia,  551; 


COMMERCIAL   ASSOCIATIONS  197 

2.  System  of  France,  The  articles  of  incorporation 
may  be  embodied  in  a  private  instrument. ^^ 

3.  System  of  Venezuela.  Witliin  a  period  of  ten  days 
after  the  general  incorporation  meeting  of  the  sub- 
scribers, the  directors  must  make  a  declaration  in  the 
commercial  registry  of  the  domicil  of  the  corporation,  in 
which  they  must  state  specifically  that  all  the  formali- 
ties of  the  law  for  incorporating  the  company  have  been 
fulfilled.  As  an  evidence  of  said  declaration  they  must 
present  a  list  of  the  subscribers,  a  statement  of  the 
cash  paid  in  on  account  of  shares  of  stock,  a  copy  of 
the  minutes  of  the  incorporating  meeting  and  a  copy  of 
its  by-laws  to  be  filed.  Within  the  same  period  of  ten 
days,  the  aforesaid  declaration  must  be  published  in  the 
newspapers.  ^^ 

Facts  that  the  articles  of  incorporation  must  show. 

The  articles  of  incorporation,  in  addition  to  statements 
common  to  other  commercial  associations,  must  contain 
the  following  information.  The  footnotes  indicate  the 
names  of  the  countries  whose  codes  require  the  respective 
details: 

1.  The  number  of  shares  into  which  the  corporate 
capital  is  divided  and  by  which  it  is  represented.^^ 

2.  The  period  or  periods  within  which  the  portion  of 
the  capital,  not  subscribed  at  the  time  of  incorporation, 
is  to  be  contributed;  otherwise,   a  statement  of  the 

Costa  Rica,  231;  Ecuador,  326;  Guatemala,  301,  335;  Haiti,  40;  Honduras, 
284;  Mexico,  93;  Nicaragua,  154;  Peru,  127;  San  Salvador,  231. 

'*  Brazil,  3  ih.  and  article  300  of  the  code  of  commerce;  Santo  Domingo,  40; 
Uruguay,  393. 

Title  to  real  estate  contributed  to  the  treasury  of  a  corporation  passes 
regardless  of  the  fact  that  no  public  instrument  has  been  executed,  because  a 
corporation  can  be  organized  in  a  private  instrument;  and  thus  article  11  of  the 
law  of  September  15,  1855,  relating  to  the  formalities  of  purchase  and  sale  of 
real  estate,  has  no  application.  Brazil,  Tribunal  de  Justicia  de  S.  Paulo,  Sept. 
20,  1899,  Revista  de  Jurisp.,  v.  7,  pp.  333,  334. 

^«  Art.  244. 

"  Spain,  Chile,  Colombia,  Co.sta  Rica,  Guatemala,  Honduras,  Mexico, 
Nicaragua,  Panama,  Peru,  San  Salvador,  Uruguay. 


198  LATIN-AMERICAN    COMMERCIAL    LAW 

person  or  persons  authorized  to  determine  the  time 
and  manner  in  which  the  installments  are  to  be 
paid.^^ 

3.  The  periods  and  manner  or  occasion  of  calling 
and  holding  general  ordinary  and  extraordinary  meet- 
ings of  stockholders.^^ 

4.  The  submission  to  the  vote  of  the  majority  of  the 
stockholders,  duly  called  and  held,  of  such  matters  as 
may  properly  be  brought  before  them.'*° 

5.  The  manner  of  counting  votes  and  the  number  of 
votes  necessary  to  pass  a  resolution,  at  ordinary  as  well 
as  at  extraordinary  meetings."*^ 

6.  The  amount  of  capital  subscribed,  the  amount 
paid  in  and  how  it  is  made  up.^^ 

7.  The  advantages,  privileges  or  preferences  that 
the  promoters  reserve  for  themselves.  ^^ 

8.  The  number  of  managers  and  supervisors  and 
their  functions.  ^^ 

9.  The  powers  of  the  general  meeting,  requisites  for 
the  validity  of  its  resolutions  and  for  voting  and  the 
method  of  representing  the  corporation.^^ 

10.  The  statement   whether  the   shares  are  to    be 
transferable  by  endorsement,  or  payable  to  bearer.'*® 

11.  The  method  of  supervising  the  administration  of 
the  corporation.^^ 

12.  A  transcript  of  the  receipt  showing  that  ten  per 
cent  of  the  value  of  the  shares  has  been  paid  in.^^ 

^^  Spain,  Argentina,  Chile,  Colombia,  Costa  Rica,  Guatemala,  Honduras, 
Peru,  San  Salvador,  Uruguay. 

3'  Spain,  Peru,  San  Salvador. 

*>  Spain,  Peru,  San  Salvador. 

*i  Spain,  Panama,  Peru,  San  Salvador. 

^^  Spain,  Argentina,  Chile,  Colombia,  Costa  Rica,  Guatemala,  Honduras, 
Mexico. 

*^  Argentina,  Panama,  Mexico. 

**  Spain,  Argentina,  Brazil,  10  ib.;  Costa  Rica,  Mexico,  Panama,  Peru. 

^5  Argentina,  Chile,  Colombia,  Costa  Rica,  Guatemala,  Honduras,  Nicar- 
agua, Panama. 

*^  Argentina,  Costa  Rica,  Panama. 

*''  Costa  Rica,  Nicaragua.  **  Brazil,  3  ib. 


COMMEKCIAL   ASSOCIATIONS  199 

13.  The  amount  or  proportion  of  the  profits  which 
are  to  constitute  the  reserve  funds/^ 

14.  The  amount  of  losses  upon  the  occurrence  of 
which  the  dissolution  of  the  corporation  is  to  take 
place.  ^° 

Two  methods  of  establishing  a  corporation. 

There  are  two  methods  which  may  be  followed  in  estab- 
lishing a  corporation :  (a)  by  means  of  an  agreement  signed  by 
all  the  organizing  members;  and  (6)  by  means  of  a  pubUc 
subscription  called  for  by  a  group  of  persons,  named  pro- 
moters. Not  all  the  codes  describe  these  systems  at  length 
and  some  of  them  are  silent  in  the  matter;  but  as  neither 
form  is  opposed  to  other  rules  of  law  they  have  been  practi- 
cally accepted,  except  in  San  Salvador,  where  the  code 
authorizes  only  the  first  system.  ^^ 

We  may  divide  the  codes  in  this  respect  into  three  systems: 

1.  That  which  expressly  admits  both  methods;  ^- 

2.  That  of  the  code  of  San  Salvador,  which  authorizes 

^'  Chile,  Colombia,  Costa  Rica,  Guatemala,  Honduras,  Mexico,  Nicaragua, 
Panama,  378,  380. 

Nullity  due  to  the  lack  of  essential  requisites  in  the  organization  of  a  corpora- 
tion cannot  be  pleaded  by  stockholders  who  were  present  at  the  incorporating 
meeting  and  approved  the  acts  done  contrary  to  the  law  or  by-laws.  Brazil, 
Trib.  de  Just,  de  S.  Paulo,  Feb.  15  and  Oct.  30,  1908,  Revisla  de  Direito,  v.  20, 
p.  332. 

Questions  relating  to  the  validity  or  nullity  of  the  contract  contained  in  the 
articles  of  incorporation  of  an  association  cannot  be  subjected  to  the  decision 
of  arbitrators,  notwithstanding  the  fact  that  the  contract,  the  nullity  of  which 
is  the  matter  at  issue,  establishes  that  all  questions  arising  between  the  share- 
holders and  the  board  of  directors  must  be  submitted  to  the  cognizance  of 
arbitrators;  because  questions  of  that  kind  involve  principles  of  public  policy 
that  only  the  law  courts  can  decide.  Mexico,  Trib.  Sup.  Dist.  Fed.,  3a  Sala, 
Dec.  17,  1906,  Townsend  y  Villasana  v.  Comp.  Minera  de  San  Rafael  y  Com- 
panla,  Diar.  de  Jurisp.,  v.  10,  p.  185. 

^  The  articles  of  the  respective  codes  of  the  above  mentioned  countries  are 
as  follows: 

Spain,  151;  Argentina,  292;  Bolivia,  231;  Brazil,  3  ib.;  Chile,  426;  Colom- 
bia, 552;  Costa  Rica,  6;  Guatemala,  302;  Honduras,  285;  Mexico,  95;  Nicar- 
agua, 156;  Panama,  293;  Peru,  159;  San  Salvador,  231;  Uruguay,  406. 

"Art.  231. 

"  Argentina,  319,  .320;  Brazil,  article  3,  ib.;  Costa  Rica,  70,  71;  Mexico,  166; 
Panama,  366;  Venezuela,  233,  234. 


200  LATIN-AMERICAN    COMMERCIAL    LAW 

the  organization  of  a  corporation  only  by  means  of  a 
public  instrument;  ^^ 

3.  That  of  the  other  codes,  which  are  silent. 

The  two  methods  are  described  in  the  codes  of 
Argentina  and  Mexico  more  minutely  than  in  any  other; 
the  provisions  of  these  codes  may  therefore  be  regarded 
as  affording  the  most  information  in  the  matter. 

Code  of  Argentina. 

(a)  Method  of  organization  by  means  of  an  agreement  of  all 
the  persons  concerned.  When  all  the  persons  concerned  have 
subscribed  the  required  capital  and  fulfilled  all  other  requi- 
sites, they  can  definitely  constitute  the  corporation,  execut- 
ing the  corresponding  public  deed,  filing  it  and  publishing  it 
for  fifteen  days  with  the  by-laws,  authorization  and  other 
documents  relating  to  the  establishment  of  the  corporation.^^ 

(6)  Method  of  public  subscription.  WTien,  in  order  to  estab- 
lish a  corporation,  a  public  subscription  is  resorted  to,  the 
promoters  must  constitute  it  provisionally  by  executing  the 
necessary  articles,  which  must  be  recorded  and  pubUshed  for 
ten  days  in  the  place  of  incorporation.  When  these  require- 
ments have  been  fulfilled,  the  plan  for  the  subscription  may 
be  issued,  containing: 

1.  The  date  of  the  provisional  estabUshment,  the 
office  in  which  the  corporate  instrument  was  executed 
and  recorded,  and  the  periodicals  in  which  it  was 
published ; 

2.  The  kind  of  business  in  which  the  corporation  is  to 
engage  its  capital,  the  number  of  shares  and  conditions 
of  subscription  and  payment; 

3.  The  exceptional  advantages  that  the  promoters 
reserve  for  themselves; 

4.  The  names  and  residences  of  the  members  of  the 
board  of  directors,  if  already  appointed; 

5.  The  call  for  a  general  meeting  of  the  subscribers, 
which  is  to  be  held  within  a  period  of  three  months,  for 
the  incorporation  of  the  company.  ^^ 

"  Art.  231.  "  Art.  319.  »  Art.  320. 


COMMERCIAL   ASSOCIATIONS  201 

The  subscription  having  been  obtained,  the  promoters 
must  at  the  general  meeting  held  on  the  date  fixed,  furnish 
documentary  evidence  that  the  legal  requisites  have  been 
fulfilled,  together  with  a  draft  of  the  by-laws  in  accordance 
with  the  basis  of  subscription,  should  the  by-laws  not  have 
been  already  accepted  at  the  time  of  the  provisional  incorpor- 
ation. 

At  this  meeting  each  subscriber  can  have  only  one  vote, 
whatever  the  number  of  shares  he  may  have  subscribed  for.^^ 

The  meeting  decides  by  a  majority  of  votes  whether  the 
company  shall  or  shall  not  be  incorporated.  Should  the 
decision  be  in  the  affirmative,  the  members  then  discuss  the 
by-laws  and  appoint  the  board  of  directors,  if  this  has  not 
already  been  done.  The  minutes  of  this  meeting  must  be 
presented  to  the  Executive,  together  with  the  by-laws  and 
evidence  of  the  fulfillment  of  all  the  legal  requisites,  for  the 
necessary  authorization.  When  the  latter  has  been  obtained, 
all  the  above  mentioned  documents  must  be  recorded.  The 
company  is  then  duly  incorporated." 

Code  of  Mexico. 

(a)  Method  of  organization  by  agreement  of  all  the  persons 
concerned.  When  the  corporation  is  to  be  established  by 
agreement  it  is  merely  necessary  that  all  the  persons  con- 
cerned draw  up  and  sign  a  public  instrument,  with  all  the 
legal  requisites  thereof.  A  certificate  of  the  appraisement  of 
bonds,  securities,  or  personal  or  real  property  contributed  by 
one  or  more  members  must  be  added  to  the  articles  of 
incorporation.  The  by-laws  must  be  approved  at  the  first 
meeting  called  according  to  the  provisions  of  the  articles.  ^^ 

(6)  Method  of  organization  by  public  subscription.  When 
the  corporation  is  to  be  established  by  means  of  public 
subscription,  it  is  necessary: 

1.  To  pubHsh  a  programme; 

2.  To  subscribe  the  capital; 

3.  To  hold  a  general  meeting  to  approve  and  ratify 
the  establishment  of  the  corporation; 

«>  Art.  322.  "  Art.  323.  "*»  Art.  175. 


202  LATIN-AMERICAN    COMMERCIAL   LAW 

4.  To  protocolize  the  minutes  of  the  general  incor- 
poration meeting  and  the  by-laws.  ^^ 

The  programme  written  and  signed  by  the  promoters 
must  contain  a  complete  draft  of  the  by-laws  of  the  proposed 
corporation  with  all  explanations  that  may  be  deemed 
necessary,  the  amount  of  capital  to  be  paid  in  immediately, 
and  the  evidence  of  the  appraisement  of  any  securities, 
bonds,  chattels  or  real  estate  which  one  or  more  members 
may  contribute  to  the  corporation.  The  by-laws  must 
contain  all  the  legal  requisites  and,  furthermore,  must 
indicate  the  manner  of  calling  and  convening  the  first 
general   meeting.^" 

The  subscription  of  shares  is  to  be  stated  in  one  or  more 
copies  of  the  programme  which  must  contain  the  full  name 
or  firm  name  and  residence  of  the  subscriber,  the  number  of 
the  shares  subscribed,  the  date  of  the  subscription  and  the 
statement  that  the  subscriber  knows  and  accepts  the  draft 
of  the  by-laws;  the  whole  attested  by  two  witnesses.^ ^ 

In  order  to  proceed  to  the  establishment  of  the  corporation, 
the  corporate  capital  must  have  been  fully  subscribed  and 
ten  per  cent  of  the  cash  subscriptions  paid  in. 

If  the  whole  or  a  part  of  the  capital  consists  of  bonds, 
securities,  personal  or  real  property,  these  items  must  be 
represented  by  shares  fully  paid. 

If  the  ten  per  cent  that  must  be  paid  in  cash  is  not  paid 
within  the  period  fixed  by  the  promoters,  the  shares  must  be 
considered  as  unsubscribed. ^^ 

The  amount  requested  by  the  promoters  is  to  be  paid  by 
the  subscribers  to  the  credit  institution  or  commercial  house 
designated  for  that  purpose.  The  amount  so  deposited  is  to 
be  turned  over  to  the  directors  appointed  at  the  first  general 
meeting,  after  the  protocolization  and  registration  of  the 
necessary  documents.^^ 

w  Art.  167. 

By  protocolization  is  meant  the  filing  in  a  public  notary's  office  of  any  legal 
document  in  order  not  only  to  preserve  it  in  safety,  but  to  obtain  afterwards 
authentic  copies  thereof. 

«» Art.  168.  «i  Art.  169.  «*  Art.  170. 

«» Art.  171. 


COMMERCIAL   ASSOCIATIONS  203 

After  the  capital  is  subscribed  and  the  deposit  is  made,  a 
general  meeting  must  be  called,  the  purpose  of  which  is : 

1.  To  acknowledge  and  approve  the  deposit  made  at 
the  request  of  the  promoters,  as  well  as  the  valuation 
assigned  to  the  bonds,  securities,  personal  or  real  pro- 
perty which  one  or  more  members  may  have  contrib- 
uted to  the  corporation.  Those  who  contributed  such 
bonds,  securities,  personal  or  real  property  have  no  vote 
in  the  matter; 

2.  To  discuss  and  approve  the  by-laws; 

3.  To  discuss  the  share  or  portion  of  the  profits  that 
the  promoters  have  reserved  for  themselves; 

4.  To  appoint  the  directors  and  supervisors,  who 
must  fulfill  their  functions  during  the  period  established 
in  the  by-laws.'^'' 

A  list  of  shareholders  signed  by  those  attending  the 
general  meeting,  with  a  statement  of  the  number  of 
shares  and  votes  they  possess,  must  be  included  in  the 
minutes  of  the  meeting.^^ 

After  the  general  meeting  has  been  held  and  the 
minutes  have  been  drawn  up,  the  minutes  and  the 
by-laws  must  be  protocolized  and  registered. ^^ 

Necessary  requisites  for  organizing  a  corporation. 

In  addition  to  the  Government's  authorization  established 
in  some  of  the  codes,  as  already  observed,  other  requisites 
are  provided  for,  namely: 

1.  A  minimum  proportion  of  the  capital  must  be 
subscribed  before  organization  is  perfected.  In  this 
respect  the  codes  may  be  divided  into  four  groups: 

(a)  that  of  the  codes  which  require  the  total  capital 
to  be  subscribed;  ^^ 

(b)  that  of  the  codes  which  establish  a  minimum; 
Argentina,  ^^    Panama  ^^      and     Uruguay  ^°    require 

«<  Art.  172.  86  Art.  173.  "o  Art.  174. 

"  Brazil,  3  ib.;  Costa  Rica,  69;  Ecuador,  294;  Mexico,  170;  San  Salvador, 
232;  Venezuela,  235. 
«»  Art.  318.  89  Art.  371. 

'»  Art.  3  of  the  law  of  May  31,  1893. 


204  LATIN-AMERICAN   COMMERCIAL   LAW 

twenty  per  cent,   Colombia/^   one- third,  and  Gua- 
temala, two-thirds  of  the  capital;  ^^ 

(c)  that  of  the  code  of  Chile  ''^  which  leaves  this 
matter  to  the  discretion  of  the  Executive; 

(d)  that  of  the  codes  which  are  silent,  thus  leading 
to  the  inference  that  the  whole  capital  must  be  sub- 
scribed.'^^ 

2,  Minimum  number  of  members.  Some  of  the 
codes  fibc  the  minimum  number  of  members  required  for 
organizing  a  corporation:  Argentina  ^^  and  Panama  ^^ 
require  ten;  Brazil  ^^  and  Santo  Domingo  seven;  and 
San  Salvador  ^^  five. 

3.  A  certain  proportion  of  the  capital  subscribed 
must  be  paid  in.  In  Argentina/^  Brazil,^"  and  Mexico, ^^ 
it  is  ten  per  cent;  in  Chile  ^-  and  Colombia,^^  the 
President  of  the  Repubhc  fixes  the  amount;  in  Costa 
Rica  ^"^  and  in  Venezuela  ^^  it  is  twenty  per  cent;  in 
Santo  Domingo  ^^  and  Uruguay  ^^  twenty-five  per  cent; 
and  in  San  Salvador  ^^  one-third  of  the  capital. 

Privileges  reserved  by  promoters. 

The  organization  of  a  corporation  requires  preliminary 
work  and  effort  of  varying  difficulty  on  the  part  of  the 
promoters  or  founders.  The  law,  while  admitting  the 
promoter's  claim  to  special  rewards,  regulates  his  privileges 
as  follows: 

In  Argentina,^^  promoters  cannot,  with  the  exception 
below  mentioned,  reserve  any  premium  or  special  advantage 
to  themselves,  or  any  shares  or  bonds  which  are  not  paid  for 
like  others  offered  for  subscription,  even  though  they  con- 
stitute compensation  for  concessions  gratuitously  granted 

'1  Art.  558.  "  Art.  305.  "  Art.  433. 

^*  Spain,  Bolivia,  Haiti,  Honduras,  Nicaragua,  Peru,  Venezuela. 

7*  Art.  318.  ™  Art.  36L  "  Art.  3. 

^8 Art.  231.  "Art.  318.  «•  Art.  3. 

81  Art.  170.  82  Art.  433.  83  Art.  559. 

84  Art.  69.  86  Art.  235.  86  Art.  42. 

«'  Art.  3  of  law  of  May  31,  1893.  88  Art.  235. 
83  Art.  321. 


COMMERCIAL   ASSOCIATIONS  205 

by  the  Government;  except  when  those  advantages  do  not 
exceed  ten  per  cent  of  the  capital  or  of  the  net  profits  for  a 
period  no  longer  than  ten  years. 

In  Costa  Rica  ^^  the  only  lawful  promoters'  advantage 
consists  of  ten  per  cent  at  most  of  the  net  profits  of  the 
enterprise  for  a  period  not  longer  than  four  years;  this 
preference  is  to  be  computed  and  paid  after  the  approval 
of  the  corresponding  balance  sheet,  provided  the  first 
general  meeting  of  shareholders  had  no  reasonable  ground 
to  oppose  it. 

In  Brazil  ^^  any  concession  to  the  promoters  can  be  made 
only  after  the  organization  of  the  corporation  and  the 
preference  can  consist  only  of  a  share  in  the  net  profits  of  the 
enterprise.  ^^ 

90  Art.  74.  91  Art.  3. 

92  By  the  words  "after  the  organization  of  the  corporation"  is  meant  not  a 
time  after  the  corporation  has  entered  upon  its  functions,  but  after  the  sub- 
scribers have  declared  in  a  public  instrument  their  will  to  organize  a  corpora- 
tion (art.  72  of  decree  no.  434)  or  else  when,  in  the  general  meeting  for  the 
organization,  the  promoters  declare  that  it  has  been  incorporated  (art.  75, 
decree  no.  434). 

Promoters  are  those  persons  who  plan  the  organization  of  a  corporation, 
draw  its  by-laws  and,  in  such  character,  present  themselves  before  the  public, 
sign  and  publish  the  programme,  start  the  subscription,  make  the  deposit  of  the 
necessary  documents,  receive  the  first  payments  made  by  the  subscribers,  call 
the  general  meeting,  and  take  all  other  steps  necessary  as  preliminaiies  to 
incorporate  the  association,  engaging  the  liability  thereof.  Brazil,  Rio  de 
Janeiro,  Camara  Civil  da  Corte  de  Apel.,  May  20,  1890;  2a  Camara  da  Corte 
de  Apel.,  May  8,  1906,  and  Camara  Commercial,  Nov.  22,  1904,  Carvalho  de 
Mendonga,  op.  cit.,  v.  3,  p.  320. 

Those  persons,  promoters  or  strangers,  who  have  contributed  their  services 
to  the  organization  of  a  corporation,  may  receive  compensation  in  commis- 
sions or  in  a  certain  percentage  of  the  profits,  etc.  Brazil,  decree  no.  343, 
arts.  10  and  20,  decree  no.  1362  of  Feb.  14,  1891.  These  commissions  or  shares 
due  the  promoters  may  be  taken  from  the  capital.  Art.  7,  decree  no.  1362  of 
Feb.  14,  1891. 

When  in  a  general  meeting  of  stockholders  a  decision  was  recorded  to 
compensate  the  promoters  in  some  way,  such  decision  cannot  be  revoked  at  a 
later  meeting,  because  the  decision  when  agreed  to  by  the  promoters  consti- 
tutes a  bilateral  contract  which  cannot  be  rescinded,  except  by  mutual  consent 
of  both  parties.  Brazil,  Camara  Com.  do  Trib.  Civil  c  Criminal,  Rio  de 
Janeiro,  June  14,  1892,  in  Montenegro,  Trib.  Jmliciarios,  v.  I,  pp.  5,  8. 

A  deposit  of  ten  per  centum  of  the  value  of  the  shares  subscribed  made  in  the 
name  of  the  promoters  is  not  proper,  because  the  corporation  is  not  safe- 


206  LATIN-AMERICAN    COMMERCIAL   LAW 

In  Ecuador  ^^  and  Venezuela  ^^  the  promoters  can  obtain 
only  a  share  in  the  net  profits  of  the  corporation,  but  no 
limitation  is  placed  on  that  share;  and  they  must  also  be 
reimbursed  for  all  the  expenses  incurred  in  organizing  the 
corporation. 

Liabilities  of  promoters. 

Before  the  corporation  is  constituted  and  during  the  time 
in  which  the  promoters  are  engaged  in  organizing  the  pre- 
liminary work,  such  as  obtaining  subscriptions  and  taking 
the  steps  necessary  to  hold  the  first  meeting,  all  the  legal 
interest  of  the  prospective  corporation  and  sometimes  the 
advances  in  money  made  by  the  subscribers  are  vested  in  the 
promoters;  they  are  therefore  accountable  either  to  the 
corporation,  if  organized,  or  to  the  persons  who  entrusted  to 
them  moneys  subscribed,  for  funds  in  their  hands. 

The  modifications  of  this  rule,  as  found  in  various  codes, 
may  be  classified  into  the  following  systems: 

1.  The  promoters  are  jointly  and  unlimitedly  liable 
for  all  their  transactions  up  to  the  definite  organization  of 
the  corporation,  and  their  rights,  if  any,  against  the  same 
are  reserved.  Should  the  corporation  not  be  organized, 
the  expenses  and  consequences  of  their  acts  designed  to 
effect  its  organization  are  borne  by  the  promoters,  with- 
out their  having  any  right  of  action  against  the  sub- 
scribers; they  are,  furthermore,  unlimitedly  and  jointly 
liable  for  the  refunding  of  the  money  received  on  ac- 
count of  stock  subscriptions,  as  well  as  for  the  payment 
of  debts  contracted  in  the  name  of  the  corporation,  and 
for  damages  to  third  parties  arising  out  of  the  non- 
performance of  obligations  contracted  in  the  name  of 
the  corporation.^^ 

guarded  in  the  form  deemed  proper  by  the  law.  Camara  Commercial  do 
Tribunal  Civil  e  Criminal,  June  7,  1892,  O  Direiio,  v.  60,  pp.  113-121. 

93  Art.  293.  9^  Art.  232. 

**  Argentina,  324;  Brazil,  5  ib.;  Costa  Rica,  74;  Panama,  381;  San  Salvador, 
236;  Uruguay,  art.  5  of  law  of  May  31,  1893;  Venezuela,  231. 

The  joint  liability  of  the  promoters  in  case  of  nullity  of  the  incorporation  of 
an  association  is  established  in  Brazil  by  art.  89  of  decree  number  434. 


COMMERCIAL   ASSOCIATIONS  207 

2.  The  promoters  are  personally  but  not  jointly 
liable  for  all  obligations  contracted  with  a  view  to 
organizing  the  corporation;  their  right  to  recover  from 
the  same  whatever  they  may  have  paid  being  reserved.^^ 

Different  kinds  of  shares. 

The  capital  of  a  corporation  is  divided  into  shares  rep- 
resented by  a  document  called  acciones  or  titulos  de  accion.^' 

These  shares  may  be  issued  in  the  name  of  a  certain  person 
{nominativas)  or  to  bearer.  ^^ 

In  Chile,^^  Colombia,^"''  Guatemala  ^"  and  Honduras, ^02 
the  codes  provide  for  acciones  de  industria  (industrial  shares) , 
which  represent  the  shares  of  persons  who  contribute  their 
services  only.  They  confer  merely  a  right  to  a  certain  share 
of  the  profits  of  the  corporation  but  not  of  its  capital,  unless 
the  shares  have  not  been  divided  into  the  two  classes  of 
capital  shares  and  industrial  shares,  or  there  has  been  an 
agreement  to  the  contrary.  The  industrial  shares  must  be 
deposited  in  the  treasury  of  the  corporation  until  the  en- 
titled holder  has  fulfilled  his  obligations. 

Description  of  shares. 

In  Spain,  ^''^  Argentina,  ^°'*  Mexico,  ^"^  Panama,  ^°^  Peru,^°^ 
San  Salvador  ^°^  and  Venezuela,  ^"^  some  of  the  essential 
requirements  of  certificates  or  shares  of  stock  are  as  follows: 

9«  Ecuador,  291. 

^  The  corporate  capital  is  subject  to  a  stamp  tax  to  the  amount  of  a  milreis 
per  one  thousand  milreis  or  fraction  thereof.  Brazil,  decree  no.  3,564  of  Jan., 
1900. 

In  Mexico,  the  entries  made  in  the  books  of  a  commercial  association  con- 
stitute evidence  of  the  payment  of  the  contribution  subscribed,  except  for  the 
directors,  who  must  prove  such  payment  by  other  means,  110. 

9«  Spain,  161;  Brazil,  7  ih.;  Chile,  451;  Colombia,  576;  Costa  Rica,  109; 
Guatemala,  317;  Haiti,  35,  36;  Honduras,  300;  Mexico,  178;  Panama,  384; 
Peru,  168;  San  Salvador,  244;  Santo  Domingo,  35,  36;  Uruguay,  412;  Vene- 
zuela, 281. 

«» Art.  446.  i»"  Art.  572.  '"  Art.  313. 

102  Art.  296.  i"'  Art.  164.  i"*  Art.  328. 

los  Art.  179.  «»  Art.  384.  ""  Art.  171. 

I"*  Art.  245.  ^  Art.  282. 


208  LATIN-AMERICAN   COMMERCIAL   LAW 

1.  Name  of  the  corporation  and  date  of  its  organiza- 
tion; 110 

2.  Amount  of  the  capital  and  number  of  shares  into 
which  it  is  divided;  ^^^ 

3.  Nominal  value  or  denomination  of  every  share, 
and  portion  that  has  been  paid  up;  ^^^ 

4.  Number  of  every  share;  "^ 

5.  Period  of  duration  of  the  corporation;  ^^^ 

6.  Rights  granted  to  the  shareholders;  ^^^ 

7.  Manager's  signature. ^^^ 

Indivisibility  of  shares. 

When  two  or  more  persons  are  the  owners  of  a  share  the 
legal  relation  between  them  and  the  corporation  is  a  matter 
on  which  all  the  codes  do  not  agree;  they  follow  three  sys- 
tems, namely: 

1.  The  shares  may  be  subdivided  into  scrip  of  equal 
value.  11^  In  Costa  Rica  the  nominal  value  of  a  scrip 
certificate  cannot  be  less  than  50  colones  (S23.27  U.  S.). 

2.  The  shares  may  be  subdivided,  but  the  subdivision 
has  no  effect  upon  the  corporation;  the  owners  must 
appoint  a  common  representative  or  the  judge  may  make 
an  appointment  in  case  the  parties  concerned  do  not 
agree.  "^ 

3.  The  law  is  silent,  and  it  is  inferred  that  the  various 
owners  of  a  share  must  appoint  a  single  representative. 

Requisites  for  issuing  shares  payable  to  bearer. 

Shares  of  stock  can  be  issued  to  bearer  only  when  a  cer- 
tain part  of  their  face  value  has  been  paid.     The  amount 

"0  Argentina,  Mexico,  Panama,  Santo  Domingo,  Venezuela. 
1"  Mexico,  Panama,  Santo  Domingo,  Venezuela. 
"2  Spain,  Argentina,  Panama,  Peru,  Santo  Domingo,  Venezuela. 
"^Argentina,  Panama. 
"*  Mexico,  Venezuela, 
"s  Mexico. 

"8  Mexico,  Panama,  Venezuela. 

1"  Bolivia,  250;  Chile,  445;  Colombia,  571;  Costa  Rica,  109;  Ecuador,  287; 
Guatemala,  312;  Haiti,  34;  Hondura.s,  295;  Santo  Domingo,  34. 

i'8  Argentina,  331;  Brazil,  7  ib.;  Mexico,  182;  Panama,  385;  Venezuela,  286. 


COMMERCIAL   ASSOCIATIONS  209 

varies  in  the  different  codes,  which  divide  into  the  following 
classification : 

1.  The  total  face  value  of  bearer  shares  must  be 
paid.^i^ 

2.  One-half  of  the  face  value  of  bearer  shares  must  be 
paid.  ^20 

3.  The  codes  of  Bolivia,  Haiti,  Mexico,  Nicaragua 
and  Santo  Domingo  are  silent  on  this  matter  and  we 
may  infer  that  shares  may  be  issued  to  bearer  irre- 
spective of  the  amount  paid. 

Rights  and  privileges  of  shareholders. 

A  share  entitles  its  holder: 

1.  To  receive  a  proportionate  part  of  the  profits  of  the 
corporation,  called  '^ dividend"  (dwidendo); 

2.  To  receive  a  proportionate  part  of  the  common 
capital  at  the  time  of  liquidation  of  the  corporation  or 
while  it  is  being  wound  up,  if  the  process  is  gradual,  or 
else  when  the  shares  are  purchased  by  the  company; 

3.  To  take  part  in  the  discussion  and  determination 
of  the  affairs  of  the  corporation  at  the  general  meetings 
of  shareholders; 

4.  To  transfer  his  share  to  a  stranger  without  the 
necessity  of  asking  the  consent  of  the  other  share- 
holders or  of  submitting  to  a  claim  of  preemption  by 
the  latter. 

Of  these  privileges  of  a  shareholder,  which  are  often 
not  availed  of  nor  enjoyed,  some  may  be  considered  not 
essential.  The  first  of  these  is  the  privilege  of  taking 
part  in  the  discussion  and  determination  of  corporate 
affairs,  for  there  are  certain  kinds  of  shares  that  do  not 
include  this  power  among  the  rights  of  shareholders, 
and  in  some  countries,  the  shareholder  is  required  to 
have  a  certain  minimum  number  of  shares  in  order  to 

"'Argentina,  326;  Brazil,  7  ib.;  Chile,  449  to  451;  Colombia,  574  to  576; 
Costa  Rica,  111;  Ecuador,  296;  Guatemala,  315  to  317;  Honduras,  298,  299; 
Panama,  385;  San  Salvador,  244;  Uruguay,  412;  Venezuela,  283. 

'20  Spain,  164;  Peru,  171. 


210  LATIN-AMERICAN   COMMERCIAL   LAW 

be  allowed  to  vote  at  a  general  meeting.  The  second 
is  the  right  to  receive  a  part  of  the  common  capital  at 
the  time  of  liquidation.  There  are  cases  in  which  a 
share  carries  no  such  right,  as,  for  example,  the  privi- 
leged shares  of  the  promoters,  or  the  industrial  shares. 

Method  of  transferring  shares. 

Shares  payable  to  order  must  be  recorded  in  a  book  which 
the  corporation  must  keep  for  this  purpose,  called  a  transfer 
book,  in  which  subsequent  transfers  must  also  be  entered. 
Without  such  recording  the  transfer  has  no  effect  on  the 
corporation  or  on  third  parties. ^-^ 

Shares  payable  to  bearer  must  be  numbered  and  recorded 
in  stub-books,  in  Spain  ^-^  and  Peru.^-^  In  all  countries  they 
are  transferred  by  mere  delivery  of  the  share. 

Liability  of  shareholders. 

Until  the  full  value  of  shares  payable  to  a  named  person 
has  been  paid,  the  first  subscriber  or  holder  of  the  share,  his 
assignee,  and  each  person  succeeding  the  latter,  should  the 
share  be  transferred,  must  jointly,  and  at  the  option  of  the 
directors  of  the  corporation,  answer  for  the  payment  of  the 
portion  not  contributed.  No  agreement  to  the  contrary  is 
valid.  In  Argentina,  Bolivia,  Costa  Rica,  Mexico  and 
Venezuela,  the  obligation  is  not  joint  and  several. 

After  an  action  to  enforce  such  liability  has  been  insti- 
tuted against  any  of  the  persons  above  mentioned,  no  new 
action  against  any  other  holder  or  assignee  of  the  shares  can 

121  Spain,  162;  Argentina,  329;  Bolivia,  251;  Brazil,  7  ib.;  Chile,  law  of 
Sept.  6,  1878;  Colombia,  576;  Guatemala,  317;  Haiti,  36;  Hondm-as,  300; 
Mexico,  180;  Panama,  399;  Peru,  169;  San  Salvador,  246,  257;  Santo  Domingo, 
36;  Uruguay,  414;  Venezuela,  285. 

Shares  of  stock  have  to  pay  a  tax  of  300  reis  for  every  100  milreis  in  Brazil. 

Corporations  must  keep  a  book  for  registering  shares.  Brazil,  article  13 
of  the  code  of  com.  Decree,  no.  434,  article  22  and  law  no.  3,  150,  article  7, 
paragraph  3. 

The  way  to  dispose  of  shares  belonging  to  shareholders  who  have  not  paid 
for  them  is  governed  in  Brazil  by  decree  no.  434,  article  33. 

122  Art.  163.  123  Art.  170. 


COMMERCIAL   ASSOCIATIONS  211 

be  brought  until  it  is  shown  that  the  person  previously  sued 
is  insolvent.^-'* 

In  case  bearer  shares  have  not  been  fully  paid,  only  the 
person  who  appears  on  the  books  as  the  holder  thereof  is 
liable  for  their  complete  payment.  Should  the  name  of  the 
bearer  not  appear,  thereby  making  a  personal  claim  im- 
possible, the  corporation  may  call  in  the  corresponding 
certificates  of  the  shares  not  fully  paid. 

In  such  cases  the  corporation  has  the  privilege  of  issuing 
duplicate  certificates  of  the  same  share,  in  order  to  again  sell 
them  for  the  account  of  the  defaulting  holders  of  the  annulled 
certificates.^-^ 

Rights  of  an  assignor  of  a  share  against  the  assignee  who 
fails  to  pay  the  balance  due  on  it. 

In  case  the  assignor  of  a  share  of  stock  payable  to  a  named 
person  and  transferred  by  endorsement  has  been  compelled 
to  pay  in  whole  or  in  part  the  outstanding  balance  of  a  share, 
due  to  his  joint  liability  with  his  assignee,  the  former  has  a 
claim  to  legal  contribution  against  the  latter.  ^-^  Panama 
and  San  Salvador,  however,  declare  that  the  assignor  be- 
comes in  that  case  a  co-owner  of  the  shares. 

New  issues  of  shares. 

As  the  capital  is  the  guaranty  of  third  parties  who  con- 
tract with  the  corporation  and  as  that  capital  is  represented 
by  the  shares,  the  increase  of  the  capital  without  full  pay- 

1"  Spain,  164;  Argentina,  332;  Bolivia,  252;  Brazil,  7  *.  Chile,  452;  Colom- 
bia, 577;  Costa  Rica,  114  ib.;  Guatemala,,  318;  Honduras,  301;  Mexico,  163, 
183;  Nicaragua,  152,  153;  Panama,  401;  Peru,  171;  San  Salvador,  249;  Uru- 
guay, 413,  415;  Venezuela,  283. 

WTien  in  accordance  with  the  by-laws  of  a  corporation  a  call  of  further  sub- 
scriptions on  account  of  shares  of  stock  is  provided  for  by  the  general  meeting 
of  the  stockholders,  the  provision  is  binding  upon  all  of  them  and  they  cannot 
release  themselves  of  the  obligation  of  paying  the  amount  of  the  contribution 
by  the  transfer  of  their  shares,  where  such  transfer  is  not  in  accordance  with 
the  provisions  of  the  articles  of  incorporation.  Spain,  Trib.  Sup.,  January  8, 
1910;  Gacela  of  June  26,  1910,  p.  2. 

1"  Spain,  164;  Mexico,  183;  Peru,  171. 

iM  Argentina,  332;  Panama,  402;  San  Salvador,  249. 


212  LATIN-AMERICAN    COMMERCIAL   LAW 

merit  of  the  previous  issues  of  the  shares  would  be  deceiving 
to  the  pubUc  in  general.  The  law,  therefore,  provides  that 
no  new  issues  of  stock  can  be  floated  or  sold  until  complete 
payment  of  the  series  previously  issued.  Any  agreement  to 
the  contrary,  included  in  the  articles  of  incorporation,  in  the 
by-laws  or  regulations,  or  in  any  resolution  adopted  at  a 
general  meeting  of ,  stockholders  is  null  and  void.^^'^ 

Disabilities  of  corporations. 

Corporations  cannot  buy  their  own  shares  except  with 
earned  profits  and  with  a  view  to  reducing  the  corporate 
capital.  ^^^ 

In  Panama  ^^^  and  San  Salvador, "°  shares  issued  in  the 
name  of  a  certain  person  cannot  be  sold  without  the  consent 
of  the  corporation;  when,  therefore,  by  judicial  order,  shares 

127  Spain,  165;  Costa  Rica,  75;  Panama,  406;  Peru,  172;  San  Salvador,  252. 

12*  Spain,  166;  Argentina,  343;  Brazil,  31;  Mexico,  184;  Panama,  404; 
Peru,  173. 

Shares  which  have  been  repurchased  by  the  corporation  do  not  coimt  in  the 
computation  of  the  majority  of  votes  in  the  general  meetings  of  stockholders. 
Spain,  Trib.  Sup.,  Dec.  15,  1890;  Gacela  of  Jan.  26,  1891. 

The  legal  doctrine  that  shares  of  a  corporation  which  have  been  given  up 
by  one  of  the  associates  increase  the  value  of  the  other  shares  in  due  propor- 
tion, is  not  applicable  when  the  associate  gave  them  up  for  the  benefit  of  a 
certain  shareholder.    Spain,  Trib.  Sup.,  Oct.  20,  1865;  Gaceta,  Oct.  26,  1865. 

It  is  against  the  law  of  contracts  to  declare  forfeited  shares  belonging  to  a 
person  who  did  not  attend  the  meeting  at  which  the  causes  of  forfeiture  were 
fixed  and  who  did  not  sign  the  deed  in  which  the  corporation  was  organized. 
Spain,  Trib.  Sup.,  Dec.  1,  1880;  Gaceta,  Dec.  13,  1880. 

The  by-laws  of  a  corporation  cannot  authorize  an  increase  of  the  corporate 
capital  establishing  successive  series  of  shares,  because  in  that  way  the  capital 
would  not  be  fixed.  Brazil,  decree  no.  434,  article  84,  and  decree  8821,  arti- 
cle 35. 

When  a  corporation  binds  itself  to  make  a  payment  either  in  cash  or  in 
shares  of  its  own  stock,  it  entitles  the  creditor  to  demand  pajonent  in  cash, 
because  it  is  forbidden  to  corporations  to  acquire  their  own  shares.  This  con- 
clusion is  valid,  even  though  the  corporation  is  established  in  a  foreign  coun- 
try, if  the  case  refers  to  acts  done  or  contracts  entered  into  by  its  representa- 
tives in  Spain.  Trib.  Sup.,  Oct.  19,  1910;  Gacetas  of  March  14  and  15,  1911, 
p.  110. 

The  disability  of  corporations  buying  their  own  shares  is  not  an  obstacle 
to  their  deposit  as  collateral,  and  their  redemption  afterwards  by  paying  their 
value.    Spain,  Sup.  Trib.,  June  4,  1905;  Gaceta  of  Feb.  12  and  15,  1906,  p.  40 

129  Arts.  287,  404.  "o  Arts.  248,  251. 


COMMERCIAL   ASSOCIATIONS  213 

of  that  kind  are  sold  at  auction,  the  corporation  may  buy 
them. 

In  Chile,'"  Colombia,'^-  Guatemala  '^^  and  Honduras,'^^ 
the  capital  cannot  be  reduced;  the  corporation,  therefore, 
cannot  buy  its  shares  in  any  event. 

In  Costa  Rica  '^^  a  corporation,- its  managers  and  directors 
are  prohibited  from  buying  shares  of  the  corporation  when 
their  value  is  below  par;  when  it  is  at  or  above  par  the 
general  meeting  of  stockholders  can  authorize  the  purchase. 

Inasmuch  as  the  corporation,  in  buying  its  own  shares, 
reduces  its  capital  proportionately,  it  is  evident  that  in 
countries  which  require  the  authorization  of  the  government 
for  its  organization,  it  also  requires  such  authorization  for 
the  purchase  of  its  shares;  but  when  the  law  does  not  ex- 
pressly authorize  the  reduction  of  capital  neither  such 
reduction  nor  the  purchase  of  shares  is  permissible. 

Requisites  for  reducing  the  capital. 

In  countries  where  the  reduction  of  the  capital  is  lawful,  it 
is  necessary  to  have  that  step  decided  upon  at  a  general 
meeting  of  stockholders  by  a  majority  of  two-thirds  of  the 
total  number  of  stockholders,  possessing  at  least  two-thirds 
of  the  capital.'^" 

In  Argentina,'"  Mexico, '^^  Uruguay  "^  and  Venezuela  ''"' 
the  presence  of  stockholders  representing  three-quarters  of 
the  capital  and  the  favorable  vote  of  stockholders  repre- 
senting half  of  the  capital  is  required,  unless  otherwise 
provided  in  the  by-laws. 

In  Costa  Rica  '^'  the  presence  of  stockholders  possessing 
at  least  two-thirds  of  the  capital  and  half  plus  one  of  the 
shares  is  necessary. 

Besides  these  particulars  Spain  '^^  and  Peru  '^^  require: 
(a)  That  the  capital,  after  reduction,  shall  exceed 
75%  of  the  amount  of  the  debts; 


"1  Art.  442. 

"2  Art.  568. 

1"  Art.  309. 

"*  Art.  292. 

"5  Art.  106. 

13°  Spain,  168;  Pom,  175. 

»"  Art.  354. 

i-^s  Art.  206. 

"»Art.  1,  law  of  July  13,  1900 

"« Art.  270. 

1"  Art.  105. 

i«  Art.  168. 

1"  Art.  175 . 

214  LATIN-AMERICAN    COMMERCIAL   LAW 

(6)  That  a  balance  sheet  be  presented  to  the  court, 

appraising  the  value   of  securities  at   the  average 

quotation  of  the  last  three  months,  and  appraising 

real  estate  by  capitaUzing  its  income  according  to  the 

legal  rate  of  interest  on  money. 

In  Costa  Rica  ^^^  the  reduction  cannot  be  made  if  the 

assets  of  the  business  are  not  sufficient  to  cover  the  total 

liabihties  and  twenty-five  per  cent  in  excess  thereof. 

Disability  to  take  its  own  shares  as  security. 

As  a  consequence  of  the  previous  prohibition  to  corpora- 
tions to  buy  their  own  shares,  they  are  also  prohibited  from 
taking  them  as  a  pledge;  for,  unless  a  buyer  can  be  secured 
to  pay  a  fair  price  for  them  at  a  compulsory  sale,  the  cor- 
poration has  to  buy  them  or  leave  the  debt  unpaid.  ^^° 

Extension  of  the  term  of  a  corporation. 

The  term  of  duration  of  a  corporation  cannot  be  extended 
except  in  compliance  with  the  formahties  provided  in  the 
law  for  their  organization.  ^^^ 

The  provisions  of  the  law  in  Costa  Rica  ^^^  and  Panama  ^*^ 
are  of  a  character  requiring  special  mention,  because  in 
deahng  with  the  extension  of  the  term  of  a  corporation,  they 
limit  the  privilege  for  the  benefit  of  those  personal  creditors 
of  the  stockholders  who  have  a  preferential  power,  i.  e.,  a 
titulo  ejecutivo  or  instrument  constituting  a  confession  of 
judgment,  to  oppose  the  extension  of  the  fife  of  the  corpora- 
tion. 

The  code  of  Costa  Rica  reads: 

"When  the  period  of  duration  of  a  commercial 
association  has  terminated,  it  can  be  extended  only  by 
inscribing  and  pubhshing  the  corresponding  agreement. 

1"  Art.  106. 

i«  Spain,  167;  Argentina,  343;  Brazil,  27  ib.;  Mexico,  186;  Panama,  404; 
Peru,  174. 

i«  Spain,  119;  Argentina,  325;  Chile,  350,  425,  427;  Colombia,  465,  551, 
564;  Costa  Rica,  4,  10;  Ecuador,  330;  Guatemala,  233,  301,  304;  Honduras, 
218,  280;  Mexico,  94;  Peru,  127;  Uruguay,  407;  Venezuela,  305. 

i«  Art.  10.  "«  Art.  280. 


COMMERCIAL   ASSOCIATIONS  215 

Those  personal  creditors  of    the   stockholders  whose 
claims  are  proved  by  means  of  a  document  equivalent  to 
a  confession  of  judgment  (titulo  ejecutivo)  have  a  period 
of  thirty  days  within  which  to  oppose  the  extension  of 
the  corporate  life — ^this  period  to  be  computed  from  the 
day  of  the  above  mentioned  pubhcation.    The  opposi- 
tion thereto  shall  suspend,  with  regard  to  all  opposing 
creditors,  the  effects  of  the  extension." 
The  law  of  Panama  contains  a  similar  provision,  but  it 
requires  that  the  notice  of  opposition  be  inscribed  in  the 
commercial  registry;  and,  specifying  its  effects,  provides  that 
after  the  inscription  of  the  notice  the  claims  of  the  opposing 
creditors  are  to  be  paid  in  preference  to  all  other  obhgations 
created  in  favor  of  new  creditors. 


CHAPTER  XII 

Commercial  Associations  (4) 
management 

Administrative  agencies  of  a  corporation. 

The  powers  of  a  corporation  are  vested  in: 

1.  The  general  meeting  of  shareholders; 

2.  The  directors,  who,  as  the  executive  committee, 
put  into  operation  the  resolutions  passed  by  the  share- 
holders. 

General  meetings. 

The  general  meeting  of  shareholders  may  be:  1.  Con- 
stituent; 2.  Ordinary;  3.  Extraordinary. 

It  has  been  observed  that,  in  its  capacity  as  a  constituent 
assembly  the  general  meeting  has  full  power  to  frame  the 
articles  of  incorporation  and  the  by-laws,  and  to  do  every- 
thing necessary  to  establish  the  company,  the  powers  of 
the  assembly  being  limited  only  by  the  provisions  of  law 
governing  contracts,  and  the  terms  of  the  authorization  of 
the  government  in  countries  which  require  that  formality. 

As  for  the  ordinary  and  extraordinary  meetings  it  may  be 
said  that  they  exercise  the  legislative  power  of  a  corporation, 
sovereign  within  the  limits  of  the  law  and  the  by-laws,  and 
that  their  decisions  constitute  the  law  of  the  company.^ 

The  regular  general  meetings  of  stockholders  must  be 
held  in  the  different  Latin-American  countries  according  to 
the  following  systems: 

1.  At  least  once  a  year;  ^ 

1  Spain,  151;  Argentina,  347;  Brazil,  15;  Chile,  466,  467;  Colombia,  591,  592; 
Guatemala,  330,  3Sl;  Honduras,  313,  314;  Mexico,  202;  San  Salvador,  266; 
Peru,  159;  Panama,  422,  423;  Venezuela,  265. 

2  Argentina,  347;  Brazil,  15;  Costa  Rica,  97;  Ecuador,  305;  Mexico,  202; 
Panama,  422;  Uruguay,  421;  Venezuela,  264. 

216 


COMMERCIAL   ASSOCIATIONS  217 

2.  At  periods  fixed  in  the  by-laws;  ^ 

3.  Every  six  months;^ 

4.  In  countries  without  statutory  provision,  the 
meetings  must  be  held  at  the  periods  fixed  in  the  by- 
laws. 

Functions  of  regular  meetings. 

The  functions  of  regular  general  meetings  are: 

1.  To  discuss,  approve,  or  disapprove  the  balance 
sheets,  trial  balance  and  annual  report  presented  by  the 
directors,  as  well  as  the  reports  of  the  supervisors  in 
countries  where  they  are  required; 

2.  To  appoint  the  directors  and  supervisor  for  the 
coming  year  or  fixed  period; 

3.  To  discuss  any  other  question  mentioned  in  the 
call  for  the  meeting. '^ 

Formalities  for  calling  general  meetings. 

The  power  to  call  a  general  meeting  is  vested  in  the 
directors,  and  in  the  supervisors  where  the  law  requires 
such  functionaries;  in  Ecuador  and  in  Panama,  it  is  vested 
also  in  the  judges.  As  the  shareholders  are  in  many 
cases  not  known,  and  their  residences  at  a  distance,  it  is 
always  advisable  to  give  a  reasonable  notice  of  the  meeting 
by  publication,  mentioning  the  matters  to  be  discussed  and 
passed  upon  at  the  meeting  (orden  de  did).  The  law,  how- 
ever, does  not  always  require  these  formalities. 

Argentina,^  Brazil  ^  and  San  Salvador  ^  require  that  the 
call  for  the  meeting  be  published  in  the  newspapers  fifteen 
days  in  advance,  with  a  list  of  the  matters  to  be  considered. 
San  Salvador  requires  publication  of  the  list  of  matters  for 
discussion  in  the  case  of  extraordinary  meetings  only.^ 

» Chile,  466;  Colombia,  591;  Guatemala,  330;  Honduras,  313. 

<  San  Salvador,  266. 

"Argentina,  347;  Brazil,  15;  Chile,  466;  Colombia,  591;  Costa  Rica,  97; 
Ecuador,  305;  Guatemala,  330;  Honduras,  313;  Mexico,  202;  Panama,  422; 
San  Salvador,  266;  Uruguay,  421;  Venezuela,  265. 

»  Art.  349.  ^  Art.  15.  8  Art.  268. 

•  Art.  270. 


218  LATIN- AMERICAN   COMMERCIAL   LAW 

Venezuela  ^°  prescribes  both  requisites,  but  the  period  of 
advance  notice  is  five  days. 

In  Ecuador,  ^^  Mexico  ^^  and  Panama  ^^  no  period  of  notice 
is  fixed  but  it  is  necessary  to  pubhsh  the  Ust  of  the  matters  to 
be   considered. 

Other  codes  contain  no  provisions  in  the  matter. 

All  decisions  reached  at  the  meeting  relating  to  matters 
not  mentioned  in  the  call  are  null  and  void.^^ 

When  the  meeting  cannot  be  held  because  of  the  insuf- 
ficiency of  the  number  of  shares  represented,  a  new  call  must 
be  issued  and  the  meeting  held  at  the  time  thus  fixed,  re- 
gardless of  the  number  of  stockholders  present. ^^ 

In  Brazil,^"  when  a  quarter  of  the  shares  are  not  repre- 
sented after  the  second  call  and  the  purpose  of  the  meeting 
is  to  consider  some  modification  of  the  articles  of  organiza- 
tion or  the  by-laws,  a  third  call  must  be  issued.  Thereupon, 
no  matter  what  the  number  of  shares  represented,  the  meet- 
ing is  nevertheless  to  be  held,  and  the  decisions  arrived  at 
by  the  majority  of  the  present  shareholders  are  binding, 
provided  not  less  than  those  representing  two-thirds  of  the 
capital  appeared  at  a  meeting  whose  purpose  is  to  estabhsh 
or  liquidate  the  corporation,  to  increase  its  capital  or  to  ex- 
tend its  period.  The  directors  and  members  of  the  board 
of  supervisors  do  not  count.  Resolutions  adopted  otherwise 
are  void. 

Santo  Domingo  provides  that  in  regular  meetings  of 
stockholders  the  quorum  is  formed  by  a  number  represent- 
ing at  least  a  quarter  of  the  capital.  ^^ 

Venezuela  provides  that  in  case  a  meeting,  called  to  dis- 
cuss a  modification  of  the  articles  of  incorporation  or  the 
by-laws,  cannot  take  place  because  the  number  of  shares 
required  by  the  by-laws  is  not  represented,  a  new  meeting 
must  be  called  with  advance  notice  of  eight  days  at  least, 

10  Art.  267.  "  Art.  312.  '^  Art.  203. 

"  Art.  430. 

"  Argentina,  349;  Ecuador,  312;  Mexico,  203;  San  Salvador,  270. 
"Argentina,  351;  Ecuador,  305;  Mexico,  204;  Panama,  433;  San  Salvador, 
268. 

"  Art.  15.  "  Art.  57. 


COMMERCIAL   ASSOCIATIONS  219 

stating  that  the  meeting  will  convene  with  any  number  of 
shareholders.  The  decisions  reached  at  that  meeting  are 
not  final,  until  their  publication  and  their  ratification  by  a 
new  meeting  regularly  called,  regardless  of  the  number 
present.  ^^ 

Limitations  of  the  voting  privilege. 

In  Argentina,  no  shareholder  can  represent  more  than 
one-tenth  of  the  outstanding  shares,  nor  more  than  two- 
tenths  of  the  shares  represented  at  a  general  meeting.  ^^ 

In  Costa  Rica,^°  each  of  the  first  ten  shares  of  a  person 
entitles  him  to  one  vote;  from  that  number  up  to  one  hun- 
dred every  five  shares  entitle  him  to  one  vote;  and  there- 
after every  ten  shares  entitle  him  to  one  vote.  Fractions  of 
five  or  ten  do  not  count. 

The  rule  in  Uruguay  ^^  is  that  the  same  person  cannot 
represent  more  than  six  votes  if  the  corporation  has  one 
hundred  shares  or  more,  and  no  more  than  three  if  there 
are  less  than  one  hundred. 

In  the  constituent  stockholders'  meeting  Argentina  ^^ 
and  Venezuela  ^^  provide  that  every  shareholder  has  only 
one  vote,  regardless  of  the  number  of  shares  subscribed  for 
by  him. 

Extraordinary  meetings,  and  when  they  must  be  called. 

The  directors  and  supervisors  have,  as  an  incident  of 
their  functions,  the  power  to  call  a  general  meeting  at  other 
periods  than  those  established  in  the  by-laws.  These  meet- 
ings must  also  be  called  when  a  certain  number  of  share- 
holders so  demand.  This  number  differs  in  the  various 
Latin- American  countries,  as  follows: 

System  of  Argentina.  The  number  must  represent 
at  least  five  per  cent  of  the  capital  unless  otherwise 
provided  in  the  by-laws.  ^"^ 

18  Art.  271.  19  Art.  350.  ^o  Art.  103. 

"  Art.  420.  "  Art.  322.  "  Art.  243. 

^*  Argentina,  348;  San  Salvador,  266;  Panama,  420. 
When  in  the  by-laws  of  a  corporation  there  is  no  person  invested  with  the 


220  LATIN-AMERICAN    COMMERCIAL   LAW 

System  of  Ecuador.  They  must  represent  one-third 
of  the  capital.-^ 

System  of  Costa  Rica.  They  must  represent  one-fifth 
of  the  capital.  ^^ 

How  decisions  are  reached  at  general  meetings. 

It  is  necessary  to  the  validity  of  a  decision  reached  at  a 
general  meeting  that  in  the  vote  more  than  half  the  shares 
represented  be  cast  in  its  favor,  im.less  otherwise  provided 
for  by  the  law  or  the  by-laws.  ^^ 

Cases  which  require  special  formalities. 

There  are,  however,  important  decisions  that  can  only 
be  reached  by  the  concurrence  of  more  than  half  plus  one 
of  the  shares.     These  decisions  involve: 

(a)  the  dissolution  of  the  corporation,  before  the  pe- 
riod estabUshed  in  the  articles  of  organization; 
(6)  the  extension  of  the  period  of  its  duration; 

(c)  the  repajTnent  or  increase  of  the  capital; 

(d)  merger  with  another  corporation; 

(e)  the  reduction  of  the  corporate  capital: 

(/)  a  change  in  the  purpose  of  the  corporation; 
ig)  an  amendment  or  alteration  of  the  by-laws. 

Spain,-**  Panama  -^  and  Peru  ^°  require  the  attendance  of 
members  representing  at  least  three-quarters  of  the  capital 
and  the  vote  of  three-quarters  of  the  number  of  those  pres- 
ent. 

In  Argentina,^^  Mexico  ^-  and  Venezuela,^^  it  is  necessary 
to  have  the  attendance  of  members  who  represent  three- 
power  to  call  the  general  meeting  of  stockholders,  the  judges  have  ^ch  power 
and  must  use  it  at  the  request  of  a  proper  number  of  stockholders.  Buenos 
Aires,  Cam.  de  Ap.  Com.  de  la  Cap.,  June  12,  1913,  Jur.  de  los  Tribs.  Noes., 
June,  1913,  p.  282. 

«  Ecuador,  311;  Mexico,  209. 

28  Costa  Rica,  100;  Venezuela,  268. 

"  Argentina,  350;  Costa  Rica,  104;  Mexico,  205;  Panama,  431;  San  Salvador, 
269. 

2«  Art.  168.  29  Art.  435.  »« .\rt.  175. 

"  Art.  354.  32  Art.  206.  "  Art.  270. 


COMMERCIAL   ASSOCIATIONS  221 

quarters  of  the  capital  and  the  favorable  votes  of  a  number 
of  shareholders  who  represent  one-half  the  total  capital. 

In  Brazil  ^^  the  vote  of  two-thirds  of  the  corporate  capi- 
tal is  required. 

In  Costa  Rica  ^^  they  require  the  attendance  of  a  number 
of  members  representing  two-thirds  of  the  capital  and  the 
vote  of  half  plus  one  of  the  total  shares  of  the  corporation. 

Santo  Domingo  ^^  is  an  exception  to  the  rule,  because  in 
the  above  mentioned  cases  the  code  requires  only  the  vote 
of  a  number  of  shares  representing  one-half  the  capital. 

Privilege  of  withdrawing  from  the  corporation. 

When  the  resolution  of  the  meeting  is  to  extend  the  dura- 
tion of  the  corporation,  such  extension  not  being  authorized 
by  the  by-laws,  or  when  it  involves  merger  with  another 
corporation,  repayment  or  increase  of  the  capital  or  the 
change  of  the  scope  or  object  of  the  corporation,  all  of  which 
matters  affect  the  original  agreement  substantially,  dissent- 
ing shareholders  may  withdraw  from  the  corporation  within 
twenty-four  hours,  if  present,  or  within  a  month  from  the 
close  of  the  meeting,  if  absent,  and  they  have  the  right  to 
demand  payment  of  their  shares  in  proportion  to  the  cor- 
porate capital,  according  to  the  last  approved  balance  sheet. ^^ 

In  Panama  ^^  and  Venezuela  ^^  the  limit  of  time  for  absent 
members  to  w^ithdraw  is  fifteen  days.  Furthermore,  Vene- 
zuela does  not  give  the  shareholders  the  right  to  withdraw 
in  case  of  the  merger  of  the  corporation  with  another,  in 
case  of  the  extension  of  its  term  of  duration  or  when  an  in- 
crease in  the  capital  is  to  be  made  by  the  issue  of  new  shares. 
The  corporation  can  demand  a  period  of  three  months,  giv- 
ing sufficient  guaranty,  however,  for  the  payment  of  the 
shares  of  the  withdrawing  stockholders. 

"  Art.  15.  35  Art.  97. 

^  The  Tribunal  Supremo  of  Cuba,  on  August  19,  1902,  decided  that  the 
two-thirds  of  the  corporate  capital  required  by  the  code  in  order  to  modify  the 
Vjy-laws,  and,  therefore  also  to  reduce  the  capital  of  a  corporation,  relate  to  the 
capital  issued  and  not  to  the  nominal  or  stipulated  capital.  Betancourt, 
Codigo  de  Comer  do,  p.  88. 

"  Argentina,  354.  '« Art.  436.  '» Art.  272. 


222  LATIN-AMERICAN    COMMERCIAL   LAW 

Case  of  an  unlawful  decision  reached  at  a  general  meeting. 
A  decision  reached  at  a  general  meeting  in  violation  of  the 
provisions  of  law  or  the  by-laws  cannot  bind  shareholders 
who  oppose  it,  and  a  remedy  must  be  provided  in  case  such 
decisions  impair  the  interests  of  the  corporation.  This  is 
simply  an  application  of  the  general  principles  of  the  law 
of  contracts,  expressly  recognized  by  the  codes  of  Argentina,^" 
Costa  Rica,^^  Panama  ^^  and  Venezuela, ^^  which  provide 
that  every  shareholder  has  a  right  to  protest  against  de- 
cisions thus  reached  ultra  vires,  and  may  request  the  com- 
petent judge  to  suspend  the  execution  and  to  declare  the 
nulhty  thereof.  Such  decisions  being  ultra  vires  render  the 
expressly  assenting  shareholders  unlimitedly  liable. 

Shareholders  may  be  represented  by  proxy. 

Shareholders  may  be  represented  either  by  other  share- 
holders or  by  strangers  except  in  Brazil  where  the  proxy 
needs  to  be  a  stockholder,  but  cannot  be  represented  by  the 
directors  or  supervisors.^^  The  power  can  be  given  in  a 
letter  or  private  instrument  signed  by  the  principal,  but  it 
must  be  authenticated  by  the  consul  of  the  country  when  it 
is  issued  abroad. 

Effect  of  resolutions  passed  at  the  meetings. 

Resolutions  of  the  general  meetings  passed  in  accordance 
with  the  law  and  the  by-laws  are  binding  on  all  the  share- 
holders even  though  not  present  or  dissenting,  except  in 
cases  where  the  law  gives  them  the  privilege  to  withdraw 
from  the  corporation.^^ 

Method  of  Argentina  in  cases  of  shareholders  residing  in 
foreign  countries. 
When  there  are  shareholders    in  a  foreign  country,  who 
represent  at  least  25%  of  the  capital,  they  may  meet  to 

«  Art.  353.  "  Art.  107.  "^  Art.  418. 

«  Art.  280. 

**  Argentina,  355;  Costa  Rica,  102;  Ecuador,  314;  Mexico,  210;  Panama,  419. 
*^  Argentina,  357;  Ecuador,  316;  Mexico,  201;  Panama,  436. 


COMMERCIAL   ASSOCIATIONS  223 

examine  the  accounts  and  reports  of  directors  and  super- 
visors as  well  as  to  appoint  an  agent  to  represent  them  at  the 
general  meetings,  in  which  case  they  have  as  many  votes 
as  belong  to  such  shareholders  according  to  the  by-laws. 
In  such  case  they  may  appoint  a  presiding  officer  to  receive 
the  respective  copies  of  the  reports  and  accounts  which  the 
central  management  must  forward  to  them  a  reasonable 
time  in  advance.  The  presiding  officer  thus  appointed  must 
call  them  in  conference  and  must  correspond  with  the  main 
office.  This  provision  does  not  impair  the  right  of  every 
shareholder  to  act  individually  if  he  does  not  wish  to  pro- 
ceed collectively.'*^ 

BOARD   OF  DIRECTORS 

Number  of  directors. 

The  codes,  as  a  rule,  take  it  for  granted  that  the  manage- 
ment of  a  corporation  is  entrusted  to  more  than  one  person, 
because  they  always  mention  the  directors  (diredores  ger- 
entes,  consejeros  or  administr adores)  in  the  plural;  but  they 
make  no  special  mention  of  this  point,  except  in  Mexico, 
where  the  law  requires  a  board  of  directors  {consejo  de  ad- 
ministracion)  and  one  or  more  managers  (directores) ;  ^''  as 
well  as  in  Costa  Rica,  where  a  board  of  not  less  than  five 
managers  is  necessary,  or  one  manager  and  directors;  ^^ 
and  in  Panama,  where  a  board  of  at  least  five  managers  is 
required.  ^^ 

Character  and  liability  of  the  directors. 

The  directors  or  managers  of  a  corporation  are  its  agents, 
and  therefore,  according  to  the  law  of  agency,  they  must 
show  diligence,  faithfulness  and  obedience  to  their  instruc- 
tions. So  long  as  they  comply  with  these  obligations  they 
are  not  liable  individually  or  jointly  for  the  transactions  of 
the  corporation.  ^° 

«  Art.  358.  «  Art.  188.  Art.  84. 

*^  Art.  438.  The  law  uses  the  words  gerenles,  directores,  consejeros^,  (ulminis- 
Iradores  interchangeably,  as  they  possess  the  character  and  perform  tlie  func- 
tions of  directors  and  managers. 

=*  Spain,  156;  Argentina,  337;  Bolivia,  249;  Brazil,  299;  Cliile,  458;  Colom- 


224  LATIN-AMERICAN    COMMERCIAL   LAW 

The  managers,  however,  are  personally  and  jointly  liable 
to  the  shareholders  and  third  parties  for  violation  of  the  law 
or  by-laws  and  for  misfeasance,  malfeasance,  negligence  or 
excess  of  their  powers.  ^^ 

The  liability  is  personal,  but  not  joint,  in  Uruguay, ^^ 
unless  the  directors  pay  a  dividend  without  a  previous  and 
correct  balance  of  profits,  or  of  an  amount  greater  than  the 
balance  would  warrant,  or  when  with  a  view  to  showing 
profits  and  paying  dividends,  they  make  a  false  statement. ^^ 

bia,  583;  Costa  Rica,  84;  Ecuador,  300,  301;  Guatemala,  322;  Haiti,  32;  Hon- 
duras, 305;  Mexico,  195;  Nicaragua,  150;  Panama,  438;  Peru,  164;  San  Sal- 
vador, 261;  Santo  Domingo,  32;  Uruguay,  408;  Venezuela,  229. 

The  death  of  the  manager  who  executed  a  power  of  attorney  does  not  annul 
the  power,  if  it  was  granted  in  the  name  of  the  corporation.  Spain,  Sup.  Trib., 
March  10,  1873;  Gaceta  of  March  22,  1873. 

In  every  corporation  the  members  of  the  board  of  directors  mast  be  con- 
sidered as  agents  thereof,  and  in  that  capacity,  as  long  as  they  act  within  the 
limits  of  their  power,  they  are  not  subject  to  liability  if  damage  has  been 
caused.    Spain,  Oct.  20,  1893;  Gaceta  of  Dec.  12,  1893. 

Only  persons  duly  authorized,  acting  under  the  rules  of  the  by-laws  and 
regulations  of  a  corporation  can  bind  the  corporate  capital  by  their  acts  and 
transactions.    Spain,  Dec.  2,  1859;  Gacela,  Dec.  6,  1859. 

The  legal  capacity  of  the  managers  of  a  corporation  is  governed  by  the  law 
of  agency;  the  by-laws  and  regulations  as  well  as  decisions  reached  at  the 
general  meetings  of  shareholders  must  be  taken  into  consideration  in  order  to 
determine  the  powers  of  the  managers.  Cuba,  Trib.  Sup.  Havana,  Nov.  4, 
1904,  Decision  No.  13,  Jurisp.  del  Tnb.  Sup.,  v.  XXIII,  p.  705. 

When  the  manager  of  an  association  is  authorized  to  enter  into  any  kind  of 
contract  without  limitation,  it  is  considered  that  he  is  authorized  to  give  a 
power  of  attorney  to  represent  the  association.  Spain,  Trib.  Sup.,  March  9, 
1904;  Gaceta  of  March  18,  1904. 

A  manager  acting  within  the  powers  granted  to  him  by  the  by-laws  of  a 
corporation  binds  the  same,  so  that  it  is  obliged  to  pay  the  amount  of  loans 
contracted  by  him  even  though  they  never  were  entered  in  the  books  of  the 
corporation.    Spain,  Trib.  Sup.,  Dec.  2,  1911;  Gaceta  of  March  8,  1913,  p.  265. 

^^  Argentina,  337;  Brazil,  299  of  the  code  and  11,  13  of  the  law  of  corpora- 
tions; Costa  Rica,  85,  86,  87;  San  Salvador,  261. 

The  manager  of  a  corporation  is  personally  liable  for  the  use  of  containers 
that,  as  a  trade-mark,  belonged  to  a  third  party.  The  circumstance  that 
those  containers  or  the  objects  contained  therein,  were  not  sold,  but  given  as 
presents  to  the  patrons  of  the  house,  does  not  change  the  character  of  the  act 
as  an  infringement  of  the  law  of  trade-marks.  Buenos  Aires,  Cam.  Fed.  de 
Apel.  de  la  Cap.,  Oct.  22,  1912,  Larroude  v.  Manuel  P6rez  y  Cia.,  Jur  de  los 
Tribs.  Nacs.,  Oct.,  1912,  p.  63. 

"  Art.  408.  "  Art.  418. 


COMMERCIAL   ASSOCIATIONS  225 

In  Spain,  ^^  Chile/^  Colombia/''  Ecuador,  ^^  Guatemala,  ^^ 
Honduras/^  Mexico,'^"  Nicaragua, ^^  Santo  Domingo^-  and 
Venezuela,^^  the  liability  of  the  managers  or  directors  in  all 
cases  of  \'iolation  of  the  law  or  the  by-laws  or  of  their  in- 
structions is  personal  but  not  joint.^^. 

Argentina, ^^  and  San  Salvador  ^^  exempt  from  such  liability 
those  managers  who  did  not  participate  in  the  wrongful 
resolution,  or  who  protested  against  the  decision  of  the  ma- 
jority before  action  brought  against  them. 

Particular  obligations  of  directors. 

Besides  the  obligations  naturally  incidental  to  their  char- 
acter as  agents  of  a  corporation,  the  directors  must  perform 
certain  specific  duties  that  the  law  has  carefully  provided 
for.     Of  these  the  most  important  are: 

1.  To  present  at  the  regular  general  meeting  of  stock- 
holders the  balance  sheet  showing  the  result  of  the  man- 
agement of  the  common  business  during  the  preceding 
period.  In  Argentina,  Chile,  Colombia,  Costa  Rica, 
Ecuador,  Guatemala  and  Honduras,  the  directors 
must,  in  addition  to  the  balance  sheet,  present  a  report 
on  the  state  of  the  business  and  a  statement  showing 
all  assets  and  liabilities ;  •'^ 

"  Art.  156.  65  Art.  458.  ««  Art.  585. 

"  Art.  303.  58  Arts.  322,  324.  bs  Art.  305. 

«» Arts.  194,  195.  8i  Art.  150.  ^^  Art.  32. 

»» Art.  229. 

"^  A  judicial  decision  which  rejects  the  complaint  (sentenda  absolutoria  de  la 
dermmda)  against  the  directors  of  a  corporation  because  the  plaintiff  did  not 
prove  any  negligence  or  fault  of  the  defendants  imposing  responsibility  on 
the  latter,  does  not  infringe  the  provision  of  article  156  of  the  code  of  commerce. 
Spain,  Trib.  Sup.,  Dec.  7,  1892;  Gaceta  of  Jan.  28,  1893. 

«5  Art.  .3.37.  "«  Art.  261. 

«^  Argentina,  347;  Brazil,  15;  Chile,  461;  Colombia,  586;  Costa  Rica, 
116;  Ecuador,  308;  Guatemala,  325;  San  Salvador,  266,  272;  Venezuela, 
265. 

The  action  demanding  of  the  managers  or  liquidators  of  a  corporation  the 
accounts  of  their  administration  cannot  be  brought  by  an  individual  stock- 
holder; only  the  corporation  itself  duly  represented  can  do  that.  Buenos 
Aires,  Cam.  de  Ap.  Com.,  April  14,  1914,  Jur.  de  los  Tribs.  Nacs.,  April,  1914, 
p.  266. 


226  LATIN-AMERICAN    COMMERCIAL   LAW 

2.  To  call  the  general  meetings  of  stockholders, 
whether  regular  or  extraordinary;^* 

3.  As  soon  as  they  know  that  the  corporate  capital 
has  suffered  a  loss  of  fifty  per  cent,  to  declare  that  fact 
to  the  commercial  courts,  the  declaration  being  signed 
by  all  the  managers  or  directors,  and  when  the  loss  is 
seventy-five  per  cent,  to  proceed  to  the  liquidation  of 
the  corporation  according  to  the  by-laws,  under  pen- 
alty of  personal  and  joint  responsibility  for  all  trans- 
actions undertaken  after  knowledge  of  such  loss.^^ 

In  Ecuador "°  and  Venezuela  ^^  the  directors  must  call  a 
general  meeting  when  they  realize  that  one-third  of  the  cor- 
porate capital  has  been  lost. 

Payment  of  dividends. 

Directors  are  not  permitted  to  declare  dividends  out  of 
anything  but  profits,  nor  before  completing  the  reserve  fund 
established  by  the  law  or  the  by-laws.^^ 

Ecuador  '^^  and  Mexico  ''^  establish  an  exception  to  the 
principle  that  dividends  must  be  paid  out  of  profits  only  and 
in  proportion  thereto.  Ecuador  provides  that  dividends  can 
be  taken  out  of  the  corporate  capital,  in  those  corporations 
where  some  time  necessarily  elapses  before  the  business 
commences  to  operate;  during  that  time  the  customary 
interest  rate  on  money  may  be  paid  out  of  capital.  Mexico 
in  turn  prescribes  that  in  the  articles  of  incorporation  or  in 
the  by-laws  it  may  be  stipulated  that  the  face  amount  repre- 
sented by  the  shares  may  bear  interest  not  greater  than  six 
per  centum  per  annum  for  a  period  of  not  more  than  five 
years.  Such  dividends  must  be  considered  as  expenses  in 
organizing  the  corporation. 

*'*  Argentina,  348;  Brazil,  15;  Chile,  467;  Colombia,  592;  Costa  Rica,  99; 
Guatemala,  330,  331;  Honduras,  313,  314;  Mexico,  204;  Panama,  420;  Vene- 
zuela, 267. 

^^  Argentina,  369;  Chile,  464;  Colombia,  589;  Guatemala,  328;  Honduras, 
311;  Costa  Rica,  93;  Panama,  469;  Venezuela,  419. 

™  Art.  304.  "Art.  251. 

"  Brazil,  13;  Chile,  463;  Colombia,  588;  Guatemala,  327;  Honduras,  310; 
San  Salvador,  274;  Panama,  468;  Uruguay,  418. 

"  Art.  303.  '*  Art.  213. 


COMMERCIAL   ASSOCIATIONS  227 

Supervision  of  a  corporation. 

The  directors  or  managers  of  a  corporation  are  elected  by 
the  majority  of  stockholders;  therefore,  the  supervision  of 
the  action  of  the  directors  ought  to  be  entrusted  to  the 
representatives  of  the  minority.  But  no  plan  has  yet  been 
worked  out  by  the  law  for  granting  representation  to 
minorities.  The  supervisors  (comisarios,  sindicos,  or  consejo 
de  mligancia,  as  they  are  called)  are  as  a  rule  appointed  by  the 
majority  of  the  shareholders,  convened  at  a  regular  meeting."^ 

In  Chile  ^^  and  Colombia  "  the  President  of  the  Republic 
may  appoint  the  supervisor  and  fix  his  compensation,  which 
must  be  paid  by  the  corporation. 

In  San  Salvador  also  the  Government  may  appoint 
supervisors  of  a  corporation,  when  it  is  operating  a  conces- 
sion, a  patent,  or  a  franchise  granted  by  the  Government.^' 

Functions  of  supervisors. 

The  functions  of  the  supervisors  who  act  in  the  nature  of 
supervising  auditors,  are: 

(a)  to  examine  the  books  and  papers  of  the  corpora- 
tion at  least  at  the  times  fixed  in  the  by-laws; 

(6)  to  call  a  general  extraordinary  meeting  of  share- 
holders, when  they  deem  it  advisable,  or  a  regular 
meeting  when  the  directors  fail  to  do  so; 

(c)  to  inspect  the  management  of  the  corporation, 
comparing  the  cash  account  with  the  amount  of  cash 
in  the  treasury  of  the  company; 

(d)  to  look  after  the  observance  of  the  laws  and 
by-laws; 

(e)  to  supervise  the  liquidation  of  the  corporation; 
(/)  to  report  to  the  general  meeting  concerning  the 

report,  inventory  and  balance  sheet  presented  by  the 
directors.^^ 

"Argentina,  335;  Brazil,  14;  Costa  Rioa,  122;  Ecuador,  306;  Mexico,  198; 
Panama,  449;  San  Salvador,  262;  Venezuela,  252. 

'«  Art.  436.  "  Art.  562.  '8  Art.  263. 

"Argentina,  340;  Brazil,  14;  Chile,  436;  Colombia,  562;  Costa  Riea,  11!), 
123;  Honduras,  308;  Mexico,  199;  Panama,  4.'^.'"i. 


228  LATIN-AMERICAN    COMMERCIAL    LAW 

Publicity  as  the  best  method  of  supervision. 

Spain,^°  instead  of  supervisors,  provides  that  all  corpora- 
tions must  publish  every  month  in  the  "Gaceta  "  a  detailed 
balance  sheet  setting  forth  the  amount  at  which  the  secu- 
rities and  other  property  of  the  corporation  are  appraised. 
In  Cuba,  decree  No.  1123  of  1909  provides  that  the  monthly 
balance  sheets  which  must  be  published  in  the  Gaceta  are  to 
be  previously  verified  by  the  Direccion  de  Comercio  y  In- 
dustria,  which  must,  furthermore,  supervise  the  proper 
management  of  the  corporation  both  in  behalf  of  the 
Government  Treasury  and  the  associates. 

In  Chile  ^^  and  Colombia  ^^  the  directors  must  present  at 
the  general  meeting  a  report  of  the  state  of  the  business,  a 
balance  sheet,  and  an  inventory  of  the  corporate  property, 
and  these  documents  must  be  published  if  the  corpora- 
tion has  issued  shares  to  bearer. 

The  annual  balance  sheet  presented  at  the  general  meet- 
ing must  be  published  every  year,  in  Mexico  ^^  and  Pan- 
ama.^^  In  San  Salvador,^^  the  publication  of  these  docu- 
ments must  be  made  every  six  months,  and  after  the 
meeting  of  stockholders,  the  balance  sheets  presented  and 
discussed  at  the  meeting  must  be  published  with  the  report 
of  the  directors  and  the  opinion  of  the  supervisor. 

Bonds  issued  by  the  corporation. 

There  are  cases  in  which  the  capital  of  a  corporation  is  not 
sufficient  for  the  development  of  its  business,  yet  at  the  same 
time  the  shareholders  do  not  consider  it  advisable,  by  reason 
of  profits  expected  and  the  credit  enjoyed  by  the  institution,* 
to  increase  its  capital  by  calling  new  subscribers  to  share  in 
the  profits.  They  prefer  to  draw  on  the  credit  of  the  com- 
pany by  paying  a  fixed  interest  charge  and  to  amortize  the 
debt  by  creating  a  sinking  fund,  or  by  an  analogous  measure. 

In  that  case  the  corporation  may  issue  bonds  or  securities 
payable  to  certain  persons  or  to  bearer,  the  law  prescribing 
certain  requisites  to  be  fulfilled,  namely: 

«"  Art.  157.  81  Art.  461.  «« Art.  586. 

«'  Art.  157.  84  Art.  460.  s'  Art.  264. 


COMMERCIAL   ASSOCIATIONS  229 

1.  The  amount  of  the  loan  covered  by  the  bonds, 
cannot  be  greater  than  the  capital  paid  in  and  actually 
existing  according  to  the  last  approved  balance  sheet. ^'^ 

In  Argentina  ^^  and  Panama/^  corporations  must  publish 
a  balance  sheet  every  month,  and  in  the  latter  country  the 
corporation  is  subject  to  the  inspection  and  supervision  of 
the  Government. 

In  Brazil,  the  bonds  issued  with  all  the  legal  requisites 
must  be  paid  in  preference  to  any  other  creditors  of  the 
corporation. 

In  Mexico  and  Panama,  however,  the  amount  of  the  loan 
may  be  greater  than  the  capital;  in  Mexico,  whenever  bonds 
are  to  be  secured  by  property,  the  acquisition  of  which  was 
the  motive  of  the  loan,  and  in  Panama,  whenever  its  excess 
over  the  capital  is  guaranteed  by  commercial  paper  or 
instruments  of  credit  of  a  civil  character  and  payable  to 
certain  persons,  this  commercial  paper  or  instruments  of 
credit  must  be  deposited  in  the  general  treasury  of  the 
Republic. 

^  ArRentina,  365;  Brazil,  32;  Mexico,  art.  5  of  law  of  Nov.  29,  1897. 
«'  Argentina,  368.  ^  Art.  414. 


T 


CHAPTER  XIII 

Commercial  Associations  (5) 

dissolution  and  liquidation  of  commercial 
associations 

General  causes  of  dissolution. 

The  causes  of  dissolution  of  commercial  associations  are 
of  a  character  either  general  or  special  to  corporations  and 
partnerships;  personal  circumstances  may  have  a  decisive 
influence  on  partnerships  which  they  cannot  have  in  the 
case  of  corporations,^ 

The  general  causes  or  conditions  of  dissolution  are: 

1st.  The  expiration  of  the  period  fixed  in  the  articles 
of  organization,  or  the  accomphshment  of  the  purpose  of 
the  enterprise;  ^ 

1  When  a  mercantile  association  is  winding  up  its  business,  it  cannot  prove 
its  insolvency  or  lack  of  funds  except  by  the  final  result  of  its  liquidation. 
Spain,  Sup.  Trib.,  Dec.  22,  1860;  Gaceta  of  Dec.  30,  1860. 

When  a  corporation  is  dissolved  the  shareholders  are  obUged  to  pay  only  the 
balance  of  the  face  value  of  their  shares  up  to  the  amount  that  the  needs  of  the 
liquidation  may  require  to  pay  the  corporate  liabilities  or  to  equalize  the  losses 
among  the  shareholders.  Buenos  Aires,  Cam.  de  Apel.  Com.,  Oct.  5,  1912, 
Bray  v.  Barros,  Jurisp.  de  los  Tribs.  Nacs.,  Oct.,  1912,  p.  375. 

Reference  to  these  general  causes  of  dissolution  of  associations  is  made  by 
the  codes  in  the  following  articles:  Spain,  221;  Argentina,  422;  Bolivia,  266, 
Brazil,  17;  Chile,  2098,  2099,  2107  c.  c,  464  com.  c;  Colombia,  2124,  2125! 
2133  c.  c,  589  com.  c;  Costa  Rica,  25,  26;  Guatemala,  328;  Honduras,  311; 
Mexico,  216;  Nicaragua,  176;  Panama,  517,  522,  524;  Peru,  214;  San  Salvador, 
281;  Uruguay,  484  and  article  2  of  the  law  of  May  31,  1893;  Venezuela,  290. 

2  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Guatemala, 
Honduras,  Mexico,  Nicaragua,  Panama,  Peru,  San  Salvador,  Uruguay, 
Venezuela. 

A  commercial  association  is  not  considered  as  dissolved,  when  after  the 
period  of  its  duration  expired,  its  life  was  extended.  The  liability  of  the 
members  continues  in  that  case  for  all  the  debts  of  the  association.  Brazil, 
2a  Camara  da  Corte  de  Apel.  of  Nov.  30,  1905;  confirmed  by  the  Camaras 
Reunidas,  Apr.  28,  1909,  Revista  de  Direito,  v.  12,  pp.  545,  546. 

230 


COMMERCIAL   ASSOCIATIONS  231 

2d.  The  bankruptcy  of  the  association; ' 
3d.  The  total  loss  of  the  associate  capital  in  Spain, 
Bolivia  and  Peru;  in  Argentina  and  Uruguay,  the  loss 
of  three-quarters  of  the  associate  capital;  in  Chile, 
Colombia,  Guatemala,  Honduras  and  Panama,  the  loss 
of  half  of  the  capital.  In  Costa  Rica  also,  the  loss  of 
half  necessitates  the  dissolution  of  a  commercial  asso- 
ciation, if  it  cannot  pay  its  debts  with  the  remaining 
half.  In  Nicaragua,  the  loss  must  be  of  such  an  amount 
that  the  remaining  capital  is  not  sufficient  for  the 
associate  business.  In  San  Salvador  a  loss  of  two- 
thirds  and  in  Venezuela  a  loss  of  one-third  is  sufficient 
for  liquidation;  ^ 
4th.  The  unanimous  consent  of  the  associates;  ^ 
5th.  A  decision  of  the  general  meeting  of  stock- 
holders according  to  the  by-laws;  ^ 

6th.  The  impossibiUty  of  attaining  the  aims  of  the 
association;  ^ 

7th.  Merger  with  another  commercial  association;  ^ 
8th.  A  judicial  decree  dissolving  a  commercial  associa- 
tion; this  can  be  made  when  it  is  known  that  its  pur- 
pose or  activities  are  dishonest  or  contrary  to  public 
policy.^ 

'  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Costa  Rica,  Mexico,  Nicar- 
agua, Panama,  Peru,  San  Salvador,  Uruguay,  Venezuela. 

*  Art.  18. 

^  Argentina,  Brazil,  Chile,  Colombia,  Mexico,  Nicaragua,  Panama,  Uruguay, 
Venezuela. 

8  Brazil,  Mexico,  San  Salvador. 

When  a  resolution  to  dissolve  a  corporation  is  passed  in  legal  form  by  the 
stockholders,  and  such  resolution  is  proved  by  the  minutes  of  the  corporation, 
no  action  can  be  brought  by  any  of  the  stockholders  against  the  former  man- 
agers, demanding  the  dissolution  already  agreed  upon  or  demanding  the  ac- 
counts and  reports  of  their  administration.  Spain,  Trib.  Sup.,  June  28,  1907; 
Gaceta  of  Oct.  16,  1908,  p.  521. 

'  Brazil,  Costa  Rica,  Panama,  San  Salvador,  Uruguay. 

*  Costa  Rica,  Panama,  San  Salvador,  Venezuela. 

When  a  commercial  association  has  not  been  liquidated  but  has  merged  with 
another,  tHe  rules  of  dissolution  and  liquidation  are  not  applicable.  Spain, 
Trib.  Sup.,  June  12,  1867;  Gacela  of  June  20,  1867. 

*  Panama,  524. 


232  LATIN-AMERICAN    COMMERCIAL    LAW 

Special  grounds  for  dissolution  of  partnerships. 

The  special  grounds  for  dissolution  of  partnerships 
are :  ^° 

1.  The  death  of  one  of  the  general  partners,  unless 
the  partnership  agreement  provides  expressly  that  the 
partnership  shall  continue  with  the  heirs  of  the  de- 
ceased partner,  or  with  the  remaining  partners;  ^^ 

2.  Insanity  or  any  other  cause  which  produces  the 
incapacity  of  a  managing  partner  to  manage  his  prop- 
erty; ^2 

3.  Bankruptcy  of  any  of  the  partners;  ^^ 

4.  The  decision  of  one  of  the  partners  in  firms  which 
have  no  fixed  period  or  specific  object. ^^ 

In  Costa  Rica  and  Panama  a  partner  may  ask  for  the 
dissolution  at  the  end  of  a  fiscal  year,  giving  notice 
thereof  six  months  in  advance. 

'"  The  following  articles  of  the  codes  deal  with  the  matter  of  grounds  for 
dissolution  of  partnerships: 

Spain,  222;  Argentina,  419,  422;  Bolivia,  266;  Brazil,  335;  Chile,  2103,  2106, 
2107  c.  c;  Colombia,  2129,  2134  c.  c;  Costa  Rica,  25;  Ecuador,  2106;  Mexico, 
133;  Nicaragua,  176;  Panama,  506,  517,  518;  San  Salvador,  281;  Uruguay,  484; 
Venezuela,  290. 

11  Spain,  Argentina  (only  when  the  name  of  the  deceased  partner  is  included 
in  the  firm  name) ;  Bolivia,  Brazil,  Chile,  Colombia,  Mexico,  Nicaragua,  Pan- 
ama, Peru,  San  Salvador,  Uruguay,  Venezuela. 

The  heir  of  a  deceased  partner  has  a  right  to  ask  for  the  partial  administra- 
tion from  the  managers  and  the  surviving  partners.  Buenos  Aires,  Cam.  2a 
de  Apel.  Civ.,  Oct.  15,  1912,  Rello  de  Baggio  v.  Giolitto,  Jurisp.  de  los  Tribs. 
Noes.,  Oct.,  1912,  p.  261. 

In  the  proceedings  of  liquidation  of  a  commercial  association  and  the  divi- 
sion of  its  capital,  the  heir  of  one  of  its  members  cannot  object  to  what  has 
been  done  with  the  consent  of  the  latter.  Spain,  Sup.  Trib.,  June  9,  1844; 
Gaceta  of  June  14,  1864. 

The  death  of  one  of  the  partners  does  not  produce  de  jure  the  dissolution  of 
the  partnership;  nor  does  it  prevent  the  subsisting  partners  from  continuing 
by  mutual  agreement  the  business  of  the  partnership.  Spain,  Trib.  Sup., 
Sept.  21,  1907;  Gaceta  of  Oct.  28,  1908,  p.  631. 

12  Spain,  Bolivia,  Brazil,  335,  336;  Chile,  2106  c.  c;  Colombia,  2132  c.  c; 
Mexico,  Nicaragua,  Panama,  Peru,  Uruguay,  Venezuela. 

1'  Spain,  Bolivia,  Brazil,  Chile,  Ecuador,  Costa  Rica,  Mexico,  Nicaragua, 
Panama,  Peru,  Uruguay,  Venezuela. 

"  Argentina  (only  when  the  name  of  the  partner  who  asks  for  the  dissolu- 
tion is  included  in  the  firm  name) ;  Bolivia,  Brazil,  Chile,  Colombia,  Nicaragua, 
Uruguay. 


COMMERCIAL   ASSOCIATIONS  233 

5.  The  loss  of  the  whole  capital;  ^^ 

6.  The  withdrawal  from  the  partnership  of  any 
partner  whose  name  was  included  in  the  firm  name;  ^^ 

7.  The  revocation  of  the  power  of  attorney  of  a 
managing  partner,  if  one  of  the  other  partners  asks  for 
the  dissolution.^^ 

Special  ground  for  dissolution  of  corporations. 

Besides  the  general  causes  of  dissolution  of  commercial 
associations,  there  is  one  specially  applicable  to  corporations. 
This  relates  to  the  minimum  number  of  members  to  which 
the  corporation  may  have  been  reduced,  namely: 

(a)  in  Brazil  the  corporation  must  be  dissolved  when 
the  niunber  of  its  members  is  reduced  to  less  than 
seven,  unless  the  legal  number  is  again  obtained 
within  six  months; 

(6)  in  San  Salvador,  when  the  number  is  less  than 
five  during  more  than  six  months;  in  Santo  Do- 
mingo, when  it  is  less  than  seven  during  one  year, 
and  in  Panama,  whenever  it  becomes  less  than  ten. 

Rescission  of  partnership  agreement. 

The  law  does  not  grant  to  one  of  the  partners  an  action  for 
rescission  as  a  remedy  against  all  breaches  of  the  agreement 
of  partnership,  but  reserves  such  action  for  such  breaches  as 
may  seriously  impair  the  common  interest  or  create  diffi- 
culties in  the  management  of  the  enterprise.  Only  Spain,  ^^ 
Brazil  ^^  and  Peru  ~^  provide  that  any  breach  of  the  agree- 
ment may  give  rise  to  the  rescission  of  the  partnership,  a 
rule  which  is  merely  an  application  of  the  general  principles 
of  contract  but  which  has  many  limitations  in  other  coun- 
tries. 

In  Argentina,  2^  Bolivia,  ^^  Chile,  ^^  Colombia,  ^^  Costa 
Rica,^^  Mexico,  2^  Nicaragua,  ^'^  Panama,  ^^  Uruguay  ^^  and 


"  Argentina. 

1^  Argentina. 

"  Mexico. 

18  Art.  218. 

"  Art.  336. 

20  Art.  211. 

"  Art.  419. 

«  Art.  263. 

2»  Art.  2101  c.  c. 

"  Art.  2127  c.  c. 

«  Art.  28. 

^krt.  131. 

"  Art.  177. 

28  Art.  511. 

29  Art.  481. 

234  LATIN-AMERICAN    COMMERCIAL    LAW 

Venezuela,  ^°  the  grounds  for  the  rescission  of  a  partnership 
agreement  by  action  against  one  of  the  partners  are  limited 
to  the  following: 

1.  Use  of  the  firm  name  or  the  employment  of  the 
common  funds  for  his  own  benefit;  ^^ 

2.  Interference  in  the  management  by  a  partner  not 
entrusted  with  such  power  under  the  agreement;  ^^ 

3.  Fraud  in  the  administration  or  bookkeeping  of  the 
partnership;  ^^ 

4.  Failure  to  pay  his  stipulated  contribution,  after 
demand;  ^^ 

5.  Entering  for  his  own  account  into  transactions 
forbidden  by  the  law  of  partnership;  ^^ 

6.  Absence  of  a  partner  bound  to  render  personal 
services  to  the  partnership,  when,  after  demand,  he  fails 
to  return  or  acceptably  explain  the  temporary  cause 
thereof.  ^^ 

Mexico  and  Nicaragua  cover  in  this  ground  all  cases 
in  which  the  partner  does  not  render  the  services  stip- 
ulated. In  Mexico,  his  failure  to  do  so  is  not  a  ground 
for  rescission  if  he  can  show  good  preventing  cause 
valid  for  a  period  that  will  not  injure  the  common 
interest. 

7.  Total  destruction  of  the  specific  thing  that  the 
partner  bound  himself  to  contribute  to  the  common 
fund.37 

In  Venezuela  this  case  is  mentioned  with  reference  to 
limited  partners  only. 

™  Art.  287. 

"  Spain,  Argentina,  Bolivia,  Brazil,  Costa  Rica,  Mexico,  Nicaragua,  Pan- 
ama, Peru,  Uruguay,  Venezuela. 

^2  Spain,  Argentina,  Bolivia,  Brazil,  Costa  Rica,  Mexico,  Nicaragua,  Pan- 
ama, Peru,  Uruguay,  Venezuela. 

^'  Spain,  Argentina,  Bolivia,  Brazil,  Costa  Rica,  Mexico,  Nicaragua,  Pan- 
ama, Peru,  Uruguay,  Venezuela. 

^*  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Mexico,  Nicaragua,, 
Panama,  Peru,  Uruguay,  Venezuela. 

^^  Spain,  Argentina,  Bolivia,  Brazil,  Mexico,  Nicaragua,  Panama,  Peru,. 
Uruguay. 

''  Costa  Rica,  Peru,  Uruguay.  "  Argentina,  Panama. 


COMMERCIAL    ASSOCIATIONS  235 

Effects  of  a  partial  rescission. 

The  partial  rescission  of  a  contract  of  commercial  asso- 
ciation makes  the  agreement  of  no  effect  as  to  the  culpable 
member,  who  is  ousted  from  the  association  and  must  pay 
all  the  losses  of  the  partnership  if  any;  and  it  is  authorized 
to  retain  his  contribution  without  payment  to  him  of  any 
part  of  the  profits,  in  so  far  as  the  transactions  pending  at 
the  time  of  the  rescission  are  still  unliquidated.^^  In  Costa 
Rica  he  must  be  paid  his  contribution  in  partial  payments  as 
and  when  the  pending  affairs  are  concluded.  ^^ 

Voluntary  withdrawal  of  a  partner. 

In  partnerships  for  which  no  fixed  period  was  stipulated, 
should  one  of  the  partners  request  dissolution,  the  others 
cannot  refuse  it,  unless  the  request  is  made  in  bad  faith, 
that  is,  when  the  partner  intends  to  obtain  by  the  dissolution 
of  the  partnership  profits  that  he  would  not  otherwise  have 
obtained.  ^° 

The  partner  who  voluntarily  withdraws  from  or  asks 
for  the  dissolution  of  a  partnership  cannot  prevent  the 
completion  of  all  pending  transactions  in  the  form  most 
convenient  for  the  common  interest;  and  so  long  as  those 
transactions  are  not  completed,  the  division  of  the  partner- 
ship property  cannot  take  place. '^^ 

Obligation  of  registering  the  premature  dissolution  of  a 
commercial  association. 

The  dissolution  of  a  commercial  association  due  to  a 
cause  other  than  the  expiration  of  the  stipulated  period  does 
not  bind  third  parties  except  from  the  date  of  its  inscription 
in  the  commercial  registry.  ^^ 

'8  Spain,  219;  Argentina,  420;  Bolivia,  264;  Brazil,  339;  Mexico,  132;  Nicar- 
agua, 181;  Panama,  512;  Peru,  212;  Uruguay,  482. 

39  Art.  29. 

^0  Spain,  224;  Argentina,  425;  Bolivia,  269;  Chile,  2110  c.  c;  Colombia, 
2134  c.  c;  Nicaragua,  179;  Peni,  217;  Uruguay,  487. 

*i  Spain,  225;  Argentina,  425;  Bolivia,  270;  Brazil,  339;  Nicaragua,  180; 
Peru,  218;  Uruguay,  489. 

«  Spain,  226;  Argentina,  429;  Bolivia,  265;  Brazil,  338;  Mexico,  136;  Nicar- 
agua, 178;  Panama,  516;  Peru,  219;  Uruguay,  483,  492;  Venezuela,  305. 


236  LATIN-AMERICAN    COMMERCIAL    LAW 

In  Chile  ^^  and  Colombia  ^^  the  dissolution  of  a  commer- 
cial association  cannot  be  pleaded  against  a  third  party, 
except  in  the  following  cases: 

1.  When  the  life  of  the  association  has  ended  by  the 
expiration  of  the  period  fixed  in  the  articles  of  organiza- 
tion; 

2.  When  notice  of  its  dissolution  has  been  given  in  the 
official  paper  of  the  department  or  by  bills  posted  in 
three  of  the  most  frequented  places  of  the  locality; 

3.  When  it  is  proved  that  the  third  party  had  through 
other  channels  timely  knowledge  of  its  dissolution. 

Survival  of  commercial  associations. 

In  all  cases  of  dissolution  the  legal  entity  of  the  commer- 
cial association  is  deemed  to  survive  for  the  sole  purpose  of 
winding  up  pending  transactions  and  gradually  liquidating 
those  that  are  finished. '^^ 

Appointment  of  the  liquidators. 

As  a  rule  the  liquidation  is  entrusted  to  the  manager  of 
the  association,  as  his  experience  and  detailed  knowledge  of 
the  corporate  business  are  generally  guaranties  of  an  in- 
telligent closing  of  the  common  affairs.  This  presumption 
in  favor  of  the  managers  may,  however,  be  rebutted,  and  for 
that  reason  the  law  provides  the  shareholders  with  power  to 
request  the  call  of  a  general  meeting  for  the  app>ointment  of 
liquidators.'^^ 

«  Art.  2114  c.  c. 

"  Art.  2140  c.  c. 

*^  Argentina,  422;  Brazil,  335;  Costa  Rica,  133;  Panama,  539;  Uruguay, 
498.  Notwithstanding  that  the  life  of  a  commercial  association  has  expired, 
such  association  can  appear  in  court  and  enforce  its  rights  when  it  has  con- 
tinued doing  business,  a  circumstance  that  must  be  considered  as  evidence 
that  the  association  is  in  liquidation  despite  the  absence  of  the  clause  "en 
liquidadon"  after  the  firm  name,  as  provided  for  by  law.  Buenos  Aires,  Cam. 
Fed.  de  Ap.  de  la  Cap.,  April  28,  1914,  Jurisp.  de  los  Tribs.  Noes.,  April,  1914, 
p.  25. 

«  Spain,  228;  Argentina,  434;  Bolivia,  274;  Brazil,  344;  Chile,  465;  Colom- 
bia, 590;  Ecuador,  336;  Guatemala,  329;  Honduras,  312;  Nicaragua,  182,  183; 
Peru,  221;  Uruguay,  423,  and  article  7  of  the  law  of  May  31,  1893;  Venezuela, 
311. 


COMMERCIAL   ASSOCIATIONS  237 

In  Costa  Rica/^  Panama  ^^  and  San  Salvador/^  the  mana- 
gers of  partnerships  are  the  Hquidators,  unless  otherwise 
provided  in  the  articles  of  agreement;  whereas  in  corpora- 
tions, the  general  meeting  of  shareholders  makes  the  ap- 
pointment. 

In  Mexico,  the  liquidators  are  always  specially  appointed 
either  by  the  associates  or  by  the  judge,  if  properly  applied 

to.  50 

Functions  of  the  liquidators. 

When  the  liquidators  are  not  the  same  persons  who 
previously  served  the  association  in  their  capacity  as  man- 
agers, they  have  the  following  obligations: 

1.  To  receive  all  the  corporate  property,  papers  and 
books  from  the  managers,  making  a  detailed  inventory 
of  everything  received; 

2.  To  make  and  present  to  the  associates  a  periodical 
balance  sheet  showing  the  progress  and  status  of  the 
liquidation; 

3.  To  collect  money  due  to  the  association  by  its 
members  or  debtors,  representing  it  in  the  courts  wher- 
ever necessary; 

4.  To  pay  the  debts  of  the  association; 

5.  To  sell  the  property  of  the  association  as  required, 
in  order  to  meet  its  obligations  and  proceed  to  the  final 
distribution  of  the  assets; 

6.  To  lay  a  general  and  final  balance  sheet  before  the 
members,  showing  the  distribution  of  the  capital  among 
them." 

The  manager  of  an  association  in  liquidation  has  power  as  liquidator  to 
collect  its  credits  to  pay  the  obligations  contracted  and  to  conclude  all  pending 
transactions  even  though  he  cannot  enter  into  new  contracts.  Spain,  Trib. 
Sup.,  Oct.  12,  1888;  Gacela  of  Dec.  3,  1888. 

«  Art.  139.  ■>»  Art.  533.  "  Art.  285. 

«  Art.  217. 

"Spain,  230,  232;  Argentina,  436,  437;  Chile,  412;  Coloml)ia,  540;  Costa 
Rica,  135,  138;  Ecuador,  338;  Guatemala,  329;  Honduras,  312;  Mexico,  221, 
222;  Nicaragua,  182,  186,  187;  Panama,  538,  541;  Peru,  223;  San  Salvador, 
287,  288;  Uruguay,  499;  Venezuela,  313,  314. 

A  contract  entered  into  by  the  members  of  a  partnership  with  tlu;  liquidator 


238  LATIN-AMEEICAN    COMMERCIAL   LAW 

A  liquidator  who  was  formerly  a  manager  has  these 
same  obligations,  with  the  exception  of  the  first. 

Functions  of  the  general  meeting  of  stockholders  during 
the  liquidation. 

The  general  meeting  of  stockholders  continues  its  func- 
tions during  liquidation.  It  receives,  approves  or  disap- 
proves the  balance  sheets  presented  by  the  liquidators;  it 
must  appoint  new  liquidators  to  fill  vacancies  or  remove 
them  when  deemed  advisable;  it  approves  or  modifies  the 
basis  of  the  liquidation  and  decides  all  questions  not  within 
the  powers  of  the  liquidators.^^ 

The  liquidators  and  the  association. 

The  relations  between  the  liquidators  and  the  association 
are  governed  by  the  rules  of  agency.  The  basis  of  the 
functions  of  the  liquidators  are  the  articles  and  by-laws,  the 
agreements  made  by  the  members,  and  the  provisions  of  the 
law.^^ 

thereof,  by  virtue  of  which  the  liquidator  takes  over  all  the  assets  of  the  part- 
nership and  binds  himself  to  pay  all  its  liabilities  and  a  certain  amount  to  each 
partner,  is  valid.  Spain,  Trib.  Sup.,  April  27,  1910;  Gacetas  of  Sept.  16,  17, 
1910,  p.  241. 

62  Spain,  232;  Argentina,  436;  Bolivia,  278;  Brazil,  348;  Chile,  466;  Colom- 
bia, 591;  Costa  Rica,  133;  Ecuador,  338;  Guatemala,  330;  Honduras,  313; 
Mexico,  222;  Nicaragua,  186;  Panama,  539;  Peru,  225;  San  Salvador,  287; 
Uruguay,  498,  499. 

6'  A  decision  taken  by  the  majority  of  the  members  of  a  partnership  to 
change  it  into  a  corporation  is  valid,  and  the  dissenting  members  are  bound  by 
that  decision  when,  in  the  contract  of  partnership,  it  was  stipulated  that,  at 
the  end  of  the  period  of  its  duration,  the  majority  of  the  partners  could  decide 
whether  the  association  would  or  would  not  continue  doing  business  and  the 
form  in  which  one  or  the  other  of  those  two  alternatives  should  be  carried  into 
effect.    Spain,  Trib.  Sup.,  Feb.  11,  1903;  Gaceta  of  March  26,  1903,  p.  192. 


CHAPTER  XIV 

Commercial  Associations  (6) 
limited  partnership  and  joint  adventure 

Firm  name  of  limited  partnerships. 

A  common  form  of  commercial  association  is  that  in  which 
one  or  more  of  the  partners  are  unlimitedly  and  jointly 
liable  for  common  transactions,  while  the  other  partner  or 
partners  are  only  liable  to  the  amount  of  his  or  their  contri- 
bution. The  firm  name  of  an  association  of  this  kind  may 
take  either  of  two  forms:  one  when  there  is  only  one  un- 
limited partner,  and  one  or  several  partners  of  limited 
Uability,  in  which  case  the  firm  name  is  formed  by  the 
individual  name  of  the  unlimited  partner  with  the  additional 
words,  " Sociedad  en  Comandita"  (abbreviated  S.  en  C);  the 
other,  where  the  firm  name  is  formed  by  the  names  of  all  the 
unlimited  partners  or  some  of  them  and  the  words  "?/ 
Compania"  (abbreviated  y  Cia.),  always  adding  the  words 
"Sociedad  en  Comandita.'' 

These  types  may  be  illustrated  by  the  following  examples : 
First  case:  Juan  Lopez,  Sociedad  en  Comandita  or 
Juan  Lopez,  S.  en  C. 

Second  case:  (a)  Lopez  y  Hernandez,  S.  en  C. 
(6)  Lopez  y  Cia.,  S,  en  C. 

In  this  collective  name,  the  name  of  the  limited  partners 
cannot  be  included,  except  under  penalty  of  subjecting  the 
limited  partners  to  the  same  liability  with  respect  to  third 
persons  as  the  unlimited  partners  have  without  greater 
rights.^ 

'  Spain,  146,  147;  Argentina,  372,  375;  Bolivia,  245;  Chile,  476,  477;  Colom- 
bia, 600,  601;  Costa  Rica,  63;  Ecuador,  275;  Guatemala,  340,  341;  Haiti,  23, 
25;  Mexico,  155,  157;  Nicaragua,  144;  Panama,  332;  Peru,  154,  155;  San 
Salvador,  308;  Santo  Domingo,  23,  25;  Uruguay,  42S;  Venezuela,  221. 

The  fact  that  a  person  inherits  the  interest  of  another  in  a  limited  partner- 

239 


240  LATIN-AMERICAN    COMMERCIAL    LAW 

The  limited  partnership  is  called  "Sociedad  enComandiia" ; 
the  unlimited  partner  is  denominated  "Socio  comanditado" 
or  "gestor";  and  the  limited  partner,  "socio  comanditario." 

Liability  of  unlimited  partners. 

All  the  comanditados,  whether  managers  or  not,  are  sub- 
ject to  unlimited  and  joint  liability  and  have  all  the  obliga- 
tions and  rights  of  general  partners.^ 

Liability  of  the  special  partners. 

The  liability  of  special  or  limited  partners  for  the  obliga- 
tions and  losses  of  the  partnership  is  limited  to  the  amount  of 
their  actual  or  agreed  contributions  to  the  limited  partner- 
ship, except  when  they  include  or  allow  their  names  to  be 
included  in  the  firm  name  of  the  partnership.^ 

Prohibitions  to  limited  partners. 

Limited  partners  cannot  take  any  part  whatsoever  in  the 
management  of  the  partnership,  not  even  in  the  capacity  of 
special  agents  of  the  managing  partners. 

ship,  when  the  name  of  such  person  already  forms  a  part  of  the  firm  name  of 
that  partnership,  does  not  constitute  an  alteration  which  requires  a  new  con- 
tract of  partnership.  Spain,  Trib.  Sup.,  Oct.  13,  1891;  Gaceta  of  Oct.  29, 
1891. 

In  limited  partnerships,  the  amounts  contributed  by  the  limited  partners  to 
the  common  funds  of  the  organization  are  subject  to  the  common  liabilities. 
Spain,  May  12,  1866;  Gacela  of  June  27,  1866. 

2  Spain,  148;  Argentina,  374;  Bolivia,  245;  Brazil,  313;  Chile,  483;  Colombia, 
606;  Costa  Rica,  58;  Ecuador,  275;  Guatemala,  347;  Haiti,  23;  Honduras,  329; 
Mexico,  154;  Nicaragua,  144;  Panama,  331;  Peru,  156;  Santo  Domingo,  23; 
Uruguay,  425,  427;  Venezuela,  221. 

3  Spain,  148;  Argentina,  376,  377;  Bolivia,  246;  Brazil,  313;  Chile,  480, 
485;  Colombia,  604,  607;  Costa  Rica,  60;  Ecuador,  277,  279;  Guatemala,  344, 
349;  Haiti,  26,  27,  28;  Honduras,  326,  331;  Mexico,  154,  157;  Panama,  331, 
332;  Peru,  156;  San  Salvador,  308,  309;  Santo  Domingo,  27;  Uruguay,  429, 
430;  Venezuela,  223,  224. 

When  a  limited  partner  withdraws  his  contribution  before  the  proper  time, 
the  partnership  has  an  action  against  him  for  the  restitution  of  the  amounts  so 
taken  from  the  common  funds;  but  it  has  no  right  to  damages  on  account  of 
such  act,  when  the  bankruptcy  of  the  association  was  not  exclusively  due  to 
such  withdrawal.  Buenos  Aires,  Cam.  de  Ap.  de  lo  Com.  de  la  Cap.,  Dec.  16, 
1913,  Jurisp.  de  hs  Tribs.  Nacs.,  Dec,  1914,  p.  295. 


COMMERCIAL   ASSOCIATIONS  241 

If  the  comanditarios  violate  that  prohibition  they  are 
held  responsible  according  to  the  following  systems: 

1.  They  are  jointly  liable  with  the  comanditados  for 
all  the  debts  of  the  partnership;  ^ 

2.  They  are  jointly  liable  only  for  those  transactions 
in  which  they  participated;  ^ 

3.  They  are  jointly  liable  for  all  transactions  in 
which  they  participated,  and  if  they  customarily  en- 
gage in  the  management  of  the  partnership,  they  are 
jointly  liable  even  for  transactions  in  which  they  did 
not  participate.^ 

Acts  which  do  not  constitute  management. 

The  following  acts  are  not  regarded  as  acts  of  manage- 
ment: to  examine  the  commercial  books,  to  supervise  the 
common  business,  to  verify  data  given  by  the  comanditos, 
to  give  opinions  or  advice  at  the  meetings  of  the  part- 
ners; hence,  the  comanditarios  may  undertake  these  acts 
without  thereby  subjecting  themselves  to  joint  liability 
with  the  general  partners/  They  are  not  allowed  to  use  the 
firm  name  of  the  partnership. 

Cases  and  countries  in  which  the  comanditarios  may  use 
the  firm  name  of  the  partnership  without  being  unlimitedly 
liable.  In  Costa  Rica,^  Panama  ^  and  Venezuela  ^^  the 
comanditarios  may  be  attorneys  or  agents  of  the  limited 
partnership  without  incurring  unlimited  liability,  when, 
acting  in  that  capacity,  they  expressly  and  clearly  so 
state. 

"  Argentina,  377;  Chile,  485,  486;  Colombia,  607,  608;  Ecuador,  279;  Gua- 
temala, 349,  350;  Haiti,  28;  Honduras,  331,  332;  San  Salvador,  309;  Santo 
Domingo,  28;  Uruguay,  430;  Venezuela,  224. 

*  Costa  Rica,  60,  61;  Panama,  333. 

« Mexico,  157. 

^Argentina,  378;  Chile,  481;  Colombia,  609;  Costa  Rica,  62;  Guatemala, 
345;  Honduras,  327,  333;  Mexicjo,  156;  Panama,  334;  San  Salvador,  309; 
Uruguay,  431;  Venezuela,  225. 

A  limited  partner  can  at  the  same  time  be  a  partner  who  contributes  his 
services  {socio  imiualrial)  without  being  considered  for  that  reason  a  general 
partner.    Spain,  Trib.  Sup.,  May  16,  1881;  Gacela  of  July  23,  1881. 

8  Art.  61.  ^  Art.  333.  "  Art.  224. 


242  LATIN-AMERICAN    COMMERCIAL   LAW 

In  Chile/ ^  Colombia/^  Guatemala  ^^  and  Honduras/^ 
the  comanditarios  may  represent  the  partnership  outside 
its  domicil. 

Right  of  the  comanditarios  to  inspect  the  books. 

It  has  been  noted  that  the  inspection  of  books,  which  is 
very  important  to  the  comanditarios  as  a  method  of  super- 
vising the  course  of  their  business,  is  not  considered  as  an  act 
of  management  which  would  bind  them  in  an  unlimited 
form  for  the  acts  and  liabilities  of  the  partnership.  This 
right  of  inspection  is  limited  in  Spain,  Mexico,  Panama  and 
Peru.^^ 

In  Spain  ^^  and  Peru,^^  the  comanditarios  cannot  examine 
the  state  of  the  business  except  at  the  period  stipulated  in 
the  contract,  under  penalties  provided  in  that  instrument; 
should  the  contract  not  contain  any  stipulation  in  the  matter, 
the  balance  sheet  must  be  presented  to  the  comxinditarios  for 
a  period  of  at  least  fifteen  days  at  the  end  of  every  year,  with 
all  papers  necessary  to  verify  it  and  to  pass  upon  the  trans- 
actions of  the  year. 

Mexico  ^^  provides  that  the  comanditarios  cannot  inquire 
into  the  general  state  of  the  common  business,  except  at  the 
time  fixed  in  the  contract.  Nevertheless,  the  courts  can  at 
any  time,  at  the  request  of  one  of  the  limited  partners, 
order  the  exhibition  of  the  books  and  papers  of  the  as- 
sociation. 

When  the  right  of  inspection  lapses. 

The  comanditarios  may  transfer  or  assign  their  rights,  but 
if  they  do  so  before  the  association  has  terminated  its  busi- 
ness, the  assignees  have  no  right  to  inspect  the  books  and 

"  Art.  487.  12  Art.  609.  ^^  Art.  351. 

"  Art.  333. 

15  The  production  of  the  accounts  of  a  commercial  association  is  not  a  mere 
act  of  administration  in  which  only  the  manager  is  concerned;  it  is  an  act  of 
interest  to  the  association,  as  it  may  bind  its  capital  and  even  the  individual 
property  of  its  members.  Buenos  Aires,  Cam.  2a  de  Apel.  Civ.,  Oct.  15,  1912, 
Riello  de  Baggio  v.  Giolilto,  Jurisp.  de  los  Tribs.  Nacs.,  Oct.,  1912,  p.  261. 

"  Art.  150.  "  Art.  158.  i»  Art.  159. 


COMMERCIAL   ASSOCIATIONS  243 

the  management.     This  is  provided  by  the  law  of  Chile/^ 
Colombia, -°  Guatemala  -^  and  Honduras. ^^ 

In  Panama  -^  the  comanditarios  can  transfer  their  rights 
with  the  consent  of  the  other  partners  and  in  that  case  the 
transferee  has  a  right  of  inspection,  just  as  the  transferor  had. 

Limited  partnership  by  shares. 

In  some  cases,  the  contribution  of  the  comanditarios  is 
divided  into  shares.  The  effect  of  this  division  is  that  the 
personal  factor,  which  has  an  influence  in  the  regular 
"comandita  "  (comandita  simple)  disappears  entirely,  inas- 
much as  the  shares  are  transferable  whether  by  endorsement 
or  by  mere  delivery.  We  have  in  these  cases,  when  the 
general  partners  are  more  than  one,  two  principles  to  govern 
the  association;  on  the  one  hand,  the  rules  of  general  part- 
nership for  those  members  who  have  joint  and  unlimited 
liability,  whose  personal  qualities  have  been  taken  into 
consideration  in  organizing  the  business;  on  the  other  hand, 
the  rules  of  corporations  applicable  to  that  group  of  partners 
whose  liability  is  limited  to  the  amount  of  their  shares, 
and  whose  personal  qualities  are  immaterial  to  the  as- 
sociation. 

The  natural  consequence  of  this  arrangement  has  been  set 
forth  by  the  code  of  Argentina,  which  declares  that  the 
"comandita  "  can  issue  shares  of  stock  under  individual  name 
or  to  bearer,  transferable  in  the  form  provided  for  in  the 
by-laws;  and  that,  when  the  shareholders  are  more  than  ten 
and  represent  a  greater  capital  than  that  belonging  to  the 
general  partners  or  comandiiados,  the  law  of  corporations 
must  be  applied  and  the  board  of  supervisors  appointed  by 
the  comanditarios  have,  besides  the  obligations  derived  from 
their  character  as  such,  also  those  of  directors  of  a  corpora- 
tion. 

'» Art.  482.  20  Art.  605.  21  Art.  346. 

"  Art.  328.  23  Art.  343. 


244  latin-american  commercial  law 

joint  adventure 
(asociacion  momentanea  or  en  participacion) 

Another  form  of  association. 

The  codes  denominate  as  a  momentary  association 
(asociacion  momentanea)  or  joint  adventure  (cuentas  en 
'participacion)  those  associations  of  men  whose  organization 
is  effected  by  a  contract  by  which  one  or  more  persons  have 
an  interest  in  one  or  several  transactions  carried  through  by 
another  under  his  own  name  and  personal  credit,  the  former 
contributing  a  certain  part  of  the  capital  required  and 
sharing  in  the  result  of  the  enterprise  whether  profitable  or 
adverse,  in  the  proportion  stipulated,  2** 

Mexico  makes  a  peculiar  distinction  between  momentary 
association  and  joint  adventures  {asociaciones  en  partici- 
pacion).'^'^ The  first  are  those  whose  object  is  to  carry  on 
without  a  common  firm  name  one  or  several  commercial 
transactions  specifically  determined.  The  partners  are 
jointly  liable  in  regard  to  third  parties. ^^  Associations 
en  participacion  are  present  when  two  or  more  persons 
have  an  interest  in  transactions  carried  through  by  one 
or  several  persons,  provided  the  latter  constitute  a 
single  legal    entity.     No   direct   action   is   there   between 

2«  Spain,  239;  Argentina,  395;  Bolivia,  288;  Brazil,  325;  Chile,  507;  Colom- 
bia, 629;  Costa  Rica,  301  com.  code;  Ecuador,  346;  Guatemala,  371;  Hon- 
duras, 353;  Nicaragua,  194;  Panama,  489;  Peru,  232;  San  Salvador,  331; 
Uruguay,  444;  Venezuela,  321. 

An  association  must  be  considered  a  limited  partnership  in  spite  of  the 
fact  that  the  parties  call  it  joint  adventure,  when  it  is  stipulated  that  the 
responsibility  arising  out  of  the  acts  of  the  manager  affect  the  association  and 
not  the  individuals,  limiting  thereby  the  liability  to  the  amount  contributed. 
Spain,  Trib.  Sup.,  Dec.  5,  1910;  Gacela  of  April  7,  1911,  p.  121. 

A  momentary  association  or  joint  adventure  needs,  in  order  to  be  considered 
as  organized,  certain  requisites,  the  most  important  of  which  are:  that  one  of 
the  associates  transact  the  business  in  his  own  name  and  with  his  personal 
credit,  with  the  obligation  to  account  to  his  associates  and  to  divide  with  them 
the  gains  or  losses  in  accordance  with  their  agreement.  Colombia,  Trib.  Sup. 
del  Dist.  Judic.  del  Centro  de  Antioqufa,  April  3,  1900;  Crdnica  Judicial  de 
Antioquia,  v.  XV,  p.  2. 

2s  Art.  268.  ^  Art.  269. 


COMMERCIAL  ASSOCIATIONS  245 

the  associates  who  do  not  contract  and  the  third  contract- 
ing parties.-^ 

The  codes  follow  different  systems  in  regard  to  the 
character  of  the  persons  concerned  in  a  momentary  associa- 
tion,  namely: 

1st  System.    All  the  parties  need  to  be  merchants;  -* 
2d  System.     At  least  the  managing  partner  must  be  a 
merchant;  ^^ 

3d  System.      Non-merchants  are  not  excluded  from 
these  associations;  ^^ 

4th  System.    Non-merchants  are  expressly  empowered 
to  enter  into  the  contract  of  momentary  association.^^ 
The  characteristic  of  this  kind  of  commercial  association  is 
that  no  legal  entity  is  formed  and  no  common  firm  name  is 
adopted.  ^2 

The  owner  of  the  capital. 

If  there  is  no  legal  entity  in  momentary  associations,  it  is 
very  important  that  it  be  known  in  whom  title  to  the  funds 
contributed    to    the   common    enterprise   is   vested.      The 

"  Art.  270. 

The  object  of  a  momentary  association  is  to  undertake  one  or  several  com- 
mercial transactions,  without  using  a  common  firm  name. 

In  a  momentary  association  one  or  more  persons  have  an  interest  in  transac- 
tions that  one  or  more  persons  undertake  in  their  own  name,  provided  the 
latter,  when  more  than  one  person,  constitute  a  legal  entity. 

The  difference  between  these  two  kinds  of  association  is  that  in  the  second, 
third  parties  only  know  the  person  in  whose  name  the  transaction  is  carried 
through,  the  other  remaining  undisclosed;  whereas  in  the  first  the  transaction 
can  be  undertaken  in  the  name  of  any  of  the  associates.  The  members  of  a 
momentary  association  are  jointly  liable  in  regard  to  third  parties  with  whom 
they  have  dealt,  unless  they  can  prove  that  they  did  not  deal  directly  with 
the  creditor;  in  the  latter  case  they  are  only  bound  pro  rata  with  the  other 
members.  Mexico,  2a  Sala  del  Sup.  Trib.  del  Dist.  Fed.,  H.  Marquardt  y 
Compania  v.  Cartellot  Hermanos,  Nov.  22,  1909,  Diar.  de  Jur.,  v.  XIX,  p.  409. 

2«  Spain,  239;  Chile,  507;  Colombia,  629;  Guatemala,  371;  Honduras,  353; 
Nicaragua,  194;  Peru,  232. 

"  Brazil,  325;  Panama,  489;  San  Salvador,  332;  Uruguay,  447. 

'«  Argentina,  .395;  Mexico,  270. 

"  Costa  Rica,  140;  Ecuador,  346;  Venezuela,  321. 

"  Spain,  241;  Argentina,  395;  Bolivia,  288;  Brazil,  325;  Chile,  509;  Colombia, 
631;  Costa  Rica,  303;  Guatemala,  373;  Honduras,  355;  Nicaragua,  195; 
Panama,  490;  Peru,  234;  San  Salvador,  333. 


246  LATIN-AMERICAN    COMMERCIAL    LAW 

natural  consequence  of  the  fact  that  no  legal  entity  is 
formed  would  be  that  the  funds  are  owned  in  common;  but 
some  codes  do  not  support  this  conclusion. 

Ecuador  ^^  and  Venezuela  ^^  expressly  declare  that  the 
non-managing  partners  have  no  rights  of  ownership  in  the 
things  or  sums  contributed  to  the  association,  their  rights 
being  limited  to  an  accounting  for  their  contribution  and  to  a 
share  in  the  profits  and  losses.  Title  then  is  vested  in  the 
manager  or  managers. 

In  Argentina, ^^  Brazil,^''  Costa  Rica,"  and  Panama, ^^ 
the  provisions  of  the  codes  lead  practically  to  a  similar 
result,  because  the  common  funds  are  liable  for  all  debts  of 
the  managing  partners  including  those  of  a  personal  nature. 

Form  of  the  contract  of  joint  adventure. 

The  making  of  the  contract  of  momentary  association  is 
not  in  general  subject  to  any  legal  formality  and  its  existence 
may  be  proved  by  all  the  means  established  by  the  law.^^ 
Only  Bolivia  requires  a  written  contract.^" 

Relations  with  third  parties. 

Those  who  deal  with  the  partner  who  is  carrying  on  the 
enterprise  have  an  action  against  him  alone,  not  against 
the  silent  partners;  and  the  latter  likewise  have  no  action 
against  third  parties  who  have  dealt  with  the  manager,  unless 
he  has  transferred  his  rights  to  them.^^ 

=>»  Art.  348.  =4  Art.  323.  «  Art.  400. 

3«  Art.  327.  ^^  Art.  148.  =»  Art.  492. 

33  Spain,  240;  Argentina,  397;  Brazil,  325;  Chile,  508;  Colombia,  630; 
Ecuador,  351;  Guatemala,  372;  Honduras,  354;  Mexico,  271;  Nicaragua,  194; 
Peru,  233;  San  Salvador,  335;  Uruguay,  446;  Venezuela,  326. 

The  existence  of  a  contract  of  momentary  association  and  an  agreement 
upon  its  premature  liquidation  cannot  be  proved  by  the  testimony  of  witnesses; 
it  is  necessary  to  lay  a  foundation  of  evidence  in  writing.  Buenos  Aires,  Cam. 
2a  de  Apel.  Civ.,  Oct.  29,  1912,  Gergara  v.  Scala,  Jurisp.  de  los  Trib.  Nacs., 
Oct.,  1912,  p.  305. 

«  Art.  288. 

"Spain,  242;  Argentina,  398;  Bolivia,  288;  Brazil,  326;  Chile,  510;  Colom- 
bia, 632;  Costa  Rica,  147;  Ecuador,  347;  Guatemala,  374;  Honduras,  356; 
Nicaragua,  196;  Panama,  491;  Peru,  235;  San  Salvador,  336;  Uruguay,  448; 
Venezuela,  322. 


COMMERCIAL  ASSOCIATIONS  247 

There  are  two  exceptions  to  this  rule  in  Argentina  '*^  and 
Uruguay,"^  namely: 

(a)  when  all  the  partners  have  made  a  contract  with 
a  third  party  without  stating  the  share  belonging  to 
each,  all  are  jointly  bound; 

(b)  when  one  or  more  of  the  partners,  in  making  the 
contract,  disclosed  the  names  of  the  others,  with  their 
consent,  all  are  jointly  liable. 

The  first  of  these  two  exceptions  is  also  established  in 
Costa  Rica  ^^  and  in  Panama.  ^^ 

The  managing  partners,  supplied  with  the  common  funds, 
enjoy  perhaps  more  credit  than  their  own  capital  would 
warrant  and  they  can  take  advantage  of  this  circumstance  by 
enlarging  their  independent  business;  for  that  reason  the 
codes  of  Argentina, ^"^  Brazil,'*''  Costa  Rica,^^  Ecuador  ^^  and 
Venezuela  ^'^  provide  that  the  common  funds  are  liable  for  all 
the  debts,  even  personal,  of  the  managing  partners.  The 
first  three  countries  and  Uruguay,  however,  condition  such 
liability  to  third  parties  on  the  latter's  ignorance  of  the 
existence  of  the  momentary  association. 

Case  of  bankruptcy  of  the  managing  partner. 

As  a  consequence  of  the  above  rules,  in  the  five  countries 
mentioned,  the  creditors  of  the  managing  partners  can  apply 
to  the  payment  of  their  claims  the  balance  shown  by  the 
different  accounts  with  the  debtor,  in  whatever  character 
they  may  have  opened  the  accounts  in  their  books.  ^^ 

Relations  of  the  partners  among  themselves. 

The  special  circumstances  which  characterize  the  momen- 
tary association  affect  particularly  the  relations  of  the 
partners  with  third  parties,  who  have  no  means  of  knowing 
the  agreements  among  the  latter,  nor  of  proving  them  when 
it  may  become  necessary  to  safeguard  the  interests  of  such 

«  Art.  399.  «  Art.  449.  "  Art.  149. 

«  Art.  493.  ^  Art.  400.  «  Art.  327. 

«  Art.  148.  «  Art.  348.  »"  Art.  323. 

"  Argentina,  401;  Brazil,  328;  Costa  Rica,  148;  Ecuador,  348;  Uruguay,  451. 


248  LATIN-AMERICAN    COMMERCIAL   LAW 

third  parties.  But  in  matters  involving  the  relations  of  the 
partners  with  one  another,  the  general  principles  of  partner- 
ship are  applicable  both  as  to  mutual  obligations  and  rights 
as  well  as  to  dissolution  and  liquidation  of  the  common 
enterprise.  ^^ 

Liquidation  of  the  momentary  association. 

The  managing  partner  or  partners  are  bound  by  the  law 
and  rules  of  agency;  hence  their  functions  are  not  completed 
until  the  presentation  of  the  accounts  of  the  enterprise  or  of 
that  part  of  the  enterprise  entrusted  to  them,  and  the  pay- 
ment to  each  of  the  participants  of  the  balance  due  according 
to  the  agreement.  ^^ 

62  Brazil,  289;  Chile,  511;  Colombia,  633;  Guatemala,  375;  Nicaragua,  197. 

In  a  joint  adventure  the  silent  partner  who  agrees  to  receive  in  payment  of 
his  contribution  shares  of  stock  of  a  corporation  formed  by  the  partners  of  the 
enterprise  into  which  he  entered  cannot  afterwards  demand,  instead  of  the 
shares,  the  payment  in  cash  of  such  contribution.  Spain,  Trib.  Sup.,  April  1, 
1909;  Gaceta  of  Nov.  15,  1909,  p.  198. 

6»  Spain,  243;  Argentina,  402;  Bolivia,  290;  Chile,  507;  Colombia,  629; 
Costa  Rica,  150;  Guatemala,  371;  Honduras,  357;  Panama,  500;  Peru,  236; 
Uruguay,  452. 


CHAPTER  XV 

FOREIGN    CORPORATIONS    AND    PARTNERSHIPS 

Spain. — Condition  juridique  des  societes  6trangeres  en  Espagne,  by  Fran- 
cisco Lastres,  33  Clunet  (1906),  pp.  273-278. 

Argentina. — L6pez,  Vicente  F. :  Las  companias  extranjeras  de  seguros 
ante  la  admiiiistraci6n  nacional.    Buenos  Aires,  1898. 

Orgaz,  Raiil  A. :  Condici6n  juridica  internacional  de  las  sociedades  andnimas. 
C6rdoba,  1913. 

Zeballos,  E.  S.:  Partnerships  and  companies  formed  abroad  for  the  purpose 
of  trading  in  the  Argentine  Republic.  International  Law  notes.  New  York, 
Dec,  1919,  pp.  5-6. 

Same:  De  la  condition  dans  la  Rep.  Argentine  des  soci6t6s  organist  en  pays 
etranger,  33  Clunet,  1906,  pp.  618,  1025,  1032. 

Calandrelli,  A.:  Les  societes  commercial es  dans  le  droit  international  priv6; 
la  legislation  Argentine.  Bui.  arg.  de  droit  international  prive  (1904),  pp.  342- 
349. 

Ramirez,  C.  G. :  Derecho  internacional  jurisdiccional,  Sociedades  an6nimas 
extranjeras.    Buenos  Aires,  1895. 

Brazil. — Momsen,  Richard  P. :  Legal  requirements  for  operations  of  foreign 
and  domestic  corporations  in  Brazil.    Rio  de  Janeiro,  1919. 

Hamsotte,  R.  G.:  Societes  frangaises  et  etrangeres  au  Bresil.    Paris,  1909. 

Les  personnes  morales  etrangeres  dans  la  legislation  bresilienne,  by  Rodrigo 
Octavio,  Quest,  prat,  de  droit  int.  prive  (1914),  pp.  353-360. 

Chile. — Bill  regulating  foreign  insurance  companies  in  Chile.  U.  S.  For. 
Rel.,  1896,  pp.  43^5. 

Ecuador.— Loi  du  21  Octobre,  1909,  relative  aux  societes  Etrangeres  faisant 
des  operations  en  Equateur,  37  Clunet  (1910),  pp.  1386-1388. 

Guatemala. — Decree  of  April  19,  1893,  concerning  the  status  of  foreign 
companies,  85  Brit.  &  Foreign  State  Papers  (1892-1893),  pp.  835-836. 

Mexico. — Avalos,  Miguel  Victor:  Estudios  sobre  las  sociedades  mercantilee 
extranjeras.    Mexico.    Rev.  de  Leg.  y  Jur.,  1895,  p.  327. 

Fuller,  E.  Dean:  Handbook  of  the  law  of  Mexican  commercial  corpora- 
tions, including  foreign  corporations  in  Mexico.    Mexico  City,  1911. 

Venezuela. — Laws  governing  foreign  corp.  in  Venezuela.  In  Monthly 
Cons.  Rep.,  1904,  No.  286,  p.  66. 

Rivas  Cesar — De  las  sociedades  extrangeras  en  Venezuela.    Caracas,  1905. 

Same:  Les  soci6t6s  6trang6res  en  Venezuela,  32  Clunet  (1905),  pp.  520-529. 

General  principles. 

There  are  two  contrasted  doctrines  in  regard  to  the  ad- 
mission into  a  country  of  a  corporation  or  partnership  or- 

249 


250  LATIN-AMERICAN    COMMERCIAL    LAW 

ganized  abroad.  According  to  the  first  of  these  theories  a 
stock  company  or  a  partnership  is  an  entity  created  by  the 
law  of  the  place  where  it  was  established;  and  since  that 
law  has  no  extraterritorial  force  whatever,  the  stock  com- 
pany or  partnership  desiring  to  engage  in  business  in  other 
countries  must  secure  authorization  therefor  from  the  gov- 
ernment of  those  countries.  The  theory  is  based  upon  the 
principle  that  every  country  is  interested  in  promoting 
commercial  international  relations  and  in  the  estabhshment 
of  enterprises  which  may  serve  to  develop  the  resources 
of  the  country  for  the  benefit  of  its  own  people.  The  Latin- 
American  countries  have  not  thus  far  adopted  a  uniform 
system  in  this  respect. 

Notwithstanding  the  differences  of  legal  provisions  in 
those  countries,  the  following  rules  are  generally  observed: 
Foreign  corporations  seeking  to  engage  in  business  or  open 
branch  houses  in  such  countries  must  file  for  record  in  the 
mercantile  registry  or  other  special  office  copies  of  their 
charter,  by-laws,  and  essential  organization  papers,  includ- 
ing a  power  of  attorney  to  a  local  manager  or  agent,  duly 
authenticated  by  a  notary  public  and  certified  by  a  State 
authority,  which  vouches  for  the  authenticity  of  the  sig- 
nature of  the  notary  and  for  his  capacity  as  such,  and  coun- 
tersigned finally  by  the  consular  or  diplomatic  representa- 
tive of  the  local  country  abroad,  who  must  certify  that  the 
signature  of  the  State  authority  is  authentic  and  that  the 
company  is  legally  organized  and  in  operation  under  the  laws 
of  such  State.  Similar  registration  of  '^protocolized"  copies 
must  be  made  also  in  the  registry  of  the  capitals  of  any  State 
or  proinnce  where  business  is  contemplated. 

The  petition  for  registry  would  generally  include: 

(a)  a  statement  of  the  nature  of  the  business  proposed; 

(6)  the  date  on  which  such  business  is  to  begin; 

(c)  the  domicil  of  the  corporation; 

(d)  a  statement  of  any  issues  of  stock  or  bonds,  giv- 
ing series,  denomination,  numbers,  interest,  income, 
amortization,  and  premiums,  as  well  as  any  property 
mortgaged  to  secure  payment  of  such  issues. 


FOREIGN    CORPORATIONS   AND    PARTNERSHIPS  251 

The  special  rules  prevailing  in  each  country  vary  in  detail 
as  follows: 

Argentina. 

The  civil  code  of  Argentina,  enacted  on  September  29, 
1869,  went  into  effect  on  January  1,  1871,  when  the  doctrines 
of  Savigny  had  gained  general  acceptance  among  jurists; 
and  one  of  the  evidences  of  their  influence  upon  the  author  of 
the  Argentine  code  is  the  fact  that  associations  are  con- 
sidered independently  of  political  subdivisions  or  entities, 
being  divided,  therefore,  according  to  their  character  into 
''necessary"  and  merely  ''possible"  associations.  The 
first  consequence  of  this  doctrine  was  to  recognize  foreign 
states,  their  provinces  or  municipalities,  establishments, 
corporations  or  associations  existing  under  legal  conditions, 
as  legal  entities  or  juristic  persons  (personas  juridicas)  in 
Argentina,  enjoying  in  general  the  same  rights  as  individuals 
to  acquire  property,  to  retain  possession  thereof,  to  receive 
the  usufruct  of  property  belonging  to  others,  to  take  by 
will  or  by  acts  inter  vivos,  to  create  obligations,  and  to  in- 
stitute civil  and  criminal  actions,  in  the  measure  of  their 
capacity  in  law,  in  so  far  as  the  purpose  of  their  creation  may 
warrant.^ 

Another  consequence  of  the  same  doctrine  is  that  no  dis- 
tinction is  made  between  foreign  and  national  stock  com- 
panies or  partnerships.  Such  distinction  as  there  is  lies 
in  the  practical  point  of  their  domicil.  For  that  reason  the 
Argentine  code  of  commerce  does  not  refer  to  foreign  com- 
panies, but  to  companies  established  abroad  or  domiciled 
there. 

Article  286  of  that  code  provides  that  associations  (in- 
cluding stock  companies  and  partnerships)  organized  abroad 
to  carry  on  their  principal  business  in  the  RepubUc,  wdth  most 
of  their  capital  in  Argentina,  or  which  have  their  main 
office  and  regular  meetings  there,  shall  be  considered  as 
national  associations  for  all  purposes,  and  subject  to  the 
provisions  of  the  code. 

1  Arts.  33,  34,  35,  41,  42  c.  c. 


252  LATIN- AMERICAN    COMMERCIAL   LAW 

Corporations  or  partnerships  legally  organized  abroad, 
which  establish  a  branch  house  or  any  kind  of  representation 
in  Argentina  are  subject,  like  national  corporations  and  part- 
nerships, to  the  provisions  of  the  Argentine  law  -with,  refer- 
ence to  the  registration  and  publication  of  corporate  acts, 
powers  of  their  representatives,  and  bankruptcy.  The  rep- 
resentatives of  such  associations  have,  as  to  third  parties, 
the  same  responsibilities  as  the  representatives  of  stock 
companies.  All  persons  contracting  in  the  name  of  associa- 
tions not  constituted  or  operating  in  accordance  with  the 
provisions  of  the  Argentine  law,  become  personally,  un- 
limitedly  and  jointly  liable.-  Only  corporations,  not  part- 
nerships, need  appoint  a  responsible  agent. 

Corporations  and  partnerships  organized  abroad,  which 
have  no  branches  or  any  other  representatives  in  Argentina, 
can,  nevertheless,  undertake  therein  any  commercial  acts 
not  contrary'  to  Argentine  law.^ 

By  law  No.  8867  of  February  6,  1912,  foreign  corporations 
were  dispensed  (under  condition  of  reciprocity  to  Argentine 
corporations  in  their  home  countries),  from  the  obligation, 
imposed  on  them  by  article  287  of  the  Commercial  Code, 
of  obtaining  a  preliminary  authorization  from  the  Execu- 
tive in  order  to  do  business  in  Argentina.  They  need  merely 
show  that  they  are  regularly  constituted  in  their  home 
countries,  and  register  their  by-laws. 

According  to  Act  I  approved  on  September  19, 1917,  stock 
companies  {sociedades  anonimas)  national  or  foreign,  must 
send  quarterly  balance  sheets,  for  publication,  to  the  Bureau 
of  General  Inspection  in  the  Department  of  Justice,  and 
all  banks  and  companies  embraced  in  article  368  of  the  code 
of  commerce  ■^  must  do  so  monthly  according  to  a  form  pro- 
vided by  that  Bureau.  The  balance  sheet  of  branches  need 
refer  only  to  the  transactions  carried  on  in  Argentina. 

Failure  to  comply  with  this  obhgation  is  punishable  b}^  a 
fine  of  from  $200  to  $1,000  Argentine  currency  ($84  to  $420 
U.  S.),^  but  companies  which  do  not  keep  or  manage  other 

2  Arts.  287,  288.  «  Art.  285. 

*  Associations  which  issue  bonds.  '"  Decree  of  September  19,  1917. 


FOREIGN   CORPORATIONS   AND    PARTNERSHIPS  253 

funds  than  those  accruing  from  the  sale  of  their  own  shares, 
must  send  to  the  above  Bureau,  annually,  the  documents 
and  minutes  required  by  the  law.  According  to  article  368 
of  the  code  of  commerce  companies  which  issue  bonds 
must  send  in  their  balance  sheets  monthly  for  publication.^ 

Legislation  affecting  business  taxes  in  Argentina  changes 
from  time  to  time  as  a  result  of  recommendations  to  Con- 
gress on  the  part  of  the  national  Executive,  when  submitting 
for  approval  the  annual  budget  estimates. 

The  general  business  tax  which  takes  the  form  of  licenses 
(patentes)  was  regulated  for  the  year  1918  by  law  No.  10,366 
applying  to  the  city  of  Buenos  Aires  and  ten  National 
Territories.  The  fourteen  Argentine  provinces  have  differ- 
ent laws  on  license  fees. 

In  accordance  with  law  No.  10,366  business  industries  and 
professions  pay  an  annual  license  fee  of  from  10  to  100,000 
Argentine  pesos  ($4.21  to  $42,000  U.  S.)  depending  on  the 
nature  of  the  business  and  the  importance  of  the  particular 
concern  judged  by  official  appraisers.  The  owners  are  ob- 
hged  to  state  the  amount  of  their  capital  and  of  the  yearly 
turnover.  The  taxpayer  has  the  right  to  appeal,  if  not  satis- 
fied with  the  Hcense  tax  assessed  by  the  appraisers,  to  a  board 
composed  of  two  of  the  largest  taxpayers,  appointed  by  the 
national  Executive,  two  high  officials  of  the  bureau  of 
licenses  and  the  chief  of  the  bureau. 

At  the  time  of  entering  the  papers  in  the  commercial 
registry  all  partnerships  and  companies  are  obliged  to  pay 
a  fee  of  one  per  thousand  on  their  capital. 

According  to  a  practice  generally  observed  stock  compan- 
ies hold  their  meetings  at  the  place  of  their  legal  domicil, 
and  it  is  believed  that  the  Executive  Power  would  not  ap- 
prove the  by-laws  of  an  Argentine  corporation  providing 
that  such  meetings  could  be  held  abroad. 

Bolivia. 

According  to  a  law  of  November  13,  1886,  foreign  stock 
companies,  in  order  to  enjoy  the  privileges  of  a  legal  entity 

"  Law  of  August  21,  1918. 


254  LATIN-AMERICAN    COMMERCIAL    LAW 

or  legal  representation  in  the  Republic  must  obtain  an  au- 
thorization from  the  Executive  Power  first  proving  their  legal 
existence  in  the  country  of  origin.  This  is  done  by  means 
of  a  petition  to  the  Minister  of  Gobierno,  who  refers  it  to  the 
Fiscal.  The  authorization,  when  granted,  is  published  in 
the  Registro  Oficial,  according  to  the  law  of  November  15, 
1912.  The  corporations  must  estabUsh  a  second  domicil 
in  Bolivia,  appointing  as  their  representative  either  a  local 
director,  or  one  or  two  managers  responsible  to  the  govern- 
ment and  to  third  parties  for  the  acts  and  obligations  of  the 
company.  The  authority  of  such  managers  or  directors  must 
be  evidenced  by  notarial  powers,  granted  by  the  chairman 
or  head  of  the  board  of  directors,  and  duly  legaUzed  by  the 
Bolivian  minister  or  consul  abroad.  In  the  absence  of  these 
formalities,  branches  or  agencies  of  foreign  stock  companies 
cannot  enjoy  the  privileges  of  legal  entities;  their  acts  and 
contracts  are  considered  as  the  personal  acts  and  obhgations 
of  their  agents  and  bind  them  as  well  as  the  company. 

Foreign  companies  besides  complying  with  the  provisions 
referring  to  commercial  registry  are  obliged  to  file  in  one  of 
the  notarial  offices  of  the  capital  (la  Paz)  and  of  the  respec- 
tive department,  a  legalized  copy  of  their  articles  of  incor- 
poration and  by-laws,  and  a  list  of  their  stockholders,  with 
a  memorandum  of  the  amount  paid  on  account  of  their 
shares.  The  company  cannot  conmience  business  before 
proving  compliance  with  this  formality  by  means  of  a  certifi- 
cate from  the  recording  notary. 

The  incorporators  of  a  stock  company  cannot  transfer 
more  than  one-half  of  their  original  stock  during  the  first  two 
years  of  the  organization  of  the  company. 

Managers  or  directors  of  banks  of  issue  and  employees  of 
the  judicial,  political  and  administrative  departments  of  the 
government  cannot  be  members  of  any  board  of  directors. 

Mining  stock  companies  are  obhged  to  publish  yearly  their 
general  balance  sheet. 

Every  stock  company  with  offices  in  Bolivia  must  pay  to 
the  State  2%  per  annum  of  its  total  profits.  Mortgage 
banks,  issuing  banks,  discount  banks,  etc.,  must  pay  8% 


FOREIGN    CORPORATIONS   AND    PARTNERSHIPS  255 

of  such  profits.    Foreign  banks  require  a  minimum  capital  of 
£50,000,  and  5%  of  their  deposits  must  be  kept  as  a  reserve. 

Brazil. 

Under  the  head  of  foreign  juristic  persons  of  a  private 
character,  only  stock  companies  and  limited  partnerships 
by  shares  require  for  their  operation  in  Brazil  an  express  act 
of  governmental  authorization.  For  all  others,  whether 
commercial  partnerships  with  a  firm  name,  or  foundations, 
or  civil  associations,  custom  has  recognized  the  legitimacy 
of  the  exercise  of  their  legal  powers.^ 

According  to  article  301  of  the  commercial  code,  asso- 
ciations having  a  commercial  purpose  must  register  their 
charter  or  articles  of  association  before  commencing  business 
and  have  a  representative  in  Brazil  provided  with  full  and 
unlimited  powers. 

In  the  case  of  stock  companies,  however,  of  a  commercial 
character,  their  establishment  and  operation  depend  upon 
an  express  authorization.  Article  47  of  the  regulations  for 
stock  companies,  approved  by  decree  No.  434  of  July  4, 
1891,  provides: 

"All  foreign  stock  companies,  their  branches,  or  agencies 
require  authorization  by  the  government  in  order  to  carry 
on  business  in  the  Republic  and  must  observe  the  following 
regulations : 

"Section  1.  Their  articles  of  association  must  declare  a 
term,  never  exceeding  two  years  from  the  date  of  their 
authorization,  within  which  at  least  two-thirds  of  the  com- 
pany's capital  must  be  paid  up  and  transferred  to  this 
country. 

"Section  2.  Such  companies  are  subject  to  the  same 
conditions  that  control  stock  companies  generally  as  regards 
their  scope,  and  the  rights  and  obligations  between  the 
company  and  its  creditors,  shareholders,  and  other  inter- 
rested  parties  with  a  domicil  in  Brazil,  even  if  they  are 
temporarily  absent. 

"Section   3.      After    obtaining    said    authorization    such 

^  See  Bevilaqua,  Direito  International  Privado.    Bahia,  190G,  sec.  24. 


256  LATIN-AMERICAN    COMMERCIAL    LAW 

companies  must,  under  penalty  of  cancellation,  file  with  the 
Board  of  Trade  (Junta  Commercial),  and  where  no  such 
exists,  with  the  Registrar  of  Merchants  of  the  respective 
district  (comarca),  the  charter  and  by-law  of  the  company, 
a  list  of  the  shareholders,  with  a  note  of  the  number  of  shares 
held  and  amount  paid  up  by  each,  and  a  certificate  of 
deposit  of  one-tenth  of  the  capital.  They  must,  moreover, 
publish  in  the  Diario  Oficial  and  in  the  newspapers  of  the 
district,  the  notices  required  by  this  decree."  ^ 

These  provisions  are  liberally  and  not  strictly  construed. 
Thus,  the  declaration  mentioned  in  Section  1  of  a  period 
within  which  two-thirds  of  the  capital  shall  be  transferred 
to  the  country  is  not  always  required,  except  for  insurance 
companies,  and  it  is  well  understood  that  in  many  cases, 
e.  g.,  for  large  banks  or  factories  which  establish  branches 
in  the  country,  the  requirement  would  be  impracticable. 

The  same  holds  true  concerning  the  deposit  of  ten  per 
cent  of  the  corporate  capital.  This  requirement  answers  the 
necessity  of  proving  that  the  capital  of  the  company  or- 
ganized is,  at  least,  paid  up  to  the  extent  of  ten  per  cent. 
When,  therefore,  a  company  regularly  organized  abroad  is 
under  consideration,  and  the  company  merely  desires 
permission  to  operate  in  Brazil,  this  requirement  may  be 
dispensed  with  if  the  company  proves  immediately  that  it 
operates  regularly  in  the  country  of  its  establishment.  In 
according  to  companies,  by  presidential  decree,  permission 
to  operate  in  Brazil,  the  Government  states  the  conditions  on 
which  such  operation  is  authorized.  The  questions  exam- 
ined by  the  Executive  to  whom  the  petition  is  addressed,  or 
rather,  by  the  Department  of  Justice,  to  which  it  is  referred, 
are  the  following:  whether  the  purpose  of  the  company  is 
legal;  whether  the  incorporation  applied  for  is  contrary  to 
public  policy  or  interest. 

A  representative  of  the  company  with  full  power  to  accept 
the  Government's  suggested  changes  in  the  by-laws  must 
file  the  petition  and  have  it  witnessed  by  a  notary.     The 

8  Law  No.  3150  of  November  4,  1882,  art.  1,  sec.  3;  Decree  No.  8521  of 
1882,  art.  30,  sec.  1;  Decree  No.  164  of  January  17,  1890,  art.  1,  sec.  2. 


FOREIGN    CORPORATIONS    AND    PARTNERSHIPS  257 

conditions  imposed  by  the  Government  are  about  as  follows, 

although  they  may  vary  from  case  to  case : 

(a)  The  company  is  obliged  to  have  in  Brazil  a 
representative  provided  with  unlimited  power  to  take 
up  and  settle  definitely  questions  which  may  arise  with 
the  Government  or  with  officials  and  who  may  be  served 
with  judicial  process  in  the  name  of  the  company. 

(6)  All  acts  of  the  company  in  Brazil  shall  be  subject 
solely  to  the  laws  and  regulations  of  the  country  and  the 
jurisdiction  of  its  judicial  or  administrative  tribunals. 

(c)  Every  change  in  the  articles  of  association  is 
subject  to  the  authorization  of  the  Government.  If  the 
company  violates  this  clause,  the  authorization  to 
operate  in  Brazil  will  be  withdrawn. 

(d)  It  is  understood  that  the  authorization  granted 
does  not  excuse  the  company  from  subjection  to  the 
provisions  of  the  Brazilian  law  governing  stock  com- 
panies. 

(e)  Every  violation  of  any  clause  for  which  a  special 
penalty  is  not  pro\'ided  shall  be  punished  by  a  fine  of 
one  conto  (about  $250  U.  S.)  to  five  contos  ($1,250  U.  S.) 
and  in  case  of  repetition,  by  the  withdrawal  of  the 
authorization. 

(/)  After  the  granting  of  a  decree  of  authorization 
and  its  publication  in  the  Diario  Oficial,  a  stamp  pro- 
portioned to  the  corporate  capital  must  be  paid  at  the 
rate  of  one  milreis  to  each  thousand  or  fraction  thereof 
of  the  capital  and  the  necessary  documents  must  be  filed 
with  the  Board  of  Trade.     Only  after  this,  can  the 
company  begin  business. 
Foreign  insurance  companies  are  governed  by  a  special 
regulation  approved  by  decree  No.  5072  of  December  12, 
1903,  and  are  subject  to  the  close  supervision  of  the  Govern- 
ment.    Their   operation   in   Brazil   depends  upon   express 
authorization,  but  the  deposit  in  the  Board  of  Trade  of  the 
documents  required  for  stock  companies  in  general  is  re- 
placed by  a  permit  or  license  issued  by  the  Government  after 
an  examination  of  the  documents  necessary  to  establish  Iho 


258  LATIN-AMERICAN   COMMERCIAL   LAW 

complete  organization  of  the  company  and  the  regularity  of 
its  operations.  So  far  as  concerns  these  companies,  besides 
a  deposit  of  bonds  of  the  public  debt  of  Brazil,  there  is  a 
provision  of  law  requiring  the  employment  of  a  part  of  their 
property  in  Brazil.  For  life  insurance  companies,  this  part 
is  the  entire  statutory  reserve,  and  for  other  insurance  com- 
panies at  least  20  per  cent  of  this  reserve.  The  employment 
of  bonds  of  Brazil  is  regarded  as  equivalent  to  the  employ- 
ment of  funds  in  Brazil,  even  though  they  are  deposited 
abroad,  a  provision  which  renders  it  easy  to  satisfy  the 
Brazilian  legal  requirements. 

Chile. 

Article  468  of  the  Chilean  code  of  commerce  prescribes 
that  foreign  stock  companies  cannot  establish  agents  in 
Chile  without  the  authorization  of  the  president  of  the 
Republic.  Agents  who  act  in  behalf  of  those  companies 
without  the  foregoing  requisite  are  personally  liable  for  the 
fulfillment  of  contracts  they  may  enter  into,  without  preju- 
dice to  any  action  the  other  parties  may  have  against  the 
companies. 

Only  two  cases  are  known  in  which  the  authoriza- 
tion of  the  Government  was  requested,  and  in  both 
cases  the  companies  had  to  retire  because  of  various  cir- 
cumstances. 

t'oreign  corporations  have,  consequently,  done  business 
through  agents  who  are  willing  to  accept  personal  hability 
for  the  company  they  represent.  Most  of  them  are  mining 
companies. 

Insurance  companies  are  also  doing  business  in  Chile. 
They  have  devised  a  system  whereby  the  insured  signs  a 
policy  in  which  he  waives  all  actions  against  the  agent  of  the 
company. 

Fortunately  and  in  spite  of  the  rigor  of  the  law,  the 
courts  have  allowed  foreign  corporations  to  appear  as 
plaintiffs. 

Article  42  of  the  law  of  municipalities  of  1891  provides 
that  foreign  corporations  must  petition   the  President  of 


FOREIGN    CORPORATIONS    AND    PARTNERSHIPS  259 

Chile  for  permission  to  do  business  in  Chile.  The  petition 
is  referred  to  the  Consejo  de  Defensa  Fiscal  in  the  office  of  the 
Minister  of  Justice.  The  petition  must  show  that  the 
company  has  been  duly  organized  in  the  country  of  origin; 
and  the  petitioner  must  pay  a  stamp  tax  of  20  cents  Chilean 
per  100  pesos  of  capital  to  be  employed  in  Chile. 

The  law  of  December  22,  1916,  established  a  license  tax 
on  professions,  industries,  businesses  and  banks.  For  the 
purpose  of  le\ying  such  tax  the  centers  of  population  are 
divided  into  five  classes:  the  first  comprises  Santiago,  Val- 
paraiso, Vina  del  Mar,  Concepcion  and  Talcahuano;  the 
second  comprises  cities  having  more  than  twenty  thousand 
and  less  than  one  hundred  thousand  inhabitants;  the  third 
comprises  cities  with  more  than  ten  thousand  and  less  than 
twenty  thousand;  the  fourth,  other  cities  not  exceeding 
ten  thousand  inhabitants;  and  the  fifth,  villages,  hamlets 
and  other  minor  centers.  The  tax  is  fixed  by  a  board  of  tax- 
payers according  to  a  table  and  tariff  which  establishes  for 
professions  a  yearly  maximum  of  $1,000  Chilean  pesos 
(about  $200  U.  S.)  and  a  minimum  of  $50;  for  factories,  a 
yearly  maximum  of  $1,000  and  a  minimum  of  $30;  and  for 
commerce  and  banks,  a  yearly  maximum  of  $20,000  and  a 
minimum  of  $10.  Such  are  the  rates  fixed  for  cities  of  the 
first  class.  The  centers  of  the  second,  third,  fourth  and  fifth 
classes  pay  that  rate  diminished  by  twenty,  thirty,  forty, 
and  fifty  per  cent  respectively. 

Colombia. 

Partnerships  or  stock  companies  domiciled  abroad  which 
have  or  establish  an  enterprise  of  permanent  character  in 
Colombia  must,  within  a  period  of  six  months  after  com- 
mencing business,  protocolize  a  notarial  certificate  or  a  cer- 
tificate issued  by  the  corresponding  officer,  which  shows  the 
legal  existence  of  the  partnership  or  corporation,  its  by-laws 
and  the  person  or  persons  who  represent  the  association. 
This  protocolization  must  be  made  in  the  office  of  the  dis- 
trict notary  where  the  business  is  established  or  where  the 
main  business  is  transacted.    The  period  above  referred  to 


260  LATIN-AMERICAN    COMMERCIAL    LAW 

was  extended  to  one  year  for  associations  already  estab- 
lished in  the  country.^ 

Such  partnerships  or  stock  companies  must  have  in  Co- 
lombia an  agent  with  power  to  represent  them  in  court,  and 
such  power  must  be  protocolized  together  with  the  foregoing 
documents.  A  copy  of  the  act  of  protocolization  is  com- 
petent evidence  of  the  legal  capacity  of  the  association  and 
of  the  powers  of  its  representative  when  they  need  to  appear 
in  court  either  as  plaintiff  or  defendant.  Notaries  are  ob- 
liged to  issue  as  many  copies  as  may  be  requested  by  any 
person  with  a  view  to  verifying  his  capacity. 

When  associations  fail  to  comply  with  the  foregoing  req- 
uisites the  judge  appoints  an  attorney  as  their  representa- 
tive, in  any  suit  in  which  they  may  be  defendants,  after 
summoning  the  partner  or  stock  company  to  appear  in  the 
action  by  means  of  a  notice  or  decree  published  in  the  hall 
of  the  court  and  in  the  official  newspaper  or  periodical  of  the 
corresponding  Department. ^"^ 

Stock  companies  must,  furthermore,  register  an  abstract 
of  the  deed  of  organization  certified  by  the  notary  pubUc 
who  made  the  protocolization.    This  deed  must  contain: 

(a)  the  name,  surname  and  domicil  of  the  associates; 
(6)  the  firm  name  of  the  company  or  association; 

(c)  the  associates  in  charge  of  the  management; 

(d)  the  capital  contributed  by  each  associate  in 
cash,  credits,  or  property  of  any  kind,  with  the  value 
thereof,  or  the  method  in  which  the  valuation  is  to  be 
made; 

(e)  the  time  when  the  association  will  commence 
business. 

The  registration  above  referred  to  must  be  made  in  the 
respective  circuit  court  where  the  association  transacts  its 
more  important  business,  wherein  also  an  abstract  of  the 
powers  given  to  representatives  of  partnerships  or  stock 
companies  must  be  entered.  After  the  registration  of  the 
foregoing  abstracts  has  taken  place,  the  same  must  be  pub- 

9  Decree  No.  2  of  1906,  art.  1,  and  Decree  No.  40  of  1907,  art.  37. 

i»  Arts.  38  to  40  of  Decree  No.  40  of  1907,  and  25  and  27  of  law  105  of  1890. 


FOREIGN    CORPORATIONS   AND    PARTNERSHIPS  261 

lished  in  the  official  newspaper  or  p>eriodical  of  the  corre- 
sponding Department.  ^^ 

It  is  the  function  of  the  Executive  to  declare  when  a  for- 
eign association  has  fulfilled  all  the  legal  requisites  for  doing 
business  in  Colombia.^- 

Documents  which  must  be  protocolized  must  be  executed 
with  the  formalities  required  by  the  law  of  the  place  in  which 
they  are  drawn  up,  and  must,  moreover,  be  authenticated 
by  a  diplomatic  or  consular  officer  of  Colombia  residing  in 
such  place,  or,  if  there  is  none  such,  by  the  minister  or  consul 
of  a  friendly  nation.  ^^ 

Costa  Rica. 

Foreign  corporations  and  partnerships  with  agencies  or 
branches  established  in  Costa  Rica  are  obliged : 

(a)  to  appoint  an  agent  with  full  power  {poder  gener- 
alisimo)  to  deal  with  and  handle  all  the  business  of  the 
concern ; 

(6)  to  keep  books  in  the  country  for  all  transactions 
therein  carried  out; 

(c)  to  submit  themselves  to  the  jurisdiction  of  the 
courts  and  to  the  laws  of  Costa  Rica  for  the  decision 
of  all  judicial  questions  arising  out  of  transactions  of 
the  agency  or  branch,  and  in  regard  to  matters  of  pub- 
licity required  by  the  law  of  the  country; 

(d)  to  enter  in  the  commercial  registry : 

1.  All  instruments  showing  the  constitution  of  the 
association,  amendments  or  rescission  thereof; 

2.  General  and  full  powers  of  attorney  granted  by  the 
association,  or  the  substitution  or  revocation  thereof; 

3.  Instruments  or  certifications  showing  the  appoint- 
ment of  managers  of  stock  companies; 

4.  Matrimonial  stipulations  between  any  of  the  un- 
limited partners  and  his  wife,  when  a  coownership  of  all 
property  of  husband  and  wife  is  thereby  established; 

"  Arts.  4  of  Decree  No.  2  of  1906,  2  of  law  42  of  1898  and  469,  470  of  the 
Code  of  commerce. 

"  Art.  5,  Decree  No.  2  of  1906.  "  Art.  3  ib. 


262  LATIN-AMEEICAN    COMMERCIAL    LAW 

5.  Instruments  or  documents  in  which  an  unhmited 
partner  acknowledges  a  debt  in  favor  of  his  wife,  when 
he  is  a  merchant; 

6.  Judgments  of  divorce  or  separation  of  spouses 
which  may  affect  an  unhmited  merchant  partner,  as 
well  as  instruments  establishing  the  method  of  liquidat- 
ing the  matrimonial  partnership; 

7.  A  certificate  issued  by  the  respective  consul  of 
Costa  Rica,  or,  in  his  absence,  by  the  consul  of  a  friendly 
nation,  certifying  that  the  association  was  constituted 
and  authorized  in  accordance  with  the  laws  of  the  coun- 
try in  which  it  has  its  principal  domicil.^^ 

The  petition  for  registration  must  be  made  on  stamped 
paper,  thus  involving  a  tax  of  about  $10  to  $15.  Aside 
from  this,  taxation  of  foreign  corporations,  such  as  it  is, 
is  municipal.  Corporations  operating  under  a  conces- 
sion require  the  authorization  of  the  Executive  and  of 
Congress.  The  Ley  de  Regisiro  Publico  indicates  the 
cases  in  which  a  concession  is  necessary. 

Cuba. 

Foreign  partnerships  and  stock  companies  wishing  to  es- 
tablish branches  in  Cuba  must  enter  in  the  Commercial 
Registry,  in  addition  to  the  various  dociunents  required  by 
the  law  of  Cuban  associations,  a  certificate  issued  by  a  Cuban 
consul  stating  that  said  associations  have  been  organized 
and  authorized  according  to  the  law  of  their  country  of 
origin.  Cuban  consuls  have  a  special  form  for  this  purpose. 
These  documents  and  certificates  must  be  presented  and 
entered  in  the  Registry  of  every  one  of  the  districts  in  which 
the  association  may  establish  branches;  the  inscription  made 
at  the  time  the  first  branch  was  estabUshed  does  not  suffice.  ^^ 

"  Art.  151  of  Law  of  November  24,  1909,  and  2  and  3  of  the  law  of  June  21, 
1901. 

"  Arts.  21,  com.  c,  and  2  and  3  of  Decree  of  April  11,  1903,  and  decision  of 
the  Minister  of  Justice  of  April  14  of  1914. 

The  inscription  of  foreign  commercial  associations  is  obligatory  when  they 
desire  to  establish  branches  in  Cuba;  but  an  association  which  from  the  place 
of  its  residence  transacts  business  with  residents  in  Cuba  is  not  subject  to  the 


FOREIGN    CORPORATIONS   AND    PARTNERSHIPS  263 

By  decree  No.  1123  of  1909  a  General  Registry  (Registro 
General)  was  established,  divided  by  provinces,  in  which 
all  banks,  associations,  and  commercial  stock  companies, 
whether  domiciled  in  Cuba  or  abroad,  must,  provided  they 
do  business  in  Cuba,  enter  their  documents.  This  Registry 
is  a  branch  office  of  the  Bureau  of  Commerce  and  Industry 
of  the  Secretary  of  Agriculture,  Commerce  and  Labor.  A 
certified  copy  of  the  charter  or  articles  of  incorporation, 
amendments  thereof,  if  any,  by-laws,  regulations,  resolutions 
and  agreements,  as  well  as  all  important  data  and  information 
must  be  presented  and  sworn  to  by  the  authorized  represen- 
tative. The  Bureau  of  Commerce  and  Industry  supervises 
the  company  in  the  keeping  of  its  books  in  accordance  with 
the  code  of  commerce,  and  in  complying  with  the  resolutions 
of  the  general  meetings  of  stockholders  or  board  of  directors, 
in  verifying  the  cash  accounts  which,  in  accordance  with 
article  157  of  the  code,  must  be  published,  and  in  performing 
all  the  fiscal  duties  of  the  association.^^ 

In  order  that  a  foreign  corporation  may  establish  itself  or 
a  branch,  it  must  present  the  following  documents  to  the 
Department  of  Finance  so  that  it  may  be  declared  exempt 
from  the  payment  of  fiscal  fees,  the  documents  being  later 
presented  to  the  Mercantile  Registry  for  proper  inscription: 
(a)  a  certified  copy  of  the  charter  or  articles  of  in- 
corporation, duly    authenticated    by    the   proper    au- 
thority and  by  the  Cuban  consul; 

(6)  a  certified  copy  of  the  by-laws  issued  by  the 
secretary  of  the  company  with  the  apj^roval  of  its 
president,  both  signatures  authenticated  by  a  Cuban 
consul; 

(c)  the  provisions  of  the  by-laws  relating  to  powers  of 
attorney  granted  by  the  company,  certified  under  no- 
tarial seal,  and  the  resolution  of  the  board  of  directors 
conferring  such  powers,  authenticated  by  a  Cuban 
consul; 

afor&said  provision.    Cuba,  Trib.  Sup.,  .June  2S,  1915;  Gaceta  of  August  16, 
1915. 
'«  Art.  1,  2  *. 


264  LATIN-AMERICAN    COMMERCIAL   LAW 

(d)  a  certificate  by  a  Cuban  consul  that  the  company 
has  been  established  in  accordance  with  the  law  of  the 
respective  country; 

(e)  a  certified  copy  of  the  resolution  of  the  board  of 
directors  authorizing  the  establishment  of  a  branch 
in  Cuba  and  fixing  the  capital  with  which  it  is  to  be 
operated.  This  capital,  upon  the  profits  of  which 
Cuban  taxes  are  collected,  may  be  purely  nominal 
and  serves  to  avoid  payment  to  the  Mercantile 
Registrar  of  registration  fees  in  proportion  to  the 
total  capital  of  the  company. 

All  the  foregoing  papers  must  be  presented  in  triplicate.^" 

At  the  time  of  inscribing  an  association  a  fee  must  be  paid 
in  proportion  to  the  amount  of  the  capital  of  the  enterprise, 
as  follows:  Up  to  $500,  a  stamp  of  5  cents;  from  $500  to 
$1,000,  10  cents;  from  $1,000  to  $5,000,  50  cents;  from  $5,000 
to  $10,000,  $1.00;  more  than  $10,000,  $5.00. 

A  registration  fee  of  34%  ad  valorem  must,  moreover,  be 
paid  at  the  time  of  registration,  on  the  amount  fixed  by  the 
Tax  Bureau. 

Partnerships  or  corporations  of  any  kind  must  pay  taxes 
in  the  proportion  hereinafter  established: 

I.  Eight  per  centum  of  their  profits  must  be  paid  by: 

(a)  all  banks  of  issue  and  discount  must  be  paid  by; 

(6)  all  stock  companies  engaged  in  lending  money 
or  dealing  with  credit,  except  the  Cajas  de  Ahorros 
and  Monte  de  Piedad  sustained  by  the  State; 

(c)  all  partnerships  or  corporations,  whether  indus- 
trial or  commercial,  organized  in  Cuba  or  abroad  for 
the  cultivation  or  exploitation  of  tobacco  or  sugar; 

II.  Six  per  centum  of  their  profits  must  be  paid  by: 
(a)  all  mining  properties; 

(6)  all  other  banks  and  bankers  in  general,  compris- 
ing all  companies  or  individuals  who  devote  their 
attention  principally  to  the  making  of  loans  and 
mortgages,  or  dealing  in  discounts,  pledges  of  secu- 
rities, drafts,  loans,  deposits,  etc.; 

"  Arts.  63  to  69  of  Decree  No.  1208  of  August  28,  1917. 


FOREIGN  CORPORATIONS  AND  PARTNERSHIPS      265 

(c)  railroad  enterprises,  whether  owned  by  individ- 
uals or  by  partnerships  or  stock  companies; 
III.     Four  and  one-half  per  centum  of  their  profits 

must  be  paid  by: 

Insurance  companies,  including  mutual  insurance 
companies. 

When  a  partnership  or  corporation  or  an  individual  is 
engaged  in  various  of  the  businesses  above  referred  to,  the 
quota  must  be  paid  separately  for  each. 

Payment  of  taxes  by  insurance  enterprises  is  made  in 
proportion  to  the  premiums  paid  in  by  insured  persons  and 
of  the  commission  paid  to  agents.  Reinsurance  or  partial 
insurance  do  not  require  payment  of  taxes  if  they  have  been 
paid  on  the  original  policy,  except  when  the  reinsurance  is 
made  with  reference  to  a  policy  issued  in  a  foreign  country,  in 
which  case  the  reinsurance  is  considered  as  a  new  insurance 
issued  in  Cuba.^^ 

Domestic  corporations  pay  their  incorporation  tax  to  the 
State;  foreign  corporations  to  the  city.  If  the  corporation 
occupies  a  store,  it  must  pay  a  municipal  tax  depending  on 
the  nature  of  the  business.  Banks  and  railroads  pay  their 
income  tax  to  the  State;  and  the  law  of  municipal  taxation 
prescribes  those  associations  which  must  pay  the  income  tax 
to  the  city.  Order  463  of  1900  provides  the  taxes  to  be  paid 
the  State.  In  practice,  we  are  informed,  the  income  tax 
payable  by  foreign  corporations  is  generally  not  enforced, 
except  as  to  banks,  railroads,  insurance  companies  and 
public  utility  companies. 

There  is  no  special  banking  law,  banks  being  established 
like  any  other  corporation  according  to  the  code  of  commerce. 
The  Banco  Territorial  has  the  same  privileges  as  the  Credit 
Foncier  of  France,  being  empowered  to  mortgage  the  paper 
and  assets  of  the  bank  for  the  issue  of  mortgage  bonds. 

Ecuador,  Guatemala  and  Honduras. 

The  provisions  of  the  law  in  Ecuador,  Guatemala  and 
Honduras  relating  to  foreign  associations  are  confined  to 

18  Arts.  59,  67,  99  and  79  ib. 


266  LATIN-AMERICAN    COMMERCIAL    LAW 

stock  companies.  Before  commencing  business  in  those 
countries,  such  companies  must  request  authorization  from 
the  respective  authority;  in  Ecuador  from  the  judge  of  the 
commercial  court,  and  in  Guatemala  and  Honduras  from 
the  Executive.  Agents  acting  for  such  companies  without 
this  previous  authorization  are  personally  liable  on  the 
contracts  and  obligations  they  may  enter  into,  without 
prejudice  to  any  actions  that  may  be  instituted  against  the 
companies.  ^^ 

As  for  partnerships  of  any  kind,  the  silence  of  the  law  in 
the  three  countries  mentioned,  can  only  be  construed  as  ex- 
tending to  such  partnerships  the  provisions  applicable  to  all 
commercial  contracts  in  the  matter  of  commercial  registry. 

Mexico. 

Associations  legally  constituted  abroad  which  seek  to 
establish  themselves  in  the  Republic  of  Mexico  or  have  an 
agency  or  branch  there,  may  carry  on  business  subject  to  the 
provisions  of  the  Mexican  code  of  commerce  in  all  matters 
relating  to  the  creation  of  their  association  within  the  na- 
tional territory,  or  to  their  mercantile  transactions,  as  well 
as  to  the  jurisdiction  of  the  national  courts. 

Such  associations  must  enter  in  the  commercial  registry, 
besides  the  certified  copy  (testimonio)  of  the  protocolization 
of  their  by-laws,  articles  of  incorporation,  contracts  and 
other  papers  relating  to  their  organization,  a  general  state- 
ment {inventario)  or  last  balance  sheet,  if  they  have  any,  and 
a  certificate  showing  that  they  have  been  established  and 
authorized  in  accordance  with  the  law  of  their  country  of 
origin  issued  by  the  Mexican  minister  in  that  country,  or, 
in  his  absence,  by  the  Mexican  consul.  Documents  drawn  in 
foreign  countries  for  inscription  in  Mexico  must  first  be 
protocoUzed  in  Mexico. 

If  the  capital  of  the  association  is  divided  into  shares  it 
must  publish,  every  year,  a  balance  sheet  showing  its  assets 
and  liabilities,  and  also  state  the  names  of  the  persons 
charged  with  the  management  and  direction. 

1^  Ecuador,  art.  325;  Guatemala,  art.  332;  Honduras,  art.  315. 


FOREIGN    CORPORATIONS    AND    PARTNERSHIPS  267 

Failure  to  comply  with  the  foregoing  provisions  makes  the 
persons  who  contract  in  the  name  of  the  association  per- 
sonally and  jointly  responsible  for  all  obligations  contracted 
in  the  Republic  by  such  association.  This  requirement  can- 
not be  waived,  so  that  in  Mexico  the  plan  devised  by  foreign 
stock  companies  in  Chile  is  not  practicable. -° 

The  protocolization  of  charters  and  papers  of  a  foreign 
corporation  or  partnership  in  Mexico,  which  are  necessary  in 
order  to  qualify  it  to  establish  agencies  or  branches  in  that 
country,  requires  the  payment  of  a  stamp  tax  in  accordance 
with  the  provisions  of  the  law  of  June  1,  1906,  section  96,  as 
amended  by  decree  of  September  1,  1919,  which  levies  a  tax 
on  civil  or  commercial  partnerships  or  corporations  estab- 
lished in  the  Republic,  proportioned  to  the  capital  of  the 
association  as  established  in  the  articles  of  organization,  of 
one  peso  for  every  $1,000  or  fraction  of  said  capital.  When, 
due  to  the  nature  of  the  association,  the  title  of  the  property 
contributed  is  not  vested  in  the  association,  but  only  the 
use,  rentals  and  benefits  derived  therefrom,  the  tax  is  only 
$2.00  per  sheet  of  the  protocolo  in  which  the  articles  of 
organization  are  drawn. 

In  the  protocolization  of  papers  and  by-laws  of  foreign 
corporations  or  partnerships,  the  tax  is  paid  in  the  amount 
and  proportion  heretofore  established  for  domestic  associa- 
tions; but  if  the  capital  exceeds  one  million  pesos,  the  tax 
is  10  cents  for  each  1,000  pesos  or  fraction  thereof. 

Besides  the  payment  of  stamp  duties  in  proportion  to  the 
capital,  each  sheet  of  the  instrument  (procolo)  in  which  the 
note  of  protocolization  is  inscribed  and  each  sheet  of  the 
testimonio  or  first  certified  copy  delivered  by  the  notary  to 
the  interested  party  bears  a  one  peso  stamp.  ^^ 

The  fees  of  a  notary,  for  the  protocolization  or  drafting  of 
the  articles  of  an  association,  according  to  the  law  of  Septem- 
ber 19,  1901,  are  also  in  proportion  to  the  capital,  namely: 
(a)  when  it  is  not  above  $500,  the  fees  are  $5.00; 
(6)  when  it  is  more  than  $500  and  less  than  $2,000, 
$10.00; 

«•  Arts.  15,  24,  265  and  266.  "  Section  91  of  the  Tariff,  ib. 


268  LATIN-AMERICAN    COMMERCIAL   LAW 

(c)  when  it  is  more  than  $2,000  and  less  than  $5,000, 
$20.00; 

(d)  when  it  is  more  than  $5,000  and  less  than  $7,000, 
$30.00; 

(e)  when  it  is  more  than  $7,000  and  less  than  $10,000, 
$35.00; 

(/)  when  it  is  more  than  $10,000  and  less  than  $20,000, 
$40.00; 

{g)  if  more  than  $20,000  and  less  than  $50,000,  in 
addition  to  the  foregoing  fees,  the  notary  is  entitled  to 
$2  for  each  thousand  of  capital; 

(h)  if  more  than  $50,000,   the  notary  may  charge, 

furthermore,  $1  for  each  thousand  in  excess,  but  the 

total  charge  cannot  exceed  $200,  whatever  the  capital 

may  be.^^ 

When  it  is  not  possible  to  determine  the  amount  of  the 

transaction  the  fees  are  $8  for  every  sheet  of  the  document.  ^^ 

For  the  examination  of  documents  of  any  kind,  when 

they  do  not  exceed  ten  sheets,  the  notarial  fees  are  $3,  and 

ten  cents   in   addition   per   sheet.    If  the   examination  is 

made  outside  the  office  of  the  notary,  he  may  double  the 

amount.  2"* 

For  the  authentication  of  copies  or  testimonios,  and  for 
setting  their  rubrica  ^^  to  a  document,  the  fees  are  $1  for 
each  document  so  authenticated  or  rubricado.^^ 

Panama. 

Foreign  associations  and  partnerships  which  desire  to 
establish  themselves  or  a  branch  house  in  Panama  must 
enter  in  the  commercial  registry,  besides  a  testimonio  of  the 
protocolization  of  their  by-laws,  contracts  and  other  papers 
referring  to  their  organization,  the  last  balance  sheet  of 
their  accounts  and  transactions  and  a  certificate  showing 
that  they  are  established  in  accordance  with  the  laws  of 
their  coimtry  of  origin,  issued  by  the  consul  of  Panama  in 

22  Art.  104  ih.  23  Art.  105  ih.  24  Art.  113  ih. 

25  See  chapter  on  Legal  Procedure,  General  Rules. 
28  Art.  115  ih. 


FOKEIGN  CORPORATIONS  AND  PARTNERSHIPS      269 

said  country,  or,  in  his  absence,  by  the  consul  of  a  friendly 
nation." 

An  extract  of  the  certificate  of  incorporation  must  be 
pubHshed  three  times  in  a  local  paper  and  insurance  com- 
panies must  make  a  deposit  of  cash  or  bonds. 

The  record  statement  (escritura)  filed  by  a  foreign  or 
domestic  corporation  should  contain: 

(a)  the  name,  surname  and  domicil  of  the  corpora- 
tion; 

(b)  the  firm  name  or  denomination  of  the  association 
setting  forth  the  character  and  domicil  of  the  same; 

(c)  the  purpose  and  duration  of  the  association  and 
manner  of  computing  the  term; 

{d)  the  associate  capital  specifying  the  amount  sub- 
scribed, and  whether  it  has  been  partially  or  fully  paid 
by  each  member  and,  in  the  first  case,  when  the  balance 
should  be  paid  and  whether  the  shares  are  registered 
or  not; 

(e)  the  names  of  the  partners  charged  with  the 
management,  the  way  of  supervising  stock  companies, 
powers  of  the  general  meetings  of  stockholders  and 
manner  of  computing  votes; 

(/)  the  kind  of  property  in  which  each  member  has 
contributed  to  the  capital; 

(g)  the  amount  to  be  left  as  a  reserve  fund; 

(h)  the  method  of  making  inventories  and  balance 
sheets  as  well  as  the  distribution  of  dividends  and  the 
periods  in  which  they  must  be  fixed  and  paid; 

(i)  the  shares  which  the  founders  of  stock  companies 
and  limited  partnerships  by  shares  have  reserved  for 
themselves  or  any  other  preference  they  may  have; 

(j)  the  cases  in  which  the  association  is  to  be  liqui- 
dated; 

(k)  the  bases  for  the  liquidation  of  the  company  and 
manner  of  appointing  the  liquidators; 

(l)  the  form  in  which  the  association  is  to  publish  the 
papers  which  the  law  requires; 

^  Art.  GO. 


270  LATIN-AMERICAN    COMMERCIAL    LAW 

(m)  any  other  stipulations  which  may  be  appropri- 
ate and  lawful.-^ 
Insurance  companies,  whether  domestic  or  foreign,  can- 
not   do    business    in    Panama   without    the    corresponding 
authgrization  of  the  Executive,  who  cannot  grant  a  permit 
unless  the  following  requisites  are  fulfilled: 

(a)  that  the  company  has  been  legally  registered; 
(6)  that  the  company  has  and  maintains  an  agent  in 
the  Republic  with  power  registered  in  the  commercial 
registry    to    represent    the    company    in    and    out    of 
court; 

(c)  that  an  amount  no  less  than   100,000  balboas 

($100,000  U.  S.)  has  been  invested  in  real  estate  in  the 

Republic   or   deposited   in   quotable   securities   to   the 

satisfaction  of  the  Secretary  of  Finance  in  the  General 

Treasury  or  the  Bank  established  by  the  Executive. 

Any  person  who  insures  his  property  against  fire  outside  of 

the  Republic  must  notify  the  Superintendent  of  Insurance 

of  that  fact  within  eight  days  after  the  insured  has  received 

notice  that  the  insurance  has  been  effected,  imder  penalty 

of  from  100  to  1,000  balboas. 

The  authorization  to  do  business  in  Panama  should  be 
withdrawn  from  any  insurance  company  which  effects 
insurance  therein  through  an  unauthorized  agent.  If  a 
non-authorized  company  wTites  insurance  in  Panama,  the 
Executive  power  may  refuse  it  the  authorization  to  estab- 
lish agencies  in  the  Republic.-^ 

After  a  commercial  asociation  has  complied  with  the  afore- 
said requisites  it  can  exercise  all  its  civil  rights  according  to 
its  articles  of  organization;  for  commercial  acts  within  the 
object  and  scope  of  its  business  it  is  subject  to  the  provisions 
of  the  law  of  Panama  and  to  the  jurisdiction  of  the  national 
courts. 

Domestic  branches  or  agencies  of  foreign  associations  are 
considered  as  domiciled  in  the  Republic  and  subject  to  the 
courts  and  laws  thereof  in  all  matters  concerning  local 
transactions. 

2«  Art.  293.  29  Arts.  563,  564,  570,  571. 


1 


FOREIGN   CORPORATIONS   AND   PARTNERSHIPS  271 

Managers  of  foreign  as  of  domestic  associations  or  branches 
are  responsible  to  third  parties,  and  must,  consequently,  be 
furnished  with  an  adequate  power  of  attorney,  duly  filed  in 
the  registry  (Registrador  General). 

Foreign  stock  associations  must  publish  on  a  fixed  date, 
at  least  every  six  months,  a  balance  sheet  showing  the 
transactions  carried  on  in  Panama.^" 

Peru. 

Foreign  associations  and  partnerships  may  engage  in 
business  in  Peru,  without  other  formality  than  the  payment 
of  the  corresponding  license  (patente)  fee.  If  they  would 
avoid  difficulties,  it  is  advisable  to  register  in  the  commercial 
register;  for  example,  they  can  only  secure  the  privilege  of 
suspending  payments  without  immediate  action  {suspension 
de  pagos)  if  they  have  registered.  There  is  no  penalty  for 
failure  to  register. 

Their  capacity  to  contract  is  governed  by  the  law  of  their 
country  of  origin,  but  for  all  commercial  transactions  in 
Peru,  they  are  subject  to  the  Peruvian  law  and  courts, 
unless  otherwise  provided  in  international  treaties. ^^ 

If,  as  is  advisable,  foreign  corporations  and  partnerships 
seek  to  register  themselves  or  their  branches  in  Peru,  they 
must  enter  in  the  commercial  registry,  besides  their  by-laws 
and  documents  required  for  Peruvian  corporations  and 
partnerships,  a  certificate  issued  by  the  Peruvian  consul  in 
their  home  country  showing  that  they  are  constituted  in 
accordance  with  the  laws  of  that  country.  ^^ 

It  is  necessary  to  bear  in  mind  that  in  the  international 
congress  of  Montevideo  in  1888  there  were  framed  various 
international  treaties  which  are  now  in  operation  between 
Argentina,  Paraguay,  Peru  and  Uruguay.  The  treaty  re- 
lating to  commercial  law  was  approved  in  Peru  on  Novem- 
ber 4,  1889,  and  so  far  as  concerns  corporations  or  partner- 
ships of  any  of  the  other  three  republics,  parties  to  those 
treaties,  its  provisions  are  as  follows: 

•«  Arts.  283  to  286.  "  Art.  15.  «  Art.  21. 


272  LATIN-AMERICAN    COMMERCIAL   LAW 

The  law  of  the  country  where  an  act  takes  place  decides 
whether  that  act  is  civil  or  commercial.  ^^ 

The  law  of  the  place  where  a  person  has  his  principal 
business  decides  whether  that  person  is  or  is  not  a  merchant.  ^^ 

Merchants  and  auxiliaries  of  conmierce  are  subject  to  the 
commercial  law  of  the  place  where  they  carry  on  their 
profession.  ^^ 

The  contract  of  corporation  or  partnership  is  governed  by 
the  law  of  the  place  where  the  association  is  to  have  its 
commercial  domicil,  in  all  matters  relating  to  the  legal 
form  of  said  contract  or  the  relations  between  the  associates 
with  one  another,  or  between  them  and  third  parties.  ^"^ 

Associations  and  partnerships  possessing  the  character  of 
legal  entities  are  governed  by  the  law  of  their  domicil;  they 
are  ipso  jure  recognized  in  the  other  States,  and  are  capable 
of  exercising  civil  rights  therein  and  demanding  recognition 
as  entities  by  the  courts.  As  for  the  performance  of  acts 
within  the  scope  of  their  powers,  they  are  subject  to  the  law 
of  the  country  where  the  acts  are  performed.  ^^ 

Branches  or  agencies  established  in  one  State  by  an 
association  or  partnership  of  another  are  considered  as 
domiciled  in  the  place  where  they  do  business,  and  subject  to 
the  jurisdiction  of  the  local  authorities  in  reference  to  trans- 
actions entered  into  therein.  ^^ 

The  judges  of  the  country  where  an  association  or  part- 
nership has  its  legal  domicil  are  competent  in  all  controversies 
arising  between  the  associates,  or  instituted  by  third  parties 
against  the  association.  However,  if  an  association  domi- 
ciled in  one  State  transacts  business  in  another  in  which  a 
judicial  controversy  arises  the  association  can  be  sued  before 
the  courts  of  the  latter  State.  ^^ 

Registration  fees  for  associations  and  partnerships  in 
Peru  are  as  follows: 

(a)  if  the  capital  is  not  above  5,000  soles,  2.00  soles 
(the  sol  is  equivalent  to  about  40  cents  U.  S.  currency) ; 

^^  Art.  1  of  the  Treaty  on  commercial  law. 

"Art.  2i6.  35  Art.  3  i6.  "Art.  4t6. 

"  Art.  5  lb.  ^  Art.  6  ib.  »» Art.  7  ib. 


FOREIGN    CORPORATIONS   AND    PARTNERSHIPS  273 

(6)  if  above  5,000  soles,  besides  the  foregoing  fees, 

there  must  be  paid  for  each  thousand  soles  or  fraction 

thereof  greater  that  100  soles  and  up  to  500,000  soles, 

0.50   soles,  and  for  each  thousand  soles   above   that 

amount  0.25  soles. 

The  payment  is  made  on  the  capital  actually  paid  up  at 

the  time  the  association  is  formed,  or  which  must,  according 

to  the  articles  or  agreement,  be  paid  in  within  a  brief  period. 

Future  instalments  are  subject  to  the  same  taxes  when  they 

are  paid  in. 

Associations,  the  capital  of  which  is  not  fully  paid  up  can, 
however,  pay  the  fees  in  full  on  their  subscribed  capital,  in 
which  case  the  fees  are  reduced  one-half. 

Every  increase  of  the  associate  capital  must  pay  the 
foregoing   fees. 

The  issuing  of  obligations  (notes  or  bonds)  not  above 
5,000  soles,  caiTies  a  tax  of  2.00  soles.  For  more  than  5,000 
soles  up  to  500,000  each  thousand  or  fraction  thereof  greater 
than  100  is  taxed  0.50  soles.  Above  500,000  soles,  for  each 
thousand  or  fraction  thereof  greater  than  100  soles,  the  fees 
are  0.25  soles. •*° 

San  Salvador. 

Foreign  partnerships  and  stock  companies  which  have  no 
domicil,  branch  or  other  representation  in  San  Salvador,  can, 
nevertheless,  perform  commercial  acts  which  are  not  con- 
trary to  the  law  of  San  Salvador."*^ 

The  following  provision  of  the  San  Salvador  code  warrants 
attention  because  it  differs  somewhat  from  the  provisions 
of  law  in  other  countries.  It  reads:  ''Partnerships  and  stock 
companies  which  seek  to  constitute  themselves  in  a  foreign 
country,  but  desire  to  have  their  domicil  in  San  Salvador  and 
carry  on  their  principal  business  there,  must  be  considered  for 
all  legal  purposes  as  domestic  associations,  subject  to  all  the 
provisions  of  this  code."'*^ 

«  Tariff  of  October  I,  1902.  "  Art.  299. 

*^  Art.  300.  A  somewhat  similar  rule  has  been  adopted  by  the  Italian, 
Japanese  and  Portuguese  commercial  codes. 


274  LATIN-AMERICAN    COMMERCIAL   LAW 

Foreign  stock  companies  whenever  they  intend  to  estab- 
lish branches  or  agencies  in  San  Salvador  are  obhged  to  enter 
in  the  commercial  registry  the  articles  of  incorporation  and 
by-laws,  the  appointment  of  managers  or  agents,  and 
documents  showing  that  those  papers  were  entered  in  the 
commercial  com*t  of  the  country  of  origin.  So  long  as  the 
foregoing  requisites  are  not  complied  with  the  branches  or 
agencies  of  a  foreign  stock  company  have  no  legal  capacity 
in  San  Salvador  to  appear  in  courts  as  plaintiffs,  and  their 
managers  or  agents  are,  furthermore,  personally  and  jointly 
liable  with  respect  to  acts  or  contracts  undertaken  by  them 
in  the  name  of  the  corporation,  even  though  they  have 
stipulated  otherwise.  ^^ 

Uruguay. 

Foreign  partnerships  and  stock  companies  in  Uruguay  are 
subject  to  the  same  provisions  as  domestic  partnerships  and 
companies,  and  must,  therefore,  enter  in  the  commercial 
registry  the  articles  of  organization  and  by-laws,  as  well  as 
the  powers  granted  to  their  representatives."*^  It  is  necessary 
to  bear  in  mind,  as  has  already  been  observed,  that  stock 
companies  must  be  authorized  by  the  Executive,  and  in  case 
they  enjoy  a  franchise,  they  must  also  have  the  approval  of 
the  General  Assembly.^''  Managers  and  directors  of  part- 
nerships and  companies  are  personally  and  jointly  respon- 
sible toward  third  contracting  parties  until  the  papers  have 
been  registered  and  the  authorization  is  obtained.  After  the 
aforesaid  requisites  have  been  complied  with,  they  are  only 
liable  to  the  company  or  partnership  for  the  faithful  dis- 
charge of  their  respective  duties.  They  are,  however, 
responsible  to  third  parties  in  case  they  infringe  the  by-laws 
and  regulations.'*^ 

The  law  of  February  27,  1919,  provides  that  stock  com- 
panies, whether  domestic  or  foreign,  as  well  as  their  branches 
and  agencies,  must,  in  order  to  trade  in  that  country,  submit 
themselves  to  the  supervision  and  auditing  (fiscalisacidn)  of 

«  Arts.  12  and  16.  "  Art.  47.  «  Art.  405. 

«  Arts.  408  and  424. 


FOREIGN    CORPORATIONS    AND    PARTNERSHIPS  275 

the  Inspeccion  General  de  Bancos  y  Sociedades  Anonimas 
(Bureau  of  General  Inspection  of  Banks  and  Stock  Com- 
panies). They  are  obliged  to  publish  their  balance  sheet 
every  three  months  in  the  Diario  Oficial,  and  to  have  the 
same  supervised  and  approved  by  said  Bureau.  Their 
directors  or  managers  must,  furthermore,  present  to  the 
Bureau  a  detailed  balance  sheet  and  the  plan  for  distributing 
the  profits,  if  any.'^^ 

Failure  to  comply  with  the  foregoing  requirements  is 
penalized  by  a  fine  of  from  two  hundred  to  five  hundred 
pesos  (a  peso  =$1.03  U.  S.)  imposed  by  the  Executive,  after 
a  report  of  the  Bureau  of  General  Inspection,  without 
prejudice  to  any  other  legal  liability.^ 

The  Bureau  of  General  Inspection  enforces  compliance  by 
companies  with  the  legal  formalities  and  the  provisions  of 
the  respective  by-laws,  and  by  its  representatives  attends 
their  meetings  for  that  purpose.  These  representatives  are 
obliged  to  keep  secret  their  information  not  intended  for 
publicity.  Aside  from  their  functions  of  supervision,  the 
members  of  the  Bureau  are  strictly  forbidden  to  interfere  in 
the  management  of  corporations.'*'' 

According  to  the  same  law,  registration  fees  for  all  con- 
tracts of  association  are  1/8  per  thousand  of  their  capital, 
with  a  maximum  fee  of  100  pesos.  There  is  also  a  tax  of  1 
peso  for  each  sheet  of  the  Registry  book  used.  For  other 
documents  the  fees  are  1.20  peso  invariably. 

Venezuela. 

Foreign  associations  may  do  business  in  Venezuela  and 
appear  in  courts  as  plaintiffs  or  defendants,  but  they  are 
subject  to  the  laws  applicable  to  non-residents.  They  must, 
therefore,  give  security  for  costs,  if  plaintiffs  in  a  suit  arising 
out  of  civil  matters.  As  for  actions  derived  from  commercial 
transactions,  no  one  is  bound  to  give  such  security.^" 

Foreign    partnerships    desiring    to    establish    agencies, 

"  Arts.  1,  2  and  3  of  law  of  Fob.  27,  1919. 

«  Art.  4  ib.  «  Arts.  5,  6  and  7  ib. 

^  Arts.  27  and  293  c.  c,  and  1076  com.  c. 


276  LATIN-AMEEICAN   COMMEECIAL   LAW 

branches  or  enterprises  in  Venezuela,  must  comply  with  the 
same  requisites  as  domestic  partnerships.  As  for  stock 
companies,  they  must  enter  in  the  commercial  registry  of  the 
place  where  the  agency,  branch,  or  enterprise  is  located 
their  articles  of  organization,  by-laws,  and  other  documents 
necessary  in  creating  the  company,  according  to  the  law  of 
the  country  of  origin,  and  a  copy,  properly  legalized,  of  the 
governing  provisions  of  law.^^  The  same  formahties  must 
be  observed  in  regard  to  amendments  of  the  contract  of 
association.  ^2 

The  provisions  relating  to  commercial  bookkeeping  and 
correspondence,  as  laid  down  in  the  Code  of  commerce  of 
Venezuela,  are  apphcable  to  foreign  partnerships  and 
associations  doing  business  in  that  country. ^^ 

Foreigners,  it  seems,  cannot  estabhsh  insurance  companies 
and  banks  as  Venezuelan  corporations.  Most  commercial 
enterprises  must  pay  a  municipal  patente  or  hcense  tax, 
depending  in  amount  on  the  natiu^e  of  the  business.  Mining 
companies  pay  no  patente.  Merchants  pay  an  industrial 
patente  tax.  Corporations  pay  in  addition  ten  per  cent 
thereof  to  the  federal  government.  Companies  which  are 
not  required  to  pay  a  patente  tax  are  required  to  pay  a  stamp 
tax  of  one  per  thousand  of  their  annual  income. 

^1  Art.  294  com.  c.  ^^  Art.  295  com.  c. 

*'  Arts.  35  and  50  com.  c.  Angel  Cesar  Rivas,  Les  Societ^s  EtrangSres  en 
Venezuela,  Journal  du  Droit  International  Priv6,  v.  32  (1905),  pp.  520-529. 


CHAPTER  XVI 

Mercantile  Contracts 
general  principles 

Spain. — Abella  y  Blave,  Fermln:  Manual  de  arriendos  y  pr^stamos  con 
arreglo  a  los  vigentes  c6digos  civil  y  de  comercio.    Madrid,  1889. 

Castillejo  y  Duarte,  Jose:  La  reforma  contractual  en  el  derecho  de  suce- 
siones.    Madrid,  1902. 

Clemente  de  Diego,  F.:  La  transmisibilidad  de  las  obligaciones.  Madrid, 
1912. 

Garcia  Herreras,  Enrique:  La  sucesi6n  contractual.  Pr61ogo  de  Rafael  de 
Urena.    Madrid,  1909. 

Giorgi,  Jorge:  Teoria  de  las  obligaciones  en  el  derecho  civil  moderno.  Trans- 
lation from  the  7th  ed.    Madrid,  1911-1913.    9  v. 

Otero  y  Valentin,  Julio:  Tratado  elemental  del  derecho  de  las  obligaciones 
segiin  el  libro  IV  del  codigo  civil  espanol.  Con  un  pr61ogo  de  Lorenzo  de 
Prado  y  Fernd,ndez. 

Oyuelos  Ricardo:  Digesto,  Principios,  doctrina  y  jurisprudencia  referentes 
al  c6digo  civil  espanol.    Madrid,  1917.    2  v. 

Sdnchez  Ocana,  Ram6n:  Estudio  critico  de  las  diversas  especies  de  censos. 
Madrid,  1892. 

Argentina. — Bialeg  Masse,  Juan:  Tratado  de  la  responsabilidad  civil  ea 
derecho  argentino,  bajo  el  punto  de  vista  de  los  accidentes  del  trabajo.  Rosa- 
rio,  1904. 

Guastavino,  Jose  E.:  Nulidad  de  los  actos  juridicos.    Buenos  Aires,  1897. 

Joannini,  Frank  L.:  The  Argentine  civil  code  (effective  January  1st,  1871) 
together  with  constitution  and  law  of  civil  registry.    Boston,  1917. 

Lafaille,  Hector:  Los  contra tos  en  el  derecho  civil  argentino.  Notas  to- 
madas.  (Curso  de  1913)  Publicadas  bajo  la  direcci6n  de  Arturo  Garcia  L6pez. 
Buenos  Aires,  1869. 

Machado,  J.  A.:  Comentario  al  titulo  de  los  contratos  del  c6digo  civil. 
Buenos  Aires,  1875. 

Bolivia. — Mallea  Balboa,  Enrique:  C6digo  civil  boliviano;  unica  rcimprc- 
8i6n  oficial  concordada  y  comentada  con  la  teoria  de  autores  clasicos  y  la 
doctrina  y  jurisprudencia  de  la  Corte  Suprema.    La  Paz,  1906. 

Brazil. — Barusso,  Liberato:  Contratos  e  obrigagoes  mercantis.  Rio  de 
Janeiro,  1871. 

Bevilaqua,  Clovis:  C6digo  civil  dos  Estados  Unidos  do  Brazil  common tado. 
Rio  de  Janeiro,  1916-1920.    6  v. 

Carvalho  de  Mendonga,  Manuel  Ignacio:  Contractos  no  direito  civil  brazil- 
eiro.    Rio  de  Janeiro,  1911.    2  v. 

Civil  Code  of  Brazil  in  English,  translated  by  J.  Whelcss.    St  Louis,  1920. 

277 


278  LATIN-AMERICAN    COMMERCIAL    LAW 

Pacheco,  Antonio  Faria  Carneiro:  Dos  privilegios  creditorios,  2d  ed.  Rio 
de  Janeiro,  1914. 

Silva  Ramos,  J.  J.:  Apontamentos  jnridicos  sobre  o  contractos.  Rio  de 
Janeiro,  1861. 

Chile. — Amundtegui  Reyes,  Miguel  Luis:  Don  Andres  Bello  y  el  codigo 
civil.    Santiago,  1885. 

Bello,  Andres:  Obras  completas,  v.  XI.  Proyectos  de  c6digo  civil.  Santiago, 
1887. 

Borja,  Luis  F. :  Estudios  sobre  el  codigo  civil  chUeno.  Paris,  1901-1908.  7  v. 
(Covers  the  code  to  art.  563  only.) 

Claro  Solar,  Luis:  Explicaciones  de  derecho  civil  chileno  y  comparado. 
Santiago,  1898-1902.    2  v. 

Chac6n  y  Barrios,  Jacinto:  Exposicion  razonada  i  estudio  comparativo  del 
c6digo  civil  chileno,  3d  ed.    Santiago,  1890-1891.    3  v. 

Echeverria  y  Reyes,  Anibal:  Analogias  y  diferencias  entre  los  principales 
articulos  de  los  c6digos  clulenos.    Santiago,  1893. 

Elizalde,  Miguel:  Concordancias  de  los  articulos  del  c6digo  civil  chileno 
entre  si  i  con  los  articulos  del  codigo  civil  f ranees.    Santiago,  1871. 

Fabres  y  Fernandez,  Jose  Clemente:  Instituciones  de  derecho  civil  chileno, 
2d  ed.    Santiago,  1893-1902.    2  v. 

Lastarria,  Jose  Victoriano:  Instituto  de  derecho  civil  chileno.  Lima, 
1863. 

Same:  Estudios  jurldicos,  1^  Serie,  Instituto  de  derecho  civil  chileno.  San- 
tiago, 1914. 

Rodriguez,  Abraham :  C6digo  civil  de  la  republica  de  Chile:  2d  ed.  Santiago, 
1858. 

Vera,  Robustiano:  C6digo  civil  de  la  repiiblica  de  Chile  comentado  i  espli- 
cado.    Santiago,  1892-1897.    7  v. 

Colombia. — Angarita,  Manuel  J.:  C6digo  civil  nacional  concordado. 
Bogotd,  1888. 

Anzola,  Nicasio :  Lecciones  elementales  de  derecho  civil  colombiano.  Bogota, 
1918.    3  v. 

Calder6n,  Angel  R.:  Compilaci6n  de  la  legislaci6n  civil  nacional,  concor- 
dada  y  anotada.    Bogotd,  1908. 

Champeau  y  Uribe:  Tratado  de  derecho  civil  colombiano.  Paris,  1899.  v.  I 
only. 

Rodriguez  Pinerez:  C6digo  civil  colombiano  y  leyes  que  lo  adicionan  y 
reforman.    Bogota,  1911. 

Same:  Curso  de  derecho  civil  espanol,  concordado  con  las  legislaciones  ro- 
mana  y  colombiana,  2d  ed.    Bogotd,  1915. 

V61ez,  Fernando:  Estudio  sobre  el  derecho  civil  colombiano.  Medellin, 
1898-1911.    9v. 

Costa  Rica. — Jimenez,  Salvador:  Elementos  de  derecho  civil  y  penal.  San 
Jose,  (Costa  Rica)  1874-1876.    2  v. 

Translation  of  the  civil  code  .  .  .  with  amendments  to  1906.  (L^nited 
Fruit  Co.)    Boston,  1907. 

Cuba. — Betancourt,  Angel  C:  C6digo  civil  vigente  en  la  Republica  de 
Cuba,  con  las  modificaciones  introducidas  en  ^1  y  con  las  enmiendas  que  la 
nueva  situaci6n  politica  del  pals  ha  hecho  prdcticamente  necesarias  y  las 


MERCANTILE    CONTRACTS  279 

aclaratorias  y  concordancias  con  los  otros  cuerpos  legales  vigentes,  2d  ed. 
Habana,  1916. 

Same:  Jurisprudencia  hipotecaria.    1899,  2d,  1913.    Habana,  1916. 

Ecuador. — Urrutia,  Francisco  Jose:  Estudios  de  Iegislaci6n  y  de  derecho 
civil.    Quito,  1902.    2  v. 

Guatemala.— Cruz,  Fernando:  Instituciones  de  derecho  civil  patrio. 
Guatemala,  1882-1888.    3  v. 

Gonzalez  Sara  via,  Antonio:  Derecho  patrio — Resumen  de  nuestra  legisla- 
ci6n.     Guatemala,  1910. 

Same:  Instituciones  de  derecho  civil  patrio.    Guatemala,  1888-1907.    3  v. 

Haiti:  Bomo,  Louis:  Code  civil  .  .  .  annote  (Haiti)  Port  au  Prince,  1892. 

Mexico. — Garza,  Jose  M.  de  la:  iPor  que  la  voluntad  de  los  contrayentes  es 
la  suprema  ley  en  los  contratos  y  hasta  que  limite?  Reuista  de  legislacion  y 
jurisprudencia.    1900,  2d  sems.,  p.  191. 

Guerra,  Raimundo  L. :  Derecho  del  c6digo,  o  sea  el  c6digo  civil  del  Distrito 
puesto  en  forma  didd,ctica.    Mexico,  1873. 

Herrasti,  Francisco  de  P.:  Estudio  sobre  las  solemnidades  externas  de  los 
contratos  en  derecho  civil  mexicano.  Rev.  de  Leg.  y  Jur.,  1899,  2d  sems.,  p. 
371. 

Lozano,  Jose  Maria:  El  c6digo  civil  del  Distrito  ordenado  en  forma  de 
diccionario.    Mexico,  1870. 

Macedo,  Miguel:  Datos  para  el  estudio  del  nuevo  c6digo  civil  del  Distrito 
federal  y  Territorio  de  la  Baja  California  promulgado  el  31  de  marzo  de  1884. 
Mexico,  1884. 

Mateos  Alarc6n,  Manuel:  El  contrato  aleatorio.    El  Derecho,  1895,  p.  314. 

Same:  Lecciones  de  derecho  civil.    Mexico,  1885-1900.    6  v. 

Montiel  y  Duarte,  Isidro:  Tratado  de  las  leyes  y  su  aplicaci6n  con  arreglo  al 
c6digo  civil  del  Distrito  Federal  y  Territorio  de  la  Baja  California.  Mexico, 
1877. 

Sdnchez  Gavito,  Vicente:  Clasificaci6n  de  las  causas  de  nulidad  de  los  con- 
tratos.   Rev.  de  Leg.  y  Jur.,  1902,  2d  semst.,  p.  554. 

Same:  iCuando  el  error  de  consentimiento  produce  la  nulidad  y  cuando  la 
inexistcncia  de  un  contrato?    76.,  1902,  1st  sems.,  p.  378. 

Vallarta,  Ignacio  L.:  Estudios  de  derecho  civil.  La  ralihabitio  y  sus  efectos 
respecto  de  los  juicios  nulos  por  falta  de  poder.    Mexico,  1891. 

Vera  Estanol,  Jorge:  Papel  del  Estado  en  los  contratos.  Rev.  de  Leg  y  Jur. 
Mexico,  1896,  1st  sems.,  p.  74. 

Same:  Las  obligaciones  sin  causa.    76.,  1897,  2d  sems.,  p.  451. 

Same:  La  mora  en  las  obligaciones  a  la  orden.    76.,  1899,  1st  sems.,  p.  7. 

Verdugo,  Agustln:  iBastard  para  probar  el  dominio  de  una  finca  los  titulos  o 
escrituras  en  que  consten  los  contratos  traslativos  de  la  propiedad.  El  Derecho. 
Mexico,  1894,  p.  113. 

Same:  Revisi6n  del  proyecto  de  c6digo  civil  del  Dr.  D.  Justo  Sierra.  M6xico, 
1900. 

Paraguay — Zubzarrcta,  R.:  Elementos  de  derecho  civil.  Asunci6n,  1899- 
1900.    2v. 

Peru. — Cortez  L.  y  Rodriguez  M.  C:  Derecho  civil  comiin.  V.  I,  Lima, 
1899. 

Fuentes,  M.  A.:  Enciclopedia  del  derecho.    Lima,  1876.    3  v. 


280  LATIN-AMERICAN    COMMERCIAL    LAW 

Lama,  Miguel  Antonio  de  la:  C6d.igo  civil  anotado  y  concordado.  With  an 
appendix.    Lima,  1914. 

Ortiz  de  Zevallos  y  Vidaurre,  Ricardo:  Tratado  de  derecho  civil  peruano. 
Lima,  1906. 

Pacheco,  Toribio:  Tratado  de  derecho  civil.    Lima,  1872.    3  v. 

San  Salvador. — Bonilla,  Tibm-cio  G.:  Comentarios  al  c6digo  civil  salva- 
doreno.    San  Salvador,  1884. 

Sudrez,  Belarmino:  El  Codigo  civU  del  ano  de  1860  con  sus  modificaciones 
hasta  el  ano  de  1911.    San  Salvador,  1911.    3  v. 

Sudrez,  Belisario  U.:  Notas  criticas  al  proyecto  de  reformas  del  c6digo  civil 
salvadoreno.    San  Salvador,  1901. 

Same:  Breves  anotaciones  al  c6digo  civil  salvadoreno.  San  Salvador 
(1901). 

Same:  Repertorio  de  legislaci6n  de  la  republica  del  Salvador.  San  Salvador, 
1906. 

Valenzuela,  Salvador:  Instituciones  de  derecho  civil  salvadoreno.  San 
Salvador,  1887.    3  v. 

Uruguay. — Amezaga,  Juan  Jose:  Culpa  aquiliana.  Lecciones  del  curso  de 
derecho  civil.    Montevideo,  1914. 

Gallinal,  Rafael:  Concordancias,  motivos  y  comentarios  del  c6digo  civil  del 
Uruguay.    Montevideo,  1911-1912.    2  v. 

Guillot,  Avaro:  Comentarios  del  c6digo  civil.    Montevideo,  1896-1906.  4  v. 

Narvaja,  Tristdn:  Fuentes,  notas  y  concordancias  del  c6digo  civil  de  la 
Republica  Oriental  del  Uruguay.    Montevideo,  1910. 

Terra,  D.:  Lecciones  de  derecho  civU.    Monte\adeo,  1909. 

Venezuela. — Arismendi,  Jose  Loreto:  Codigos  Venezolanos  vigentes, 
comparados  y  anotados  con  los  de  otras  legislaciones.    Caracas,  1909. 

Dominici,  Anibal:  Comentarios  al  c6digo  civil  venezolano.  .  .  .  Caracas, 
1897-1905.    4  v. 

La  Grasserie,  R. :  Code  civil  de  Venezuela.    Paris,  1897. 

Sanojo,  Luis:  Instituciones  de  derecho  civil  venezolano.    Caracas,  1873.    4  v. 

Zuloaga.     Codigo  civil  concordado.    Caracas,  1899. 

Sources  of  obligations. 

Obligations  consist  in  general  of  legal  duties  arising  out  of 
legal  relations  between  persons.  The  sources  of  obligations 
are:  the  law,  contracts,  quasi-contracts  and  unlawful  acts 
or  omissions,  usually  called  torts,  which  include  faults  and 
negligence.  According  to  some  writers  the  law  is  the  only 
source  of  obhgations;  by  reason  of  the  fact  that  merchants 
perform  a  function  of  social  interest,  the  law  imposes  upon 
them  more  obhgations  than  upon  non-merchants  for  the 
benefit  of  third  parties.  This  fact  will  be  pointed  out  in 
dealing  with  relevant  cases  in  which  it  applies,  but  for  the 
present  we  propose  to  confine  ourselves  to  the  discussion  of 


MERCANTILE    CONTRACTS  281 

obligations  arising  out  of  contracts,  which  in  commercial 
matters  are  the  most  important  source  of  obligations. 

Law  of  commercial  contracts. 

The  independence  of  commercial  from  civil  law  would  lead 
to  the  conclusion  that  the  codes  of  commerce  which  recog- 
nize this  independence,  should  contain  a  complete  section 
covering  all  the  principles  of  contractual  obhgations.  But 
the  notion  that  commercial  law  is  entirely  independent  has 
not  progressed  to  that  point.  We  therefore  find  that  the 
commercial  codes  of  Latin-America  follow  three  different 
systems : 

1.  French  system.  The  codes  of  this  system  have  no 
section  dealing  with  the  general  principles  of  contract.^ 

2.  German-Italian  system.  The  codes  which  follow 
this  system  devote  a  title  to  the  exposition  of  the  general 
principles  of  contract,  but  the  matter  is  not  exhausted 
therein  and  the  courts  must  refer  to  other  complemen- 
tary provisions  of  law  in  order  to  have  all  the  required 
rules.  ^ 

3.  Uruguayan  system.  The  general  rules  of  contract 
are  presented  in  full  in  the  code  of  Uruguay. 

Relations  between  the  civil  and  the  commercial  law  of 
contracts. 

We  have  seen  that  most  of  the  Latin-American  codes 
consider  commercial  law  as  a  mere  complement  of  civil  law 
for  commercial  cases,  and  in  this  group  of  codes  we  find  the 
consistent  declaration  that  the  civil  law  is  to  be  applied  when 
the  commercial  law  fails  to  provide  for  a  special  case.^    But 

•  Haiti,  Santo  Domingo. 

^  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador, 
Guatemala,  Honduras,  Mexico,  Nicaragua,  Panama,  Peru,  San  Salvador, 
Venezuela. 

'Argentina,  207;  Bolivia,  213;  Brazil,  121;  Chile,  96;  Costa  Rica,  181; 
Guatemala,  171;  Honduras,  83;  Mexico,  81;  Nicaragua,  130;  San  Salvador,  73; 
Uruguay,  191. 

In  Brazilian  commercial  law,  the  laws  and  customs  antedating  the  enact- 
ment of  the  commercial  code  arc  among  the  sources  of  law.     The  Lawyers 


282  LATIN-AMERICAN    COMMERCIAL    LAW 

such  is  the  force  of  tradition  that  even  codes  which  have 
recognized  the  independence  of  the  commercial  law  contain 
the  same  provision."* 

The  commercial  code  of  Panama  is  the  only  one  which  is 
consistent  with  the  principle  of  the  independence  of  com- 
mercial law.  It  provides  in  article  194,  that  mercantile 
matters  not  provided  for  in  that  code  are  governed  according 
to  the  usages  of  commerce  generally  observed  in  the  locality, 
and  only  in  default  of  such  usage  must  the  general  principles 
of  contract  embodied  in  civil  law  be  appUed. 

The  codes  of  Ecuador  and  Venezuela  do  not  refer  to  the 
matter. 

Essential  requisites  of  contracts. 

Every  contract  to  be  legally  binding  must  have  the  follow- 
ing essential  requisites: 

(a)  capacity  of  the  contracting  parties; 
(6)   the    consent   of    two   or  more   persons    binding 
themselves   in     such    manner    that    the    rights   and 
obligations  produced  by  the  agreement  may  be  en- 
forced judicially; 

(r)  a  certain  and  lawful  object  of  the  right  and 
obligation  created,  which  may  be  a  thing,  an  act  or 
the  omission  of  an  act; 

(d)  a  "cause  "  (analogous  to,  but  not  quite  the  same 
as,  '^ consideration"). 
Having  already  discussed  the  capacity  required  in  order 
to  be  a  merchant,  we  need  merely  note  that  the  capacity  to 
enter  into  a  mercantile  transaction  is  the  ordinary  civil 
capacity  governed  by  the  civil  code.  We  may,  therefore,  pass 
on  to  the  other  requisites. 

CONSENT 

Consent  implies  the  idea  of  a  meeting  of  the  minds  of  the 

Institute  of  Rio  de  Janeiro  of  Sept.  21,  1865,  Revisla  de  Jurispr  udencia,lS70, 
p.  207. 

^  Spain,  50;  Colombia,  182;  Peru,  50. 


MERCANTILE    CONTRACTS  283 

offerer  and  offeree  with  a  view  to  contracting  some  obliga- 
tion.' 

The  defects  or  vices  that  may  invaUdate  consent  and 
hence  the  contract  itself  are:  a,  mistake;  h,  duress  or  intimi- 
dation; and,  c,  deceit. 

Mistake. 

A  mistake  may  invalidate  a  contract  only  when  it  is  a 
substantial  error  concerning: 

(a)  the  person  of  the  other  party; 

(6)  the  subject-matter  of  the  contract; 

(c)  the  "cause"  of  the  contract. 

Mistake  relating  to  the  person  of  a  contracting  party 
nullifies  the  contract  when  it  w^as  entered  into  in  considera- 
tion of  that  particular  person,  a  case  which  happens  more 
frequently  in  commercial  than  in  civil  contracts,  because 
personal  credit  usually  plays  a  very  important  role  in 
commercial  transactions. 

A  mistake  concerning  things  nullifies  the  contract,  when  it 
relates  to  the  essential  qualities  of  the  thing.  For  example, 
let  us  assume  that  X  buys  a  house  supposing  it  to  be  in  one 
town  and  finds  it  is  in  another.  Mistake  invalidates  the 
contract  whenever  it  is  certain  that  had  the  party  known  the 
real  qualities  or  characteristics  of  the  thing  he  w^ould  not 
have  entered  into  the  contract. 

Mistake  concerning  the  ''cause"  hkewise  invalidates  a 
contract,  as,  for  example,  when  one  person  intends  to  pur- 
chase and  the  other  offers  merely  to  rent  real  estate.^ 

*  When  the  existence  of  an  offer  and  its  acceptance  has  been  proved,  the 
existence  of  a  contract  is  thereby  proved.  Mexico,  4*  Sala  del  Sui)remo 
Tribunal  de  Justicia  del  Distrito  Federal,  Toriello  Guerra  v.  Compaiiia  Tele- 
fonica, October  IG,  1884,  Anuario  de  Legislacion  y  Jurisprudencia,  Seccion  de 
Juris-prwlencia,  1884,  p.  269. 

*  A  mistake  as  to  the  facts  cannot  be  pleaded  when  ignorance  of  the  truth  is 
due  to  gross  negligence.  Argentina,  Cam.  de  Apol.  en  lo  commercial  de  la  Cap- 
tail,  June  7,  191.3,  Retteo  v.  Wus,  Jur.  de  los  Tribs.  Nacs.,-  June,  191.3,  p.  273. 

A  mistake  concerning  a  thing  bought  in  good  faith  gives  the  buyer  an  action 
for  the  recovery  of  earnest  money  given  by  him  in  consideration  of  the  con- 
tract. Argentina,  Camara  2  de  Apel.  en  lo  civil  de  la  Capital,  May  23,  1914, 
Labourdetta  v.  del  Rio,  lb.,  May,  1914,  p.  205. 


284  LATIN-AMERICAN    COMMERCIAL   LAW 

Duress. 

Duress  exists  when  irresistible  force  is  used  to  procure 
consent. 

Intimidation. 

Intimidation  exists  when  one  of  the  contracting  parties 
is  inspired  by  a  reasonable  and  well-grounded  fear  of  suffer- 
ing imminent  and  serious  injury  in  his  person  or  property  or 
in  the  person  or  property  of  his  wife  (or  her  husband,  as  the 
case  may  be),  descendants  or  parents.  To  estimate  the 
force  of  the  intimidation  the  age,  sex  and  status  of  the  person 
must  be  considered.  The  fear  of  displeasing  a  person  to 
whom  obedience  and  respect  are  due  {temor  reverencial)  can- 
not annul  a  contract.  Duress  or  intimidation  even  if  em- 
ployed by  a  third  person  who  did  not  intervene  in  the 
contract  renders  an  obligation  void. 

Deceit. 

Deceit  is  a  false  representation  of  facts,  made  with  knowl- 
edge of  its  falsity  and  with  the  intention  that  it  should  be 
acted  upon  by  another,  which  actually  induces  him  to  enter 
into  a  contract  into  which  otherwise  he  would  not  have 
entered.  In  order  that  deceit  may  render  a  contract  void,  it 
must  produce  an  injury,  and  it  must  not  have  been  used  by 
both  parties.^ 

Incidental  deceit  occurs  when  the  party  spontaneously 
entered  into  a  contract,  but  was  deceived  concerning  non- 
essential circumstances.     In  this  case  the  contract  is  not 

Mistake  does  not  necessarily  nullify  a  contract  unless  it  refers  to  the  "cause " 
or  direct  object  of  the  contract.  Mistake  relating  to  the  purposes  of  the  parties 
does  not  nullify  a  stipulation.  The  simulation  of  a  contract  cannot  co-exist 
with,  the  mistake  of  one  of  the  parties  to  it.  Mexico,  Juzgado  3°  de  lo  civil  del 
Distrito  Federal,  Aug.  10,  1890,  Pontones  de  Best  v.  Rubi,  Aniiario  de  Leg.  y 
Jur.  1890,  p.  343. 

^  The  simulation  of  a  contract  may  be  proved  by  mere  conjectiu"e.  Brazil, 
No.  8893,  June  14,  1876,  Gazeta  Juridica,  vol.  12,  page  698. 

Transactions  made  to  defraud  creditors  may  be  nullified  regardless  of  when 
they  were  executed,  and  of  the  statute  of  limitatioiis.  Brazil,  Decree  No.  917, 
Art.  30. 


MERCANTILE  CONTRACTS  285 

void;  deceit  merely  renders  the  party  who  employed  it  liable 
to  an  action  for  damages. 

OBJECT   OP   CONTRACTS 

The  object  of  commerce  may  be  a  thing  or  an  act,  and  even 
an  omission.  The  object  must  be  physically  possible  and 
legally  permissible;  e.  g.,  in  the  contract  of  transportation, 
the  object  of  the  contract  is  the  act  of  the  carrier;  in  the 
pm"chase  of  a  commercial  house  the  object  implies  frequently 
an  omission,  that  is,  that  the  seller  shall  not  establish 
himself  in  the  same  line  of  business  and  within  a  certain 
district. 

Things  that  cannot  be  the  objects  of  contract  (cosas  fuera 
del  comercio.) 

There  are  things  which  naturally  belong  to  the  public 
in  general,  like  the  air  and  the  high  seas;  they  cannot  be 
objects  of  private  property,  nor  hence,  of  conamerce.  There 
are  also  things  which,  although  from  an  economic  standpoint 
possibly  the  subject  of  business  transactions,  are  for  certain 
reasons  of  public  welfare,  history  or  religion,  absolutely  or 
conditionally  not  subject  to  commerce,  such  as  the  highways, 
historic  relics,  the  public  archives,  objects  of  worship,  and 
things  that  may  impair  the  health  of  a  conununity. 

CAUSE 

Consent  must  have  a  "cause,"  because  otherwise  there  is 
no  legal  volition.  "Cause,  "  therefore,  is  the  immediate 
consideration  or  motive  of  the  parties  in  entering  into  a 
contract.^ 

*  There  can  be  no  obligation  without  a  real  and  legal  "cause."  The  promise! 
to  give  something  in  payment  of  a  non-existing  debt  is  an  obligation  without 
"cause."  Ecuador,  Corte  Suprema  de  Just.,  Davalos  v.  Carri6n,  July  28, 
1876,  Gaceta  Judicial,  1913,  p.  1254. 

The  tendering  of  payment  of  an  obligation  is  not  enough  to  release  the 
debtor.  He  is  required  to  put  the  thing  at  the  disposal  of  the  creditor,  who 
must  refuse  acceptance.  Ecuador,  Corte  Suprema  de  Just.,  Dammer  v. 
Almeida,  June  11,  WOG,  Gaceta  Jud.,  190C-1915,  p.  452. 


286  LATIN-AMERICAN    COMMERCIAL   LAW 

In  countries  ruled  by  civil  law,  "cause  "  (a  rough  transla- 
tion of  the  Latin  word  ''causa"),  is  a  term  of  wider  meaning 
than  that  of  "consideration  "  prevailing  in  Anglo-American 
law.  In  the  latter  system,  consideration,  which  is  also  essen- 
tial in  all  contracts,  consists  of  some  detriment  suffered  by  or 
forbearance  exacted  from  the  promisee,  relying  upon  the 
promise,  or  some  corresponding  benefit  accruing  to  the 
promisor.  Unless  such  consideration  can  be  sho\\Ti  by  the 
promisee,  he  cannot  enforce  the  promise  against  the  promi- 
sor.   Hence  gratuitous  promises  are  not  legally  enforceable. 

In  civil  law  countries,  causa,  as  an  essential  requisite  of 
a  contract,  is  a  reason  or  motive  for  the  making  of  a  promise. 
It  need  not  be  a  "good  consideration  "  under  Anglo- American 
law;  thus,  the  desire  to  aid  a  person  will  legally  support  the 
promise  of  a  gift  and  render  it  enforceable.^ 

The  definition  and  character  of  ' '  cause  "  as  an  essential 
requisite  of  contracts  has  given  rise  to  much  speculation  and 
criticism.  In  bilateral  contracts  the  act  of  or  promise  made 
by  one  of  the  parties  is  the  "cause  "for  the  other;  as,  for 
example,  in  the  contract  of  purchase  and  sale  the  payment  of 
the  price  is  the  "cause  "  of  the  contract  for  the  seller,  and  the 
deliver^'  of  the  thing  is  the  ' '  cause  ' '  for  the  buyer.  In  these 
cases,  therefore,  "cause"  is  equivalent  to  object.  In  uni- 
lateral contracts  the  "cause  "  of  the  obligation  for  the  debtor 

Probably  the  best  comparative  treatment  of  the  concepts  "causa"  and 
"consideration"  in  the  civil  and  in  the  common  law  is  to  be  found  in  Professor 
Lorenzen's  article  "Causa  and  Consideration  in  the  Law  of  Contracts"  in  28 
Yale  Law  Journal,  621-646  (May,  1919). 

*One  must  not  confound  the  "cause"  of  an  obligation  with  the  purpose  of 
the  contracting  parties.  Mistake  relating  to  the  cause  nullifies  the  contract, 
that  relating  to  the  purpose  does  not.  Colombia,  Trib.  Sup.  de  Distrito 
Bogota,  October  25,  1894,  Registro  Jud.  de  Cundinamarca,  VIII,  p.  1391. 

A  debtor  is  in  default  not  only  when  he  fails  to  comply  with  an  obligation  of 
delivering  something  or  doing  some  act;  but  also  when  he  does  what  he  was 
bound  not  to  do.  Colombia,  Trib.  Sup.  del  Dist.  Medellin,  March  26,  1898, 
Crdnica  Jud.  de  Antioqma,  XIV,  p.  3304. 

When  the  "cause"  of  a  contract  is  contrary  to  law,  morals  or  public  welfare, 
the  debtor  may  refuse  to  fulfill  his  obligation.  When  the  debtor  denies  the 
existence  of  any  legal  "cause"  of  his  obligation,  the  creditor  must  prove  its 
existence.  Costa  Pica,  Corte  de  Casaci6n,  Rodriguez  v.  Tinoco,  December  2, 
1913.    Sentendas  de  la  Corte  de  Casaddn,  1913,  2d  sems.,  p.  621. 


MERCANTILE    CONTRACTS  287 

is  the  act  done  or  the  thing  dehvered  by  the  creditor.  In 
these  cases  "cause  "  is  again  the  same  as  the  object.  In  gifts 
the  "cause  "  is  the  consent  of  the  donor,  expressed  Avith  the 
formahties  estabUshed  by  law.  In  these  cases  "cause  "  is  not 
equivalent  to  object,  but  to  consent.  Consequently  the 
essentials  of  a  contract  can  be  reduced  to  three,  namely: 
capacity  of  the  parties,  mutual  consent,  and  legal  object. 
For  this  reason  the  civil  code  of  Mexico  ^°  and  that  of 
Brazil  "  do  not  mention  "cause  "  among  the  requisites  of  a 
contract,  as  do  the  codes  which  follow  in  this  respect  the 
code  of  Napoleon. 

When  the  cause  is  not  expressed  in  a  contract,  it  is  pre- 
sumed to  exist  and  to  be  lawful,  unless  the  debtor  proves  the 
contrary.  ^- 

Argentina  ^^  provides  that  in  the  case  of  negotiable 
instruments,  the  failure  to  express  the  "cause  "  or  the  state- 
ment of  a  fictitious  "cause"  cannot  be  pleaded  against  a 
holder  in  good  faith.  ^"^ 

Even  though,  as  it  has  been  observed,  "cause"  is  not  an 
essential  requisite  of  civil  contracts  in  Brazil,  ^^  but  in  com- 
mercial contracts,  failure  to  express  a  "cause"  of  the  obli- 
gation renders  them  void.^^ 

Uruguay,^''  with  the  same  rule  as  Argentina,  adds  that 
failure  to  express  the  "cause"  only  gives  the  debtor  a  right 
of  action  to  prove  that  the  obligation  had  no  valid  "cause." 

The  modern  notions  concerning  negotiable  instruments 
make  the  statement  of  a  "cause"  thereof  unnecessary. 

1°  Art.  1279  c.  c.  "  145  c.  c. 

^2  When  the  "cause"  of  an  obligation  is  not  expressed,  it  is  presumed  that 
said  cause  is  the  liberality  of  the  obligor.  Colombia,  Tribunal  Superior  del 
Distrito,  Bucaramanga,  October  9,  1896,  Revisla  Judicial  de  Santander,  VII 1, 
510. 

"  Art.  212. 

"  A  bill  of  exchange  is  deemed  simulated  when  it  does  not  correspond  to  any 
real  transaction,  or  when  it  is  accepted  by  mistake,  or  by  an  insane  or  in- 
capacitated person.  Brazil,  No.  3199,  Relatorio  da  Corte,  May  8,  1871, 
Gaceta  Juridica,  vol.  2,  p.  429. 

»«  Art.  145  c.  c.  18  Art.  129.  "  Art.  197. 


288  LATIN-AMERICAN   COMMERCIAL   LAW 

LEGAL    FORMALITIES 

The  form  of  contracts  may  be  essential  when  the  law  or  the 
agreement  of  the  parties  specifically  so  provides. 
Three  systems  may  be  traced  in  this  matter: 

1.  Formalistic  system.  This  is  characterized  by  the 
fact  that  the  validity  of  the  contract  depends  upon  the 
use  of  certain  words  peculiar  to  every  transaction,  as  in 
the  old  ritualistic  system  of  the  Roman  law. 

2.  System  that  requires  a  written  instrument.  In  this 
system,  the  validity  of  a  contract  depends  upon  the 
execution  of  a  private  or  public  instrument,  but  the 
system  requires  no  special  words  or  ritualism,  the  con- 
tract being  interpreted  in  the  light  of  the  purposes  and 
intent  of  the  parties  rather  than  by  the  Uteral  words  of 
the  document. 

3.  Non-formalistic  system.  According  to  this  system, 
in  a  mercantile  agreement  the  parties  may  be  bound 
by  the  meeting  of  the  minds  expressed  orally  or  in  any 
other  clear  way  without  specific  formality. 

These  three  systems  may  be  found  represented  in  every 
one  of  the  Latin-American  codes.  The  first  is  illustrated  in 
the  use  of  certain  words,  for  example,  the  words  ''bill  of 
exchange  "  required  in  countries  like  Brazil  and  Panama  as  a 
legal  requisite  to  the  validity  of  such  instruments;  and  the 
word  "acepto"  for  the  acceptance  of  a  draft  in  certain 
countries.  A  written  instrument  is  required  in  the  case  of 
certain  contracts,  no  matter  what  the  importance  of  the 
transaction;  it  is  also  required  as  a  necessary  formality  in  all 
kinds  of  contracts  the  amount  of  which  is  over  1,500  pesetas 
in  Spain  ($289.50), ^^  200  pesos  ($88.00)  in  Argentina, ^^ 
(Peru  (soles),  ($97.32),2o  and  Uruguay  ($206.84);  ^i  250  pe- 

18  Art.  51. 

In  order  to  establish  whether  the  amount  of  an  obligation  is  more  or  less 
than  1,500  pesetas,  the  computation  must  be  made  in  Spanish  money.  Cuba, 
Tribunal  Supremo,  February  11,  1901.  Jurisp.  del  Trib.  Supr.  in  Materia 
Crim.,  vol.  VI,  p.  75. 

19  Art.  209.  2"  Art.  51.  "  Art.  193. 


MERCANTILE    CONTRACTS  289 

SOS  (bolivianos)  in  Bolivia  (-$87.33)  --  and  in  Nicaragua 
($108.75);  23  400  milreis  ($132)  in  Brazil;  ^^  500  pesos 
$486.60  nominal)  in  Guatemala;  ^^  100  pesos  ($46.54)  ;26 
and  150  pesos  ($62.50)  in  Honduras. 

Public  and  private  instruments. 

A  WTitten  instrument  may  be  public  or  private.  It  is 
private  when  WTitten  and  signed  by  the  parties  only  or  before 
witnesses.  It  is  public  when  written  by  a  notary  and  signed 
before  him.  Generally  the  notary  keeps  the  original  in- 
strument in  his  records  and  gives  the  parties  a  first  certified 
copy;  or  by  judicial  decree  he  may  give  them  a  second 
certified  copy.  By  public  instrument  is  also  meant  every 
document  issued  by  a  public  authority  in  the  performance 
of  his  official  duties. 

Official  brokers  may  also  authenticate  mercantile  instru- 
ments and  these  enjoy  a  certain  evidential  force  comparable 
to  that  of  a  public  instrument,  as  we  have  already  observed. 

FORMATION    OF   A    COMMERCIAL   CONTRACT 

Offer  and  acceptance. 

Between  the  moment  at  which  an  offer  is  made  and  the 
time  at  which  it  becomes  a  perfect  contract  by  acceptance, 
there  are  important  legal  relations  between  the  parties. 

An  offer  can  be  made  to  a  person  who  is  present  and  in 
that  case  the  acceptance  or  refusal  of  said  offer  must  be  made 
at  once  or  some  change  may  be  proposed  by  the  offeree 

"  Art.  211.  23  Art.  132.  24  ^rt.  123. 

A  paper  written  by  the  plaintiff  is  not  considered  written  evidence  which 
may  be  supplemented  by  the  testimony  of  witnesses  in  order  to  prove  the 
existence  of  a  debt  over  400  milreis,  when  it  does  not  refer  to  documents. 
Brazil,  Decision  No.  3,200  of  the  Relatorio  da  Corte,  June  3,  1873,  0  Direito, 
vol.  3,  p.  115. 

Even  though  a  commercial  action  is  brought  for  more  than  400  milreis  it  is 
admissible  and  can  be  proved,  when  that  amoimt  is  the  result  of  several 
transactions,  every  one  of  them  involving  less  than  that  sum.  Decision 
No.  8,342  of  Aug.  23,  1873,  Gazela  Juridica,  vol.  1,  p.  461;  December  3,  1878, 
Relatorio  da  Corte,  O  IXreito,  vol.  18,  p.  358.  Corte  de  Apellagao,  March  31, 
1892,  O  Direilo,  vol.  58,  p.  238. 

"  Art.  195.  26  Art.  184  . 


290  LATIN-AMERICAN    COMMERCIAL    LAW 

which  is  considered  as  a  new  offer;  this  must  be  accepted  or 
repudiated  without  delay.  Once  the  offer  is  accepted  the 
contract  is  binding  unless  the  law  provides  otherwise.  ^^ 

When  the  offer  is  made  to  a  person  residing  in  another 
place,  and  it  is  accepted,  a  doubt  arises  as  to  whether  the 
contract  is  perfected  at  the  moment  when  and  in  the  place 
where  the  offer  was  accepted  or  when  and  where  the  ac- 
ceptance was  receiv'ed  by  the  offerer.  This  is  a  question  of 
great  importance  because  upon  its  decision  depends  the 
application  to  the  case  of  the  law  of  one  or  the  other  of  the 
two  places  involved  in  the  case. 

There  are  two  systems  regarding  this  point: 

1.  Spanish  system.  Contracts  entered  into  by  means 
of  letters  are  perfected  when  the  offer  or  the  modifying 
proposition  has  been  accepted;  -^ 

2.  Italian  system.  Contracts  are  perfected  when  the 
acceptance  of  the  offer  is  received  by  the  offerer.  ^^ 

The  provision  of  article  203  of  the  code  of  Panama  deserves 
special  mention;  it  states  that  ''contracts  entered  into  over 
the  telephone  are  considered  as  made  between  present 
parties  when  the  said  parties  or  their  representatives  per- 
sonally talked  over  the  telephone." 

Telegraphic  correspondence. 

In  the  matter  of  telegraphic  correspondence  the  codes  of 
Spain, ^°  Mexico  ^^  and  Peru  ^-  provide  that  agreements 
made  by  that  method  are  binding  only  when  it  has  been 
so  stipulated  in  advance  and  the  telegrams  have  the  requi- 
sites and  conventional  marks,  if  any,  which  were  previously 
agreed  upon  by  the  parties. 

In  Honduras,  ^^  San  Salvador  ^^  and  Venezuela, ^^  tele- 

'^  The  acceptance  of  an  offer  can  be  express  or  tacit.  Colombia,  Tribunal 
Superior  del  Distrito  de  Panama,  May  31,  1892,  Registro  Jud.  (de  Panama), 
VI,  1694. 

28  Spain,  54;  Bolivia,  215;  Brazil,  127;  Chile,  101;  Colombia,  188;  Costa 
Rica,  190;  Ecuador,  145;  Guatemala,  179;  Honduras,  87;  Mexico,  80;  Peru,  54. 

29  Panama,  210;  San  Salvador,  75;  Uruguay,  204  and  Venezuela,  120. 

30  Art.  51.  "  Art.  80.  ^2  Art.  51. 
33  Art.  84.                                34  Art.  74.                                35  Art.  130. 


MERCANTILE    CONTRACTS  291 

graphic  correspondence  only  creates  legal  effects  between  the 
contracting  parties  after  it  has  been  acknowledged  by  them ; 
Honduras  also  provides  that  such  correspondence  may 
produce  legal  effects  when  it  has  been  authenticated  by  the 
corresponding  telegraph  office.  Argentina  ^'^  and  Panama  ^^ 
provide  that  telegraphic  correspondence  is  governed  by  the 
same  rules  as  govern  letters. 

Contracts  entered  into  through  brokers. 

Contracts  in  which  a  broker  has  intervened  are  deemed 
complete  when  the  parties  to  them  have  accepted  his 
offer.  ^^ 

In  Costa  Rica  ^^  the  same  provision  is  applicable  to  con- 
tracts made  through  factors  or  clerks. 

In  Mexico  the  rule  is  modified  by  the  provision  that  the 
aforesaid  contracts  are  binding  only  when  the  contracting 
parties  have  signed  the  proper  memorandum  {minuta)  in 
the  presence  of  the  broker,  according  to  special  rules.*" 

Effects  of  the  offer  prior  to  acceptance. 

Before  an  offer  is  accepted  there  is  no  binding  legal  tie 
between  the  parties;  but  the  relation  is  one  of  legal  power  in 
the  offeree  and  liability  in  the  offerer  to  have  the  offer  con- 
verted into  a  contract  by  exercise  of  the  offeree's  power  to 
accept.  Inasmuch  as  the  offer  may  ha\"e  led  the  offeree  to 
make  certain  preparations  before  communicating  his  an- 
swer and  before  knowledge  of  a  revocation  by  the  offerer,  the 
legal  situation  is  complex.  The  solutions  given  by  the  codes 
may  be  classified  as  follows: 

1.  The  offerer  may  withdraw  his  offer  during  the 
time  intervening  between  the  sending  of  the  offer  and 
its  acceptance. '^^ 

2.  The  offerer  may  withdraw  his  offer  during  the 

^  Art.  214.  37  Art.  197. 

^  Spain,  5.5;  Argentina,  213;  Bolivia,  214;  Chile,  106;  Colombia,  193;  Hon- 
duras, 88;  Peru,  55;  San  Salvador,  76;  Uruguay,  201. 
^9  Art.  189.  ^n  Art.  82. 

"  Brazil,  127;  Chile,  99;  Colombia,  186;  Ecuador,  143;  Guatemala,  179. 


292  LATIN-AMERICAN    COMMERCIAL    LAW 

time  intervening  between  the  sending  of  the  offer  and 
his  receipt  of  the  acceptance.^' 

3.  The  offerer  must  wait  until  the  return  mail.^^ 

4.  The  offerer  is  bound  to  wait  for  an  answer  for  a 
reasonable  period  sufficient  for  a  reply.  It  is  presumed 
that  the  offer  was  received  on  time,  in  the  absence  of 
proof  to  the  contrary.  Should  the  acceptance  be  sent 
on  time  but  be  delayed  in  reaching  the  offerer,  there  is 
no  contract,  but  the  offerer  must  inform  the  acceptor 
of  this  circumstance  at  once.^^ 

Silence  of  the  offeree. 

The  silence  of  the  offeree  cannot  be  construed  as  accept- 
ance effecting  the  conclusion  of  the  contract,  unless  by 
special  and  previous  stipulation  of  the  parties,  in  order  to 
speed  the  transaction,  such  interpretation  can  be  deduced 
therefrom,  or  when  in  view  of  the  special  character  of  the 
business  and  of  the  circumstances  the  offerer  need  not  wait 
for  an  answer.  ^^ 

All  that  has  been  said  as  to  the  formation  of  a  contract 
must  be  understood  with  the  limitation  that  when  the  law 
requires  a  written  instrument  or  any  other  formality  for  the 
perfection  of  the  contract  the  mere  agreement  of  the  parties 
does  not  suffice  so  long  as  the  legal  requisite  has  not  been 
complied  with. 

EFFECT   OF   CONTRACTS 

Effect  of  a  contract  between  the  parties  thereto. 

A  contract  binds  the  parties  thereto  only.  It  also  binds 
their  heirs  and  assignees,  unless  the  obligation  arising  out  of 
the  agreement  is  unassignable  and  personal  only. 

Effect  of  a  contract  in  regard  to  third  parties. 

There  are  three  exceptions  to  the  above  mentioned  rule: 
(a)  when  the  creditors  demand  a  declaration  of  the 

*2  Uruguay,  204;  Venezuela,  12-1.  *'  Nicaragua,  134. 

**  Panama,  204.  "  Panama,  205, 


MERCANTILE  CONTRACTS  293 

nullity  of  acts  and  contracts  of  their  debtor  made  in 
fraud  of  their  rights  {accion  pauliana) ; 

(b)  when  a  contract  is  made  for  the  special  benefit 
of  third  parties,  who  may  in  that  case  accept  and  claim 
the  benefits  conferred;  and 

(c)  when  creditors  prosecute  the  rights  of  their 
debtor,  who  refuses  to  do  so  himself.  ^^ 

By  third  parties  are  meant  all  persons  who  neither  per- 
sonally nor  by  means  of  guardians,  agents  or  any  other 
representative  have  entered  into  the  contract. 

Contracts  constitute  law  for  the  parties. 

Lawful  agreements  constitute  law  for  the  parties  and  for 
those  who  legally  represent  them.  They  bind  the  parties  not 
only  to  that  which  has  been  expressly  stipulated  but  also  to 
all  the  consequences  which  equity  and  legal  usage  deduce 
from  the  obligation,  according  to  its  nature."*^ 

Obligations  of  giving  (obligatio  dandi). 

An  obligation  of  giving  something  implies  the  duty  of 
preserving  it  with  the  diligence  required  by  the  nature  of 
the  obligation  and  the  circumstances  of  person,  time  and 
place.  ^^ 

Obligations  of  doing  (obligatio  faciendi). 

When  the  obligation  consists  in  the  doing  of  something 
which  the  debtor  fails  to  perform,  the  respect  for  human 
liberty  and  the  impossibility  of  finding  an  adequate  means  of 
compulsion,  has  induced  the  law  to  provide  that  instead  of 
doing  the  act  the  debtor  must  be  compelled  to  pay  damages 
to  the  creditor.  The  same  rule  governs  the  obligation  of  not 
doing  some  act.^'* 

DIFFERENT   KINDS    OF    OBLIGATIONS 

Several  and  joint  obligations  (obligationes  solidarias). 
According  to  the  civil  law,  the  fact  that  two  or  more 

"  Uruguay,  226  to  229.  "  Uruguay,  209. 

«  Uruguay,  210,  211.  «  Uruguay,  215. 


294  LATIN- AMERICAN    COMMERCIAL    LAW 

creditors  and  two  or  more  debtors  have  been  parties  to  an 
agreement  does  not  imply  that  each  of  the  creditors  may  ask 
that  each  of  the  debtors  be  compelled  to  deliver  the  whole 
thing,  the  subject-matter  of  the  obligation,  although  they 
may  so  stipulate. 

Three  systems  are  followed  by  the  commercial  codes  of 
Latin-America  as  to  the  joint  and  several  character  of 
commercial  obhgations. 

French  system.  The  codes  are  silent  in  the  matter  and 
leave  it  to  be  governed  by  the  civil  code  or  by  commer- 
cial custom,  according  as  the  independence  of  the 
commercial  law  is  or  is  not  accepted  in  the  countr^\ 

German  system.  In  mercantile  transactions  obliga- 
tions are  deemed  joint  and  several. '^ 

System  of  Uruguay.  The  code  expressly  provides 
that  a  joint  and  several  obligation  is  not  presumed  in 
commercial  matters.  ^^ 

Conditional  obligations. 

An  obligation  is  conditional  when  the  acquisition  of  rights, 
or  the  extinction  of  those  already  acquired  depends  upon 
some  event,  which  constitutes  the  condition. 

Conditions  may,  be  precedent  (suspensivas)  or  subsequent 
(resolutorias) ;  the  first  suspend  all  effects  of  an  obligation 
until  the  happening  of  the  condition,  the  second  leave  the 
contract  in  full  force,  but  subject  to  termination  by  the 
happening  of  the  condition.  As  in  mercantile  matters  most 
contracts  relate  to  personal  property,  which  is  easily  dealt 
with  and  disposed  of,  it  often  happens  that  its  return  to  the 
former  .owner  proves  impossible;  if  that  is  the  debtor's 
obligation  in  the  case  of  the  happening  of  a  condition  sub- 
sequent, delivery  of  the  equivalent  of  the  property  in  ques- 
tion satisfies  the  obligation. 

The  condition  subsequent  produces  a  retroactive  effect. 
It  is  considered  that  the  former  owner  has  never  ceased  to 
possess  the  subject-matter  of  the  obligation;  should  the  thing 

s"  Panama,  221;  San  Salvador,  79;  Venezuela,  115. 
8'  Art.  263. 


MERCANTILE  CONTRACTS  295 

be  lost  or  impaired  the  loss  falls  on  him,  unless  the  loss  or 
impairment  is  due  to  the  fault  or  negligence  of  the  other 
party.  Rights  conferred  to  third  parties  while  the  condition 
was  pending  shall,  however,  produce  all  their  effects  in  spite 
of  the  retroactive  effect  oftthe  condition,  when  the  subject- 
matter  of  the  obligation  was  delivered  to  them. 

A  condition  subsequent  is  always  implied  in  bilateral 
contracts  in  the  event  that  one  of  the  parties  fails  to  comply 
with  his  obligation;  but  the  other  party  may  choose  between 
the  rescission  of  the  contract  and  its  performance,  and  the 
payment  of  damages  in  either  event.  ^^ 

Obligations  subject  to  a  term. 

A  term  may  be:  a,  legal;  h,  conventional;  c,  discretionary. 
The  first  is  established  by  the  law,  the  second  by  the  parties, 
and  the  third  by  the  court  or  judge.  ^^ 

Legal  term  for  obligations. 

Some  of  the  codes  are  silent  as  to  the  legal  term  for  the 
fulfillment  of  commercial  obligations;  the  others  may  be 
divided  into  the  following  groups: 

Obligations  in  which  no  term  or  period  is  established  by 
the  parties  or  by  the  law,  are  enforceable: 

(a)  ten  days  after  the  date  of  the  contract  if  they  may 
be  enforced  by  means  of  an  ordinary  action  and  the 
next  day  if  they  may  be  enforced  by  means  of  summary 
executive  action  (accion  executiva) ;  ^^ 

52  Uruguay,  230  to  246. 

A  contract  cannot  be  rescinded  when  one  of  the  parties  fails  to  comply  with 
it,  if  a  rescissory  clause  has  been  stipulated  for  the  benefit  of  the  seller  only. 
Argentina,  Camara  2^  de  Apelacion  de  lo  civil  de  la  Capital,  August  12,  1913, 
Jut.  de  Ids  Tribs.  Macs.,  Aug.,  1913,  p.  152. 

"  The  stipulation  that  the  debtor  has  the  privilege  to  pay  any  time  he 
pleases  does  not  imply  that  the  obligation  dcspends  on  a  term.  Ecuador,  Corte 
Suprema  de  Quito,  Cuvi  v.  Mila,  July  25,  1910,  Gaceta  Judicial,  1911-1912, 
p.  948. 

"Spain,  62;  Costa  Rica,  207;  Honduras,  95;  Mexico,  83;  Peru,  62;  San 
Salvador,  78. 

Cf.  infra,  chapter  on  legal  procedure. 


296  LATIN-AMERICAN    COMMERCIAL    LAW 

(5)  ten  days  after  the  date  of  the  contract;  ^^ 

(c)  three  days  after;  ^^ 

(d)  any  time,  unless   the  nature  of   the  transaction 
or  mercantile  usage  requires  otherwise.  ^^ 

Manner  of  computing  terms. 

Terms  consisting  of  a  certain  number  of  days  are  computed 
without  including  the  day  of  the  contract,  but  counting  the 
day  on  which  the  obligation  is  due,  so  that  a  judicial  action 
can  be  brought  when  that  day  has  passed. ^^ 

Months  are  reckoned  from  date  to  date;  should  the  last 
month  not  have  the  corresponding  number  of  days,  the 
obligation  is  due  the  last  day  of  that  month.  Years  are  of  365 
days.°^ 

No  terms  of  grace  or  courtesy  or  of  any  other  character 
which  may  alter  the  fulfillment  of  a  mercantile  obligation  are 
admitted,  except  those  established  by  the  parties  themselves 
or  by  the  law.*'" 

Most  of  the  commercial  codes  do  not  state  whether  the 
term  of  an  obligation  may  be  deemed  to  run  in  favor  of  both 
parties,  or  in  favor  of  the  debtor  alone  as  the  civil  law  pro- 
vides; only  the  codes  of  Colombia,"  Ecuador  ^^  and  Uru- 
guay ^^  state  that  the  term  is  considered  to  run  in  favor  of 
both  parties,  and  the  creditor  cannot  be  compelled  to  receive 
premature  payment  unless  otherwise  stipulated. 

Panama  provides  the  reverse.^^  A  debtor  may  fulfill  his 
obligation  before  it  is  due  when,  from  the  clauses  of  the  con- 

55  Brazil,  127;  Uruguay,  252.  "  Panama,  227. 

55  Bolivia,  221. 

58  Bolivia,  220;  Brazil,  135;  Colombia,  199;  Costa  Rica,  204;  Guatemala,  193; 
Nicaragua,  137;  Panama,  229;  Uruguay,  250. 

The  provision  of  the  codes  that  in  mercantile  obligations  which  have  no 
period  stipulated  or  established  by  the  law,  said  obligation  is  exigible  ten  days 
after  its  date,  does  not  refer  to  bills  of  exchange  and  similar  instruments. 
Brazil,  No.  7994,  March  6,  1872,  Revista  Juridica,  1873,  p.  250. 

59  Spain,  60;  Chile,  110;  Colombia,  198;  Mexico,  84;  Panama,  229;  Uiuguay, 
251. 

8"  Spain,  61;  Bolivia,  219;  Chile,  112;  Colombia,  210;  Costa  Rica,  206; 
Ecuador,  153;  Mexico,  84;  Peru,  61;  Nicaragua,  138. 
81  Art.  207.  82  Art.  158.  83  ^rt.  249. 

8<  Art.  234. 


MERCANTILE  CONTRACTS  297 

tract  or  from  the  circumstances,  a  contrary  intention  of  the 
parties  cannot  be  inferred.  The  debtor  in  that  case  may  only 
deduct  a  discount  when  so  stipulated  or  accepted  by  usage. 

Obligations  with  a  penalty  clause. 

In  case  of  failure  to  comply  with  an  obligation  containing 
a  penalty  clause,  the  creditor  may  choose  between  the 
payment  of  the  penalty  or  damages,  but  he  cannot  exact 
both,  unless  expressly  so  stipulated. ^^ 

In  Brazil  ^^  and  Uruguay,*'"  in  case  of  breach  of  a  contract 
containing  a  penalty  clause,  the  party  can  ask  only  for  the 
payment  of  the  stipulated  penalty. 

In  Panama  ^^  also  the  party  can  ask  only  for  the  payment 
of  the  penalty,  unless  otherwise  stipulated,  or  when  the 
debtor  has  acted  in  bad  faith.  Nevertheless,  should  the 
penalty  be  due  only  in  case  of  failure  to  perform  the  contract 
at  the  time  and  place  agreed  upon,  the  creditor  may  request 
simultaneously  the  fulfillment  of  the  contract  and  the 
payment  of  the  penalty,  if  this  right  has  not  been  expressly 
waived  or  if  performance  of  the  contract  has  been  accepted 
without  protest. 

The  penalty  must  be  paid  even  though  the  creditor  has 
suffered  no  damage.  The  creditor  who  sustained  damage 
greater  than  the  penalty  cannot  demand  a  greater  indemnity 
unless  he  proves  the  debtor's  bad  faith.  The  penalty  cannot 
be  demanded  when  the  performance  of  the  contract  has 
become  impossible  by  reason  of  unforeseen  events  or  the  fault 
of  the  creditor  himself,  or  when  performance  of  the  obliga- 
tion has  been  accepted  without  protest. 

*^  Spain,  56;  Bolivia,  216;  Costa  Rica,  192;  Guatemala,  ISO;  Honduras,  89; 
Mexico,  88;  Nicaragua,  134;  Peru,  56. 

A  debtor  who  fails  to  comply  with  his  obligation  at  the  proper  time  and 
place,  must  pay  the  stipulated  penalty,  even  though  he  had  good  excuse  for 
the  failure.  Argentina,  Camara  1°  de  Apel  de  lo  civ.  de  la  Capital,  July  17, 
1914,  Sosa  Colombo. 

Interest  due  on  a  sum  in  the  payment  of  which  there  has  been  default,  can 
only  be  computed  from  the  time  of  the  service  of  the  summons,  unless  other- 
wise expressly  stipulated.  Arg(;ntiiia,  Corte  Suprcma  de  la  Naci6u,  July  1, 
1913,  Devoto  and  Rocha  v.  National  Govcrmnent. 

««  Art.  128.  87  Art.  268.  ^  Arts.  237  to  239. 


CHAPTER  XVII 

Mercantile  Contracts 

GENERAL  PRINCIPLES  (continued) 

Alternative  obligations. 

In  alternative  obligations,  the  right  of  election  lies  with 
the  debtor  unless  it  has  been  expressly  granted  to  the 
creditor.  When  only  one  alternative  is  feasible,  the  debtor 
loses  the  privilege  to  elect. 

When  the  privilege  of  election  has  been  expressly  given  to 
the  creditor,  an  obligation  ceases  to  be  alternative  from  the 
date  on  which  notice  of  the  election  was  given  to  the  debtor. 
Before  such  notice  the  liabilities  of  the  debtor  are  governed 
by  the  following  rules: 

1.  When  any  of  the  things  he  is  to  deliver  has  been 
lost  by  unforeseen  events,  he  must  dehver  whichever 
article  the  creditor  may  select  from  among  those 
remaining  or  the  one  that  remains,  if  only  one. 

2.  When  the  loss  of  one  of  the  things  was  due  to  the 
fault  of  the  debtor,  the  creditor  may  ask  for  any  of  those 
remaining  or  the  value  of  that  which  has  disappeared 
through  the  fault  of  the  debtor. 

3.  When  all  the  things  have  been  lost  through  the 
fault  of  the  debtor,  the  creditor  has  the  privilege  of 
selecting  and  demanding  the  value  of  any  one  of  them. 
The  same  rules  are  applicable  to  obhgations  of  doing  or 
not  doing  in  case  some  or  all  of  the  acts  to  be  performed 
have  become  impossible. 

Divisible  and  indivisible  obligations. 

Obligations  of  giving  a  specified  thing,  as  well  as  those  not 
susceptible  of  partial  fulfillment  are  considered  indivisible. 
In  the  case  of  indivisible  obligations,  if  one  of  the  debtors 

298 


MERCANTILE  CONTRACTS  299 

fails  to  comply  with  his  duties,  he  is  liable  in  damages,  or 
what  the  civilians  call  ''damages  and  injuries"  (damnum 
emergens  et  lucrum  cessans).  Joint  debtors  who  were  ready 
to  comply  with  their  duties  need  only  contribute  to  the 
indemnity  in  a  share  proportionate  to  the  value  of  the  thing 
to  be  delivered  or  of  the  service  of  w^hich  the  obligation 
consists. 

Performance  of  obligations. 

Commercial  contracts  must  be  performed  in  good  faith, 
according  to  their  terms,  without  misconstruing  the  correct, 
proper  and  usual  meaning  of  the  words,  whether  oral  or 
written,  and  without  altering  the  natural  consequences  of 
the  language  used  by  the  contracting  parties  in  expressing 
their  will  and  contracting  their  obligation.^ 

Wlien  a  difference  is  found  between  the  two  copies  of  a 
contract  entered  into  through  an  agent  or  broker,  the  case  is 
controlled  by  the  corresponding  memorandum  entered  in  the 
books  of  the  agent  or  broker,  provided  the  books  are  kept 
according  to  the  legal  requisites.^ 

Rules  for  interpretation  of  contracts. 

If  there  is  any  doubt  about  the  meaning  and  effect  of  a 
contract  the  following  rules  are  to  be  applied: 

1.  The  intent  of  the  parties  prevails  over  the  Hteral 
meaning  of  the  words;  the  words  and  sentences  in  the 
letters  of  merchants  are  to  be  understood  not  in  their 
academic  connotation  but  according  to  the  meaning 
attributed  to  them  by  merchants.^ 

'Spain,  57;  Costa  Rica,  194;  Guatemala,  181;  Honduras,  90;  Mexico,  78; 
Panama,  214;  Peru,  57;  Uruguay,  209. 

^  Spain,  58;  Costa  Rica,  198;  Honduras,  91;  Panama,  215;  Peru,  58;  San 
Salvador,  77. 

'  When  the  tenor  of  a  contract  is  clear,  the  rules  for  the  interpretation  of  con- 
tracts are  useless.  Spain,  Tribunal  Supremo,  April  11,  1865;  Gaceta  of  April  23, 
1865,  January  15,  1867,  Ih.  Jan.  19,  1867,  June  19,  1865. 

The  interpretation  of  a  doubtful  clause  in  a  contract  is  a  matter  left  to  the 
discretion  of  the  judge.  Mexico,  Primera  Sala  Del  Sup.  Trib.  de  Just,  del 
Distrito  Fed.,  May  29,  1893,  Garcia  v.  Fuertes,  Anuario  de  Leg.  y  Jut.  Sec.  de 
Casacion,  1893. 


300  LATIN-AMERICAN    COMMERCIAL   LAW 

2.  The  acts  of  the  contracting  parties,  at  the  time  of 
and  subsequent  to  the  making  of  the  contract  must  be 
taken  into  consideration.^ 

3.  Commercial  usages  and  practices  generally  ob- 
served must  be  applied  in  appropriate  cases. 

4.  When  a  word  is  used  which  may  be  applicable  to 
different  quantities  or  moneys  it  is  understood  that  the 
quantity  or  money  used  in  similar  contracts  is  meant. 
When  days,  months  or  years  are  mentioned,  it  must  be 
understood  that  the  days  are  of  twenty-fours  hours,  the 
months  of  the  number  of  days  indicated  in  the  Gregorian 
calendar,  and  the  year  of  three  hundred  and  sixty-five 
days. 

5.  When  a  sentence  may  be  construed  in  two  mean- 
ings, one  making  the  contract  void  and  the  other  valid, 
the  latter  is  to  be  accepted.  If  both  interpretations 
make  the  contract  valid,  that  more  reasonable  and  fair 
is  to  be  followed.^ 

6.  Those  conditions  which  are  natural  and  usual  in 
every  contract  are  considered  implied  in  it  when  the 
parties  do  not  expressly  stipulate  otherwise. 

7.  When  according  to  different  interpretations  a 
contract  may  be  detrimental  to  one  of  the  parties  that 
interpretation  which  produces  the  least  detriment  must 
be  accepted.^ 

The  rule  that  when  the  purpose  of  the  parties  to  a  contract  is  well  known  it 
must  govern  the  case  rather  than  the  grammatical  meaning  of  the  words  of  the 
instrument  itself,  is  applicable  in  a  contest  between  the  parties  themselves, 
but  not  to  a  third  party,  who  must  abide  by  the  literal  contents  of  the  con- 
tract. Colombia,  Trib.  Sup.  del  Dist.  del  Centre  de  Antioquia,  May  6,  1897, 
Cronica  Judicial  de  Antioquia,  XIV,  p.  2085. 

^  Doubts  which  may  arise  in  the  interpretation  of  a  contract  must  be  re- 
solved by  taking  into  consideration  principally  the  acts  of  the  parties,  which 
may  show  how  they  understood  their  rights  and  obligations  as  therein  con- 
tracted.   Spain,  Trib.  Sup.,  July  5,  1893;  Gaceta  of  Nov.  17  and  18,  1893. 

^  It  is  never  presumed  that  two  persons  stipulate  senseless  and  useless 
things  in  a  contract.  Colombia,  Trib.  Sup.  del  Dist.  de  Magdalena,  Sept.  11, 
1897,  Revista  Judicial,  XI,  p.  938. 

8  A  contract  must  be  interpreted  in  the  way  least  onerous  to  the  debtor. 
Peru,  Amat.  v.  Marzano,  Corte  Suprema  de  Just.  Lima,  October  10,  1908, 
Anales  Judiciales,  v.  Ill,  p.  452. 


MERCANTILE  CONTRACTS  301 

8.  Acts  of  merchants  are  not  presumed  to  be  gratui- 
tous. 

9.  When  a  doubt  cannot  be  resolved  by  applying  the 
principles  of  law,  commercial  usages  and  practices,  it  is 
decided  in  favor  of  the  debtor.^ 

Contracts  made  in  foreign  countries. 

In  all  matters  relating  to  the  performance  of  contracts 
entered  into  in  foreign  countries  and  to  be  performed  in 
another  country  the  law  of  the  latter  is  applicable.^ 

By  payment  is  meant  the  delivery  of  the  thing  or  the 
rendering  of  the  service  which  was  promised.  The  creditor 
cannot  be  compelled  to  receive  a  thing  different  from  that 
stipulated  for,  even  though  it  is  of  an  equivalent  or  greater 
value.^ 

Payment  can  be  made  by  the  debtor,  his  representative  or 
by  another  person  interested  in  the  performance  of  the  obli- 
gation. It  can  also  be  made  by  a  third  party  with  the 
expressed  or  implied  consent  of  the  debtor;  and,  finally,  it 
can  be  made  by  a  third  party  against  the  will  of  the  debtor.  ^'^ 
Expenses  arising  out  of  or  incidental  to  payment  are  for  the 
account  of  the  debtor.  ^^ 

Place  in  which  the  obligation  is  to  be  performed. 

The  rules  of  the  civil  law  provide  that  the  object  of  a 
contract  must  be  delivered: 

'  Spain,  59,  60;  Argentina,  218,  220;  Brazil,  130  to  132;  Chile,  6,  110;  Colom- 
bia, 3,  4;  Costa  Rica,  196,  199,  201;  Ecuador,  4,  156;  Guatemala,  182,  183,  188, 
190;  Honduras,  92,  93;  Nicaragua,  135,  136;  Panama,  216,  220;  Uruguay,  295, 
296,  298. 

« Chile,  113;  Colombia,  202,  203;  Ecuador,  154;  Venezuela,  124. 

9  Spain,  1157  c.  c;  Argentina,  744  c.  c;  Chile,  1568  c.  c;  Colombia,  1627  c.  c; 
Costa  Rica,  764  c.  c;  Mexico,  1514-1515  c.  c;  Panama,  1044  c.  c;  Uruguay, 
1449  c.  c. 

'« Spain,  1158-1159  c.  c;  Argentina,  760  to  762  c.  c;  Chil:-,  1572-2574  c.  c; 
Colombia,  1632  c.  c;  Costa  Rica,  765  c.  c;  Mexico,  1529  to  1535  c.  c;  Panama, 
1045  c.  c;  Uruguay,  14.50  c.  c;  Venezuela,  1208  c.  c. 

"Spain,  1168  c.  c;  Chile,  1571  c.  c;  Colombia,  1629  c.  c;  Costa  Rica, 
784  0.  c;  Mexico,  1524  c.  c;  Panama,  1055  c.  c;  Uruguay,  1467  c.  c;  Ven- 
ezuela, 1223  c.  c. 


302  LATIN-AMERICAN    COMMERCIAL    LAW 

(a)  at  the  place  designated  in  the  contract; 

(6)  if  no  stipulation  is  made  therefor,  delivery  is  to 
be  made  at  the  place  where  the  thing  was  when  the 
contract  was  entered  into; 

(c)  in  any  other  case,  at  the  domicil  of  the  debtor.  ^- 
The  commercial  codes  of  Mexico  and  Panama  embody 
special  rules,  as  follows: 

Mexico  provides  ^^  that  mercantile  obligations  must  be 
perforaied  at  the  place  designated  in  the  contract;  if  the 
contract  is  silent,  performance  must  be  made  at  the  place 
deemed  most  conformable  to  the  intention  of  the  parties 
according  to  the  character  of  the  transaction,  by  mutual 
agreement  or  at  the  discretion  of  the  judge. 

Panama,  ^^  reproducing  the  rule  of  Mexico,  except  the 
clause  relating  to  the  mutual  agreement  of  the  parties  or 
judicial  discretion,  provides  instead  that  in  other  cases  the 
contract  must  be  performed  at  the  place  where  the  com- 
mercial house  or  the  domicil  or  residence  of  the  debtor  is 
located.  When  the  object  to  be  delivered  is  a  specific  one 
located  in  the  place  where  the  contract  was  entered  into,  to 
the  knowledge  of  the  parties,  delivery  must  be  made  in  that 
place.  Money  debts,  ^^  except  those  consisting  of  negotiable 
instruments  payable  to  bearer  or  to  order,  must  be  paid  at 
the  place  where  the  creditor  has  his  commercial  house,  or  in 
default  thereof  at  his  residence. 

Application  of  payments  in  case  of  several  debts. 

According  to  the  civil  law,  a  person  having  several  debts 
of  the  same  class  owing  to  a  single  creditor,  can  declare  at  the 
time  of  making  a  payment  to  which  debt  it  is  to  be  applied. 
The  payment  cannot  be  applied  to  the  capital  or  principal 
until  the  interest  has  been  paid  off.  Payment  must  then  be 
applied  to  the  debt  most  onerous  to  the  debtor.  If  the 
debts  have  all  matured  and  are  of  the  same  kind,  pajinent 
must  be  applied  to  all  pro  rata.^^    This  system  is  favorable 

12  Art.  1171  of  the  Spanish  civ.  c. 

"  Art.  86.  1^  Art.  224.  "  Art.  225. 

"Art.  1172  to  1174  of  the  Spanish  civil  code. 


MERCANTILE    CONTRACTS  303 

to  the  debtor  and  in  the  absence  of  a  contrary  provision  in  the 
commercial  law  or  usages  it  must  be  applied. 

Chile  ^^  has  adopted  an  intermediate  system  which  leaves 
the  application  of  a  payment  to  the  discretion  of  the  creditor, 
provided  the  debtor  has  not  designated  any  special  debt  at 
the  time  of  making  the  payment. 

Colombia  ^^  and  Panama  ^^  follow  a  system  entirely 
favorable  to  the  creditor;  the  former  pro^'ides  that  the 
creditor  of  various  matured  credits  against  the  same  debtor 
may  apply  a  payment  to  the  claim  which  is  least  secured  and 
the  latter  leaves  the  application  of  the  payment  entirely  to 
the  discretion  of  the  creditor. 

The  receipt  and  its  legal  effects. 

A  debtor  who  pays  has  a  right  to  demand  a  receipt  and 
need  not  be  satisfied  merely  with  the  return  of  the  document 
which  serves  to  prove  his  debt.  The  receipt  is  the  evidence 
of  his  payment.  This  consequence  attaches  to  the  character 
of  an  obligation  and  its  performance,  and  it  is  expressly 
provided  for  by  the  codes  of  Chile,  ^'^  Colombia,  ^^  Ecuador  -^ 
and  Venezuela.-^ 

A  receipt  for  a  debt  carries  a  presumption  of  the  payment 
of  all  other  debts  due  previously,  when  it  is  customary  for  the 
merchant  who  gives  the  receipt  to  collect  his  debts  at  fixed 
periods.-^ 

In  paying  an  account  or  in  giving  a  receipt  a  merchant 
preserves  his  right  to  rectify  mistakes,  omissions,  double 
entries  or  any  other  errors.  ^^ 

Tender  of  payment  and  judicial  deposit. 

It  would  not  be  fair  to  allow  the  creditor  to  prolong  the 

"  Art.  121.  18  Art.  213.  i'  Art.  222. 

«>  Art.  119.  21  Arts.  209,  210. 

Article  9  of  law  No.  110  of  1888  prohiliits  the  judges  and  public  officials  from 
admitting  in  evidence  receipts  which  are  not  written  on  stamped  i)aper. 
Colombia,  Tribunal  Supremo  del  Dist.  de  Cundtnamarca,  September  24, 
1894,  Registro  Jud.  de  Cundinamarca,  VI,  p.  2571. 

"  Arts.  160,  161,  162.  =»  Arts.  125,  127,  128. 

'^  Chile,  120;  Colombia,  211;  Ecuador,  161;  Venezuela,  127. 

"Chile,  122;  Colombia,  214;  Ecuador,  162;  Vcmezuela,  128. 


304  LATIN- AMERICAN    COMMERCIAL    LAW 

obligations  of  the  debtor  for  an  indefinite  period,  particu- 
larly in  mercantile  affairs  which  require  quick  disposition. 
The  commercial  codes  have  no  general  provisions  tending  to 
release  the  debtor  on  tender  of  payment;  they  imply  such 
rules,  however,  in  cases  such  as  the  delivery  of  the  thing 
sold,  when  the  buyer  does  not  accept  it,  or  in  cases  of  trans- 
portation and  freight.  The  procedure  followed,  therefore, 
is  that  established  by  the  civil  law,  which,  substantially,  is 
as  follows: 

When  the  creditor  refuses  to  accept  payment,  when  he  is 
absent  or  is  an  incompetent  or  incapacitated  person,  when 
different  persons  claim  to  be  the  legal  creditor,  or  when  the 
document  in  which  the  obligation  was  evidenced  has  been 
lost,  the  debtor  may  release  himself  from  the  obligation  by 
depositing  the  object  or  amount  of  the  debt  in  the  place 
designated  by  the  court.  Before  the  court  will  order  the 
deposit,  the  debtor  is  required  to  prove  that  the  payment  was 
tendered  and  the  intention  to  deposit  advertised.  Notice 
must  also  be  given  to  the  interested  persons  after  the  deposit 
has  been  made.  The  judicial  deposit  puts  an  end  to  the 
obligation  of  the  debtor;  the  creditor  can  at  any  time  with- 
draw the  deposit,  but  if  he  authorizes  the  debtor  to  withdraw 
it  the  creditor  loses  all  his  special  privileges  with  respect  to 
the  money  or  article  deposited.  The  debtor  and  sureties  are 
thereby  discharged.  ^^ 

Loss  of  the  thing  due. 

The  obligation  of  giving  a  specified  thing  is  extinguished 
when  the  thing  is  lost  or  destroyed  without  fault  on  the 
part  of  the  debtor,  provided  he  is  not  in  default.     In  the 

28  Spain,  1176  c.  c;  Argentina,  790  c.  c;  Chile,  1598  c.  c;  Colombia, 
1656  c.  c;  Costa  Rica,  797  c.  c;  Mexico,  1556  c.  c;  Panama,  1063  c.  c;  Uru- 
guay, 1481  c.  c;  Venezuela,  1232  c.  c. 

The  judicial  deposit  of  a  debt  does  not  exonerate  a  debtor  from  his  obligation 
as  long  as  said  deposit  has  not  been  approved  by  the  court  in  a  proper  judicial 
decision;  therefore  the  debtor  may  be  adjudged  in  default  in  complying  with 
the  corresponding  contract  while  the  proceedings  relating  to  the  judicial 
deposit  are  pending.  Mexico,  Tribunal  Sup.  del  Dist.  Fed.,  August  28,  1899, 
Arevalo  v.  Diputacion  de  Mineria  de  Pachuca,  An.  de  Leg.  y  Jur.  Sec.  de  Casa- 
ci6n,  1894,  p.  361. 


MERCANTILE  CONTRACTS  305 

absence  of  proof  to  the  contrary,  it  is  presumed  that  the 
loss  occurred  through  the  fault  of  the  debtor  when  the  thing 
was  lost  while  in  his  possession. 

When  the  obligation  is  extinguished  by  loss  of  the  thing, 
all  rights  of  action  which  the  debtor  might  have  had  with 
respect  thereto  against  third  persons  pass  to  the  creditor. 

Release  from  a  debt. 

Release  from  a  debt  is  governed  by  the  law  with  respect 
to  gifts,  but  the  release  may  be  tacit. 

When  a  private  instrument  evidencing  a  debt  appears  in 
possession  of  the  debtor,  it  is  presumed,  in  the  absence  of 
proof  to  the  contrary,  that  the  creditor  intentionally  de- 
livered the  instrument  to  and  thereby  discharged  the  debtor. 

Merging  rights  of  creditor  and  debtor. 

Merging  of  the  rights  of  creditor  and  debtor  does  not 
extinguish  debts  due  in  severalty,  except  with  respect  to  the 
part  in  which  the  character  of  creditor  and  debtor  are 
merged. 

Set-off. 

A  set-ofT  takes  place  when  two  persons  are  reciprocally 
creditors  and  debtors  of  each  other.  In  order  that  set-off 
may  take  place  it  is  necessary: 

1.  That  each  of  the  persons  indebted  be  a  principal 
debtor; 

2.  That  the  reciprocal  debt  consists  of  a  liquidated 
sum  of  money  or  if  the  things  due  are  perishable,  that 
they  be  of  the  same  kind  and  quality; 

3.  That  both  debts  be  due; 

4.  That  no  lien  or  suit  instituted  by  a  third  party,  of 
which  due  notice  has  been  given  to  the  debtor,  affects 
either  creditor  or  debtor. 

Nevertheless,  sureties  may  offset  against  the  claim  of  the 
creditor  whatever  the  latter  owes  to  the  principal  debtor. 

A  debtor  who  has  consented  to  an  assignment  of  rights  by 
his  creditor  to  a  third  party,  cannot  set  off  against  the 


306  LATIN- AMEEICAN    COMMERCIAL   LAW 

assignee  a  claim  against  the  assignor.  In  the  United  States 
generally,  notice  of  the  assignment  suffices  to  effect  this 
disability.  If  the  debtor,  after  notice  by  the  creditor  of  the 
assignment,  does  not  consent  to  it,  he  may  set  off  against  the 
assignee  his  claims  against  the  assignor  existing  prior  to  the 
assignment,  but  not  those  contracted  subsequently.  When 
the  assignment  is  made  without  the  knowledge  of  the  debtor, 
he  can  offset  against  the  assignee  credits  existing  both  prior 
to  and  subsequent  to  the  assignment,  but  without  knowledge 
thereof. 

Set-off  can  not  take  place  when  any  of  the  debts  is  derived 
from  a  deposit  or  thing  deposited  with  the  debtor,  nor  can  it 
take  place  against  an  obligor  whose  promise  was  gratuitous 
and  without  consideration. 

Novation  (novacion). 

Substitution  of  a  new  obligation  for  an  old  one,  which  is 
thereby  extinguished,  may  occur  in  one  of  the  following  ways: 

1.  By  a  change  in  the  subject-matter  of  the  debt  or 
its  principal  elements  or  conditions. 

2.  By  a  substitution  in  the  person  of  the  debtor. 
This  novation  may  be  made  without  the  privity  of  the 
old  debtor,  or  by  the  debtor's  transmission  of  his  debt 
to  another,  who  accepts  the  obligation  and  is  himself 
accepted  by  the  creditor. 

3.  By  a  substitution  in  the  person  of  the  creditor. 
All  three  parties  must  assent  to  the  new  bargain.  It 
is  not  presumed;  it  must  always  be  expressly  declared. ^^ 

Nevertheless,  the  substitution  of  a  new  creditor  in  the 
rights  of  a  former  one  is  presumed: 

1.  When  an  ordinary  creditor  pays  a  preferred 
creditor,  e.  g.,  in  cases  of  claims  against  bankrupts. 

2.  When  a  third  party  who  has  no  interest  in  the  debt 
pays  it  with  the  express  or  tacit  consent  of  the  debtor. 

"  The  substitution  of  one  obligation  for  another  is  not  presumed  and  is  not 
proved  by  a  copy  of  a  contract  in  which  no  mention  is  made  of  the  obligation 
supposed  to  be  substituted.  Mexico,  Secunda  Sala  del  Sup.  Trib.  del  Dist. 
Fed.,  Aug.  8,  1911,  Gallopin  v.  Lejarza,  Diario  de  Jur.,  1912,  p.  386. 


MERCANTILE  CONTRACTS  307 

3.    When  a  person  who  has  an  interest  in  the  perfor- 
mance of  the  obUgation  pays  it,  in  which  case  a  partial 
or  total  merging  of  the  primary  obligation  may  take 
place.-* 
In  such  case,  the  partly  paid  creditor  may  enforce  his 
rights  with  respect  to  the  balance  with  a  preference  over  the 
subrogated  creditor. 

Prescription  (statute  of  limitations). 

In  legal  matters  the  word  "prescription"  {prescripcion)  has 
two  meanings: 

(a)  it  is  a  method  of  acquiring  ownership;  and, 
(h)  it  is  a  method    of   releasing  a  person  from  an 
obligation  by  lapse  of  time. 

Requisites  of  prescription. 

For  acquisitive  prescription  it  is  necessary  to  possess 
things : 

a,  in  good  faith;  h,  under  a  claim  of  right  or  valid 
title;  c,  during  a  certain  time  specified  by  law;  d,  pub- 
licly; e,  peacefully;  and/,  without  interruption. 

Good  faith  consists  in  the  belief  that  the  person  from  whom 
the  thing  was  received  was  its  owner  and  could  transfer 
ownership  therein. 

By  claim  of  right  or  valid  title  is  understood  a  title  which 
legally  suffices  to  transfer  ownership  in  the  thing  claimed. 
A  claim  of  valid  title  must  be  proved ;  it  is  never  presumed. 

The  prescriptive  period  established  by  the  law  varies  in 
different  cases  and  countries.  It  will  be  referred  to  in  its 
appropriate  place  in  this  work. 

Possession  is  said  to  be  public  or  notorious  when  the 
possessor  does  nothing  to  prevent  the  fact  of  his  possession 
from  becoming  known. 

It  is  said  to  be  peaceful,  when  it  was  not  acquired  by  a 
violent  act. 

^  The  substitution  of  a  new  creditor  for  an  old  one  transfers  to  that  new 
creditor  all  actions,  privileges,  mortgages  and  pledges  against  the  principal 
debtor  and  his  co-doljtors.  Ecuador,  Corte  Suprema  de  Justicia,  April  22, 
1915,  Dillon  v.  Barba,  Gacela  Judicial,  July  24,  1915. 


308  LATIN-AMERICAN    COMMEFCIAL    LAW 

Possession  is  interrupted:  a,  naturally,  when  for  any  cause 
it  ceases  for  one  year  or  more;  h,  civilly,  when  a  judicial 
summons  has  been  served  on  the  possessor,  even  though  it  is 
made  by  order  of  an  incompetent  judge,  provided: 

1.  It  is  not  void  because  lacking  legal  formalities; 

2.  The  plaintiff  has  not  withdrawn  his  complaint  or 
has  not  failed  to  prosecute  it  in  time; 

3.  The  complaint  is  not  dismissed. 

Mercantile  transactions  relate,  as  a  rule,  to  personal 
property;  hence  the  requisite  of  a  claim  of  right  or  valid  title 
is  not  necessary,  because  the  mere  possession  of  personal 
property  in  good  faith  is  in  most  cases  equivalent  to  a 
prima  facie  valid  title. 

Negative  prescription  or  the  limitation  of  actions  against 
obligors  takes  place  by  the  mere  lapse  of  the  period  of  time 
fixed  by  law. 

Non-performance  of  obligations. 

Failure  to  perform  an  obligation  may  be  voluntary  or 
involuntary. 

Voluntary  failure.   Default  (Mora) . 

An  obligor  is  "in  default  "  when  he  fails  to  perform  his 
obligation  at  the  time  specified  by  agreement  or  fixed  by 
law.  29 

An  obligation  may  be  due  on  a  certain  day  or  may  have  no 
period  established  for  its  fulfillment.  In  the  latter  case  the 
creditor  is  required  to  demand  payment  from  the  debtor 
(hacer  interpelacion)  before  a  judge,  a  notary  or  any  other 
official  authorized  thereunto.^" 

2^  A  contracting  party  is  not  in  default  when  he  does  not  fulfill  an  obliga- 
tion, if  the  other  party  fails  to  comply  with  his  duties.  Mexico,  Tercera  Sala 
del  Sup.  Trib.  del  Dist.  Fed.,  Dec.  27,  1911,  Elsasser  y  Cia  v.  The  Jersey  Dairy 
Association,  S.  A.  Diario  de  Jur.,  1912,  p.  249. 

^^  In  obligations  of  giving  certain  sums  of  money  having  no  fixed  term  for 
their  fulfillment,  the  obligation  to  pay  legal  interest  begins  when  the  proper 
demand  for  payment  is  made.  Mexico,  Juzgado  Primero  de  lo  Civil  del 
Distrito  Federal,  November  15,  1911,  Zaccagua  i'.  Compania  Italiana  de  Con- 
strucciones,  S.  A.  Diario  de  Jiirisp.,  1912,  p.  705. 


MERCANTILE  CONTRACTS  309 

In  the  other  case,  namely,  when  the  obUgation  is  due  on  a 
certain  day,  there  are  two  systems  governing  the  determina- 
tion when  the  debtor  is  in  default : 

System  of  the  Spanish  code  of  1885. 

A  debtor  is  in  default  in  mercantile  matters,  from  the  day 
following  that  on  which  the  obligation  becomes  due.  In 
Guatemala  since  the  obligation  is  due.^^ 

System  of  the  Spanish  code  of  1829. 

A  debtor  is  in  default  in  mercantile  matters,  when,  after 
the  obligation  has  become  due,  a  demand  is  made  upon  him 
judicially  or  before  a  notary  or  other  official  to  comply  with 
the  obligation.^- 

Negligence  (culpa). 

By  negligence  is  meant  the  omission,  causing  injury  to 
another,  of  that  care  required  by  the  nature  of  the  obligation 
and  the  circumstances  of  persons,  things  and  places. 

Fraud  (dolo). 

Fraud  likewise  causes  injury,  but  differs  from  negligence 
because  in  case  of  fraud  the  injury  is  intentionally  induced. ^^ 

The  obligation  to  pay  damages  arising  from  future  negli- 
gence can  be  lawfully  waived  in  a  contract,  but  the  waiving 
of  that  obligation  for  injuries  arising  from  fraud  is  unlawful 
and  void. 

Damages. 

The  failure  to  perform  a  contract  gives  the  other  contract- 

A  demand  is  necessary  in  the  case  of  obligations  of  doing  some  act  in  order 
that  the  debtor  be  in  default.    lb. 

"Spain,  63;  Guatemala,  194;  Honduras,  90;  Mexico,  85;  Panama,  232; 
Peru,  63. 

The  debtor  when  obliged  to  pay  the  price  of  something  bought  on  credit,  is 
in  default  and  must  pay  interest  on  the  debt  from  the  day  the  debt  is  due, 
without  a  previous  demand.  Mexico,  Primera  Sala  del  Sup.  Trib.  de  Just,  del 
Dist.  Fed.,  March  16,  1893,  Camacho  v.  Grande  Guerrero,  Anuario  de  Leg.  y 
Jur.  Secc.  de  Casacidii,  1893. 

'2  Bolivia,  222;  Brazil,  138;  Costa  Rica,  208;  Nicaragua,  139;  Uruguay,  213. 

"Spain,  Tribunal  Supremo,  March  11,  1904;  Gaccla  of  May  9-11,  1904. 
The  graduation  of  a  fault  or  negligence  is  a  matter  left  to  the  discretion  of  the 
courts. 


310  LATIN- AMERICAN    COMMERCIAL    LAW 

ing  party  who  has  performed,  the  right  to  ask  for  the  rescis- 
sion of  the  contract,  and  subjects  the  party  in  default  to 
the  secondary  duty  of  paying  damages.  The  civilians 
use  for  the  concept  '' damages"  the  phrase ''damages  and 
injuries." 

By  damage  (dano)  is  meant  any  loss  directly  sustained 
{damnurPu  emergens)  and  by  "injury  "  (perjuicio)  every  profit 
that  one  is  prevented  from  obtaining  (lucrum  cessans). 
"Damages,"  therefore,  includes  both  elements,  physical 
losses  sustained  and  loss  of  prospective  profits.  But,  as  in 
American  law  generally,  the  lost  profits  must  be  directly 
ascertainable  and  proximate,  and  not  merely  indirect,  remote 
or  speculative. 

The  code  of  Uruguay  ^"^  provides  that,  except  in  cases  of 
special  provision  of  the  code  or  of  fraud,  the  debtor  is  only 
responsible  for  damages  which  the  parties  have  foreseen,  or 
which  might  have  been  in  contemplation  at  the  time  of 
the  contract. ^^ 

Payment  of  interest. 

In  obligations  involving  the  payment  of  a  certain  amount 
of  money,  penalty  for  default  comprises  merely  the  payment 
of  interest,  except  in  the  case  of  exchange  or  contrary  agree- 
ment. Such  interest  is  due  without  the  necessity  of  the 
creditor's  proving  any  loss  and  even  when  the  debtor  acts  in 
good  faith.  ^^ 

Panama  ^^  provides  that  a  debtor  in  default  must  pay 
damages  thereby  arising  and  must  answer  for  unforeseen 
events;  and  that  when  a  certain  rate  of  interest  has  been 
stipulated  in  case  of  default  and  the  injury  sustained  by  the 

3*  Art.  223. 

'*  This  is  not  unlike  the  rule  of  the  United  States  Supreme  Court  in  Howard 
V.  Stillwell  Tool  Mfg.  Co.  (1895),  139  U.  S.  199,  that  profits  which  may  reason- 
ably be  presumed  to  have  been  within  the  contemplation  of  the  parties  were  an 
element  of  the  measure  of  damages. 

''  By  the  words  interes  corriente  is  meant  interest  generally  accepted  in  com- 
mercial matters  at  a  certain  locality  where  the  special  transaction  takes  place. 
Colombia,  Trib.  Sup.  del  Dist.  Jud.  de  Medellin,  Dec.  17,  1895,  Crdnica  Judi- 
cial de  Antioquia,  IV,  p.  634. 

»^  Art.  235. 


MERCANTILE    CONTRACTS  311 

creditor  exceeds  the  amount  of  interest,  the  debtor  must  pay 
the  whole  damage. 

Article  240  of  the  code  of  Panama  affords  an  exceptional 
protection  to  the  merchant  creditor.    It  reads  as  follows: 

''With  respect  to  matured  credits  of  a  mercantile  char- 
acter, the  creditor  has  a  lien  on  money,  chattels  and  any  other 
property  of  his  debtor  of  which  he  may  be  in  actual  posses- 
sion or  which  he  may  have  at  his  disposal  by  the  debtor's 
consent." 

This  lien  cannot  be  enforced  if  when  the  things  came  into 
the  possession  of  the  creditor  as  bailee,  the  debtor  himself  or 
a  third  person  had  indicated  a  special  destination  for  them. 
Merchants  can  also  enforce  this  lien  among  themselves  with 
respect  to  their  outstanding  credits  arising  out  of  bilateral 
mercantile  contracts,  in  two  cases: 

(a)  when  the  debtor  went  into  bankruptcy  or  sus- 
pended payments; 

(b)  when  the  creditor  suing  out  a  writ  of  attachment 
could  not  find  sufficient  unburdened  property  belong- 
ing to  the  debtor.  ^^ 

Involuntary  failure  of  performance. 

Involuntary  failure  to  perform  an  obligation  arises  from 
an  unforeseen  event  or  by  force  majeure. 

PROOF    OF    OBLIGATIONS 

A  commercial  contract  can  be  proved: 

1.  By  pubUc  instruments.^^ 

2.  By  the  memoranda  of  brokers  and  the  certified 
copies  of  their  books. 

^  A  comissionista  (commercial  agent)  is  not  obliged  to  pay  damages  when 
he  refused  to  hand  over  merchandise  belonging  to  his  principal  so  long  as  the 
latter  does  not  pay  his  compensation.  Peru,  Dalma  v.  Petti,  January  7,  1907. 
Anales  Judicialea,  v.  II,  p.  542. 

'*  When  the  existence  of  a  contract  is  proved  by  means  of  a  public  docu- 
ment, and  at  the  same  time  other  documents  equally  trustworthy  and  other 
means  of  evidence  contradict  said  public  document,  the  judge  may  us(>  his 
di.scretion  in  evaluating  the  (jvidence.  Si)ain,  Tiib.  Sup.,  November  15,  1890; 
Gaceta,  December  10,  1890. 


312  LATIN-AMERICAN    COMMERCIAL   LAW 

3.  By  private  documents  signed  by  the  parties  or  by 
some  person  at  their  request  and  in  their  behalf. 

4.  By  epistolary  or  telegraphic  correspondence. 

5.  By  commercial  books  and  accepted  invoices. 

6.  By  the  admission  and  sworn  statement  of  the  par- 
ties. 

7.  By  the  testimony  of  witnesses. 

8.  By  presumptions  and  other  legal  means.'**' 

This  matter  is  more  fully  discussed  in  the  chapter  on 
legal  procedure.  Attention  may,  however,  be  here  called  to 
certain  peculiarities  of  the  commercial  law. 

Admissibility  of  the  testimony  of  witnesses. 

The  testimony  of  witnesses  is  not  admissible  to  evidence 
contracts  over  1,500  pesetas  ($300  U.  S.)  in  Spain, ^i  $200 
($84  U.  S.)  in  Argentina,^^  400  milreis  ($128  U.  S.)  in  Brazil,'*^ 
$100  ($43  U.  S.)  in  Costa  Rica,*^  $500  in  Guatemala,  ^^ 
$150  ($58  U.  S.)  in  Honduras,^^  200  ($192  U.  S.)  soles  in 
Peru."^ 

In  other  countries  the  testimony  of  witnesses  is  generally 
accepted  regardless  of  the  amount  of  the  contract,  unless 
otherwise  expressly  provided  by  the  law. 

Notwithstanding  the  limitation  as  to  oral  testimony  in 
Guatemala  the  testimony  is  admissible  when  intended  not 
to  enforce  the  performance  of  a  contract  but  to  compel  the 
party  to  execute  it  in  wTiting. 

Furthermore,  it  must  be  borne  in  mind  that  the  hmitation 
with  respect  to  the  admissibility  of  the  testimony  of  witnesses 
is  applicable  only  to  the  proof  of  contracts,  not  to  the  proof 
of  commercial  acts  of  any  other  nature. 

In  Chile  '^^  and  Panama,  ^^  the  courts  may  in  their  discre- 
tion accept  parol  evidence  even  against  the  tenor  of  public 
documents. 

We  have  already  discussed  the  probative  force  of  the 

«  Argentina,  208;  Bolivia,  122;  Costa  Rica,  209;  Ecuador,  164;  Panamai 
244;  Mexico,  1205;  Venezuela,  130. 

"  Art.  51.  «  Art.  209.  "  Art.  123. 

"  Art.  184.  «  Art.  195.  «  Art.  84. 

«  Art.  51.  ^  Arts.  128,  129.  «  Art.  246. 


MERCANTILE    CONTRACTS  313 

commercial  books,  and  in  the  chapter  on  legal  procedure  we 
shall  deal  with  the  other  forms  of  evidence.  Invoices  in 
which  merchants  customarily  state  the  amount,  character  and 
quality  of  merchandise  sold  cannot  produce  any  effect 
in  favor  of  the  issuing  merchant,  until  after  they  have  been 
accepted  or  acknowledged  by  the  purchaser.  This  fact  may 
be  proved  by  all  forms  of  evidence;  therefore  invoices  are 
included  within  the  rules  appUcable  to  private  instruments. 

NULLITY   OF    CONTRACTS 

Contracts  in  which  one  of  the  essential  requirements  is 
missing  are  void. 

Effects  of  the  nullity  of  a  contract. 

WTien  the  nullity  of  an  obligation  has  been  declared,  the 
contracting  parties  must  restore  to  each  other  the  subject- 
matter  of  the  contract  with  its  fruits  or  proceeds  or  the 
value  thereof  with  interest.  But  this  rule  is  subject  to  the 
following  limitations: 

1.  When  the  nullity  is  caused  by  incompetency  of  one 
of  the  contracting  parties,  the  incompetent  party  is 
under  no  duty  to  make  restitution,  except  to  the  extent 
that  he  has  profited  by  the  thing  or  by  the  value  re- 
ceived by  him. 

2.  When  the  nullity  arises  from  the  illegality  of  the 
consideration  or  the  object  of  the  contract,  provided  it 
constitutes  a  crime  or  misdemeanor  common  to  both 
contracting  parties,  they  have  no  right  of  action  against 
each  other  and  criminal  proceedings  may  be  instituted 
against  them.  Things  which  may  have  been  the  sub- 
ject-matter of  the  contract  are  restored  or  applied  as  is 
provided  by  the  penal  code  with  respect  to  the  subject- 
matter  of  crimes  or  misdemeanors. ''^ 

This  rule  is  applicable  to  cases  in  which  there  has  been 
a  crime  or  misdemeanor  on  the  part  of  only  one  of  the 

"•  Only  the  contracting  parties  and  their  successors  may  demand  the  nullity 
of  a  contract.    Spain,  Trib.  Sup.,  April  1,  1897;  Gacela  of  April  18,  1897. 


314  KiTIN-AMERICAN    COMMERCIAL   LAW 

contracting  parties;  the  innocent  party  is  then  entitled 
to  recover  what  he  has  given,  but  is  not  bound  to  com- 
ply with  what  he  has  promised. 

3.  If  the  illegal  consideration  or  object  constitutes 
neither  a  crime  nor  a  misdemeanor  the  following  rules 
are  observed: 

(a)  when  both  parties  are  culpable,  neither  can 
recover  what  he  has  parted  with  by  virtue  of  the 
contract,  nor  claim  the  fulfillment  of  what  the  other 
party  has  promised; 

(b)  when  only  one  of  the  contracting  parties  is 
culpable,  the  latter  cannot  recover  what  he  has 
parted  with  or  demand  the  fulfillment  of  what  has 
been  promised  him.  The  innocent  party  may  de- 
mand the  restoration  of  what  he  has  parted  with, 
while  under  no  duty  to  perform  his  own  promise. 

4.  Whenever  a  person  who,  by  a  declaration  of 
nullity,  is  under  a  duty  to  return  a  thing  is  unable  to 
return  it  because  of  its  loss,  he  must  return  the  fruits  or 
proceeds  gathered  or  accumulated  and  its  value  at 
the  time  of  loss,  wdth  interest  from  that  date. 

So  long  as  one  of  the  contracting  parties  fails  to  return  that 
which  he  is  obliged  to  deliver  by  virtue  of  a  declaration  of 
nullity,  the  other  party  cannot  be  compelled  to  carry  out 
his  own  duties  in  the  premises. 

The  action  for  a  declaration  of  nullity  is  extinguished  by 
the  confirmation  of  the  contract  by  the  party  entitled  to 
institute  that  action. 


CHAPTER   XVIII 

COMMERCIAL   AGENCY 

Spain. — Benito  y  Endara,  Lorenzo:  El  mandate  mercantil.  Barcelona, 
1904. 

Estasen,  Pedro.  El  viajante  y  el  representante  de  comercio  segun  el  derecho 
espanol.    Barcelona,  1904. 

Brazil. — Gama,  Alfonse  Dionysio:  Das  procuragoes,  2d  ed.,  cor.  e  muito 
augm.    Rio  de  Janeiro,  1913. 

Gongalves,  Maia:  Theoria  e  pratica  das  procuragoes.    Amazonas,  1910. 

Cuba. — Biblioteca  juridica  de  la  Republica  de  Cuba.  Procuradores  y 
mandatarios  judiciales.  Disposiciones  vigentes  para  el  desempeno  de  pro- 
curador  y  mandatario  judicial  en  la  Republica  de  Cuba.    Habana,  1910. 

Mexico. — O'Reilly,  Francisco:  iEl  comisionista  que  anticipa  fondos  puede 
vender  los  efectos  contra  las  instrucciones  expresas  del  comitente?  El  Derecho, 
Mexico,  1897,  p.  273. 

Definition. 

Agency,  in  general,  is  a  contract  by  which  one  person,  the 
principal,  gives  another,  the  agent,  a  power  which  the  latter 
accepts,  to  represent  the  former,  in  order  to  undertake  in  his 
name  and  for  his  account  some  act  or  a  series  of  acts.^ 

The  contract  of  agency  is  called  mandato;  the  principal  is 
the  mandante,  or  comiltnte  in  commercial  affairs,  and  the 
agent  or  representative  the  mandatario  or  comisionista.  The 
document  containing  the  power  of  attorney  is  called  poder. 
The  greater  part  of  the  law  of  agency  is  governed  by  the 
civil  code. 

Legal  capacity  to  be  an  agent. 

In  stating  the  general  principles  which  govern  the  capacity 

'  Power  given  by  a  merchant  to  a  bank  to  cash  bills  of  exchange  which 
represent  the  price  of  merchandise  is  a  contract  of  agency  and  not  one  of  pur- 
chase and  sale.  Cuba,  Trib.  Sup.,  Oct.  13,  1905;  Gaceta  of  May  16,  1906. 
•  A  contract  by  which  one  party  contributes  his  services  to  resell  goods  which 
the  other  is  to  send  him,  the  parties  dividing  the  profits  derived  therefrom,  is  a 
partnership,  not  an  agency.  Culm,  Trib.  Sup.,  Aug.  6,  1902;  Gaceta  of  Aug.  30, 
1902. 

315 


316  LATIN-AMERICAN    COMMERCIAL    LAW 

of  a  party  to  bind  himself  contractually,  requiring  a  certain 
age  and  other  conditions,  the  law  takes  into  consideration 
the  usual  cases.  But  a  person,  without  reaching  that  age  or 
fulfilling  those  conditions,  may  be  deemed  by  a  given 
principal  better  qualified  or  more  reliable  than  other  persons 
of  legal  age  and  full  capacity;  that  is  a  matter  which  con- 
cerns the  grantor  of  the  power,  and  the  law  in  some  coun- 
tries recognizes  the  privilege  of  a  principal  to  appoint  a 
minor  his  agent,  according  to  the  following  systems: 

1st  System.  An  emancipated  minor  may  be  an  agent, 
but  any  actions  that  the  principal  may  bring  against 
him  are  subject  to  the  rules  governing  the  obhgations 
of  minors.^ 

M  System.  A  power  of  attorney  can  validly  be 
gTanted  to  a  person  incapable  of  binding  himself,  and 
the  principal  is  bound  by  the  execution  of  the  agency, 
both  as  to  the  agent  and  as  to  third  persons  with  whom 
the  latter  has  contracted.  An  incompetent  person  who 
accepts  a  power  can  set  up  the  nullity  of  the  agency 
when  he  is  sued  by  the  principal  for  not  performing  the 
obligations  of  the  contract,  without  prejudice  to  the 
right  of  action  of  the  principal  for  conversion  of  the 
principal's  property  to  the  agent's  use.^ 

3d  System.  Non-emancipated  minors  can  be  granted 
powers,  but  the  principal  has  no  right  of  action  against 
them  except  in  accordance  with  the  rules  appUcable  to 
obligations  of  minors.^ 

4th  System.  Those  who  have  no  capacity  to  bind 
themselves  cannot  as  a  rule  be  agents.  Minors,  how- 
ever, can  be  grantees  of  powers,  except  for  judicial 
purposes;  but  the  principal's  rights  of  action  against 
a  minor  are  limited  according  to  the  principles  of  the 
obligations  of  minors.'' 

2  Spain,  1716  c.  c;  Haiti,  1754  c.  c;  Panama,  1407  c.  c. 

3  Argentina,  1931,  1932  c.  c;  Chile,  2128  c.  c;  Colombia,  2154  c.  c;  Uruguay, 
2062  c.  c. 

^  BrazU,  1298  c.  c;  Honduras,  1895  c.  c;  Nicaragua,  2128  c.  c;  San  Salvador, 
2036  c.  c;  Venezuela,  1656  c.  c. 
^  Costa  Rica,  1260  c.  c. 


COMMERCIAL   AGENCY  317 

5th  System.    Minors  cannot  be  agents.^ 

6th  System.    Married  women  and  minors  over  eighteen 

years  old  can  accept  a  power,  if  authorized  respectively 

by  the  husband  or  parent  to  do  so/ 

In  Spain  ^  married  women  also  need  their  husband's 

authorization  to  accept  a  power,  while  in  Haiti  ^  such 

authorization  is  not  necessary. 

Forms  of  power. 

The  power  of  attorney  is  the  instrument  by  which  the 
agency  is  created  or  the  agent's  powers  defined.  The  Anglo- 
American  la^\yer  and  business  man  in  their  deahngs  with 
Latin-American  countries  find  it  occasionally  difficult  to  de- 
termine whether  a  certain  authority  must  or  must  not  be  spe- 
cifically mentioned  in  a  power  of  attorney.  They  are  inclined 
to  believe  that  powers  of  attorney  are  complicated  and  for- 
malistic  instruments.  This  idea  has  probably  been  produced 
by  the  powers  executed  by  notaries  in  foreign  countries.  No- 
taries and  lawyers  very  frequently  indulge  in  legal  verbosity 
and  surplusage.  As  a  matter  of  fact  a  power  of  attorney  may 
be  at  the  same  time  brief  yet  comprehensive;  it  is  merely 
necessary  to  be  careful  to  mention  those  faculties  of  the  agent 
which  the  law  does  not  consider  implied  in  a  general  power, 
even  though  words  like  ''ample/'  "liberal,"  or  any  other 
emphatic  adjectives  might  have  been  used. 

Law  which  governs  the  form  of  a  power  to  be  exercised 
in  a  foreign  country. 
The  form  of  power  of  attorney  depends  upon  the  law  of  the 
place  where  such  power  is  given  and  executed,  by  application 
of  the  principle,  generally  accepted  in  private  international 
law,  of  locus  regit  actum.  If  the  law  of  New  York,  for  in- 
stance, validates  a  power  given  in  a  mere  letter  signed  by  the 
principal,  that  letter  suffices  to  prove  the  power  in  other 
countries,  notwithstanding  that  the  law  there  requires  a 
document  executed  before  a  notary  public. 

« Guatemala,  2194  c.  c.  '  Mexico,  2357  c.  c.  «  Art.  1710  c.  c. 

9  Art.  1754  c.  c. 


318  LATIN-AMERICAN    COMMERCIAL    LAW 

It  is  necessary,  however,  to  observe  that  in  most  of  the 
Latin-American  countries  a  public  instrument  is  required 
not  as  a  matter  of  form,  but  as  an  essential  condition  for  the 
existence  of  the  agent's  power.  In  that  case  the  requisite  of 
a  public  instrument  affects  the  validity  of  the  act  itself; 
hence  it  is  governed,  in  that  respect,  by  the  law  of  the  place 
where  the  agent  is  to  exercise  his  powers.  If  that  law  re- 
quires a  public  instrument,  the  power  must  be  embodied  in 
such  an  instrument;  but  otherwise  the  method  of  its  execu- 
tion is  left  to  the  law  of  the  place  where  it  is  drawn.  ^° 

In  this  matter,  however,  what  in  Latin-American  countries 
is  called  a  ''public  instrument "  is  practically  unknown  in  the 
United  States;  at  least  in  those  states,  in  which  the  law  is 
based  on  Anglo-Saxon  traditions.  By  reason  of  this  circum- 
stance, and  inasmuch  as  a  power  can  always  be  executed  in  a 
public  instrument  even  though  this  formality  is  not  necessary 
for  certain  transactions,  the  most  advisable  practice  is 
to  draw  the  power  in  the  form  used  in  the  United  States, 
adopting  the  language  of  Latin-America  as  far  as  possible, 
and  have  the  signature  of  the  grantor  and  witnesses  ac- 
knowledged before  a  notary  public.  This  would  approximate 
most  nearly  a  Latin- American  ''public  instrument  ";  the 
signature  of  the  notary  must  then  be  authenticated  by  the 
county  clerk  or  secretary  of  state  of  the  state,  and  the  latter's 
signature  finally  authenticated  by  the  consul  of  the  country 
where  the  power  is  to  be  exercised. 

Express  and  implied  power. 

A  power  may  be  either  express  or  implied."  A  power  is 
implied  when  the  principal,  knowing  that  a  person  is  acting 
in  his  behalf,  does  nothing  to  prevent  such  act  of  intervention 
in  his  business,  and  thus  tacitly  acquiesces  in  the  acts  done. 
But  evidence  of  such  acquiescence  cannot  be  adduced  except 

'"  Laurent,  Principes  de  Droit  Civil,  vol.  I,  p.  155.  For  a  general  idea  of 
what  is  meant  by  a  public  instrument,  see  chapter  on  Procedure,  Contentious 
Jurisdiction,  infra. 

11  Spain,  1700  c.  c;  Argentina,  1907  c.  c;  Ecuador,  2110  c.  c;  Honduras, 
1889  c.  c;  Nicaragua,  2133  c.  c;  Panama,  1401  c.  c;  San  Salvador,  2031  c.  c; 
Uruguay,  2053  c.  c;  Venezuela,  1651. 


COMMERCIAL   AGENCY  319 

in  accordance  with  the  general  rules  of  evidence,  which  Hmit 
the  admission  of  the  testimony  of  witnesses  in  certain 
cases.  ^2 

A  power  can  never  be  implied  in  Costa  Rica/^  Guate- 
mala,^^ Haiti,  ^^  Mexico, ^"^  Peru  ^^  and  Santo  Domingo. ^^ 
However,  under  the  name  of  gestor  oficioso,  a  person  can  act 
in  behalf  of  another  who  is  absent  or  cannot  attend  to  his 
business,  the  latter  not  being  bound  by  the  acts  of  the 
gestor,  unless  the  principal  ratifies  or  avails  himself  of  the 
benefits  of  the  acts  done  by  the  gestor ^^ 

An  express  power  can  be  given  by  means  of  a  public  or  a 
private  instrument,  or  even  verbally.  An  oral  power  is 
only  valid  when  the  law  does  not  require  a  written  docu- 
ment and  the  amount  of  the  transaction  is  not  over  the 
maximum  fixed  by  the  law  for  the  admissibility  of  oral 
testimony.  2'' 

When  a  public  instrument  is  necessary. 

In  the  matter  of  requiring  a  public  instrument,  the  follow- 
ing systems  may  be  noted: 

System  of  Spain.  A  power  must  be  executed  in  a 
public  instrument  when  it  embraces  an  authorization  to 
contract  marriage  in  the  name  of  the  principal,  when  it 
is  to  cover  general  representation  in  judicial  cases  or  in  a 
special  case;  and  when  it  gives  authority  to  manage 
property,  or  to  execute  a  document  which  must  itself  be 
drawn  in  a  public  instnmient  or  may  prejudice  a  third 
party.  2^ 

System  of  Argentina.     A  power  produces  the  same 

1^  Acts  undertaken  by  a  person  who  claims  to  be  the  representative  of  an- 
other, bind  the  principal,  even  though  the  latter  gave  him  no  power,  i)rovided 
he  accepts  the  contract  entered  into  by  such  person.  Argentina,  Cam.  Fed.  de 
Apel.  de  la  Cap.,  June  27,  1914,  Jur.  de  los  Tribs.  Macs.,  June,  1914,  p.  71. 

1'  Art.  1251  c.  c.  "  Art.  2187  c.  c.  is  Art.  1749  c.  c. 

"  Art.  2345  c.  c.  "  Art.  1244  c.  c.  '8  Art.  1987  c.  c. 

"  Mexico,  2410,  2419,  2428  c.  c. 

^  A  commercial  agency  or  commission  can  be  granted  orally  or  by  means  of 
letters.  Colombia,  Corte  Sup.  de  Just.,  Oct.  27,  1904;  Gacela  Jiul.,  vol.  XVII, 
p.  152. 

^'  Spain,  1280  c.  c;  Panama,  1131  c.  c. 


320  LATIN-AMERICAN    COMMERCIAL   LAW 

effects  whether  expressed  in  a  pubHc  or  in  a  private 
instrument.  2^ 

System  of  Chile.  This  system  is  similar  to  that  of 
Spain,  but  its  wording  is  simpler,  providing  merely  that 
a  power  must  be  granted  in  a  public  instrument  when  the 
donee  of  the  power  must  execute  an  instrument  of  that 
kind.  23 

System  of  Costa  Rica.  Powers  are  divided  into  three 
classes,  namely:  special,  general,  and  most  general 
(generalisimo) .  Powers  of  the  last  two  classes  require 
incorporation  in  a  public  instrument  and  inscription  in 
the  corresponding  section  of  the  Registry  of  Property. ^^ 

System  of  Colombia.  Powers  may  be  either  express  or 
implied  without  any  limitation.  ^^ 

System  of  Mexico.  A  power  must  be  expressed  in  a 
public    instrument: 

(a)  when  it  is  general; 

(6)  when  the  amount  of  the  transaction  for  which  it 

is  granted  exceeds  one  thousand  pesos; 

(c)  when,  by  virtue  thereof,  the  agent  must  execute 
in  the  name  of  the  principal  a  document  which  must 
be  expressed  in  a  public  instrument,  according  to  law; 

(d)  when  it  is  granted  for  a  judicial  matter,  provided 
the  amount  claimed  is  one  thousand  pesos  or  more.^^ 

="2  Argentina,  1873  c.  c;  Haiti,  1749  c.  c;  Santo  Domingo,  1985  c.  c. 

A  power  of  attorney  to  undertake  business,  the  amount  of  which  is  over 
400  milreis  can  only  be  proved  by  means  of  a  written  instrument.  Brazil, 
Trib.  de  Just,  de  S.  Paulo,  Oct.  21,  1903,  Sao  Paulo  Judiciario,  vol.  Ill,  p.  303. 

A  power  of  attorney  can  be  given  orally,  in  a  private  or  in  a  public  instru- 
ment, by  means  of  a  letter,  under  the  form  of  a  commission,  a  request  or  even 
an  indirect  petition.  In  order  to  give  a  power  by  means  of  a  letter  it  is  enough 
to  show  in  the  same  the  purpose  of  the  principal  to  entrust  the  addressee  with 
certain  business,  no  matter  in  what  form  the  letter  is  drafted.  Brazil,  Trib.  de 
S.  Paulo,  Nov.  10,  1905,  Sao  Paulo  Judiciario,  vol.  IX,  p.  311. 

A  power  the  purpose  of  which  is  other  than  appearance  in  court  can  be  given 
orally.    Brazil,  Trib.  de  Just,  de  S.  Paulo,  Dec.  17,  1903,  lb.,  vol.  II,  p.  290. 

23  Chile,  2123  c.  c;  Ecuador,  2110  c.  c;  Nicaragua,  2123  c.  c;  San  Salvador, 
2031  c.  c;  Uruguay,  2053  c.  c. 

24  Costa  Rica,  1251  c.  c. 

2s  Colombia,  2149  c.  c;  Honduras,  1889  c.  c;  Venezuela,  1651  c.  c. 
28  Mexico,  2352,  2353  c.  c. 


COMMERCIAL   AGENCY  321 

System  of  Peru.  A  power  must  be  incorporated  in  a 
public  instrument  when  the  grantee  must  execute  a  public 
instrument  on  behalf  of  the  principal  or  when  the  amount 
claimed  in  a  law  suit  exceeds  fifty  pounds  sterling.  ^^ 

Authorization  contained  in  a  general  power. 

The  power  of  an  agent  being  construed  according  to  the 
law  of  the  place  where  the  power  is  to  be  exercised,  it  may- 
well  happen  that  the  extent  of  such  power  is  greater  there 
than  in  the  country  where  the  principal  originally  executed 
the  power.  A  general  power  implies  only  acts  of  manage- 
ment or  administration.-^ 

Planiol,  the  present  professor  of  civil  law  in  the  Paris 
School  of  Law,  distinguishing  acts  of  disposition  from  acts  of 
management  or  administration  says:  ''In  a  general  way  we 
can  say  that  under  acts  of  disposition  besides  all  alienations 
properly  so  called  (sales,  barters,  gifts,  contributions  to 
associations,  etc.),  a  certain  number  of  acts  are  included 
which  affect  definitively  the  property  of  a  person  for  the 
future;  a  mortgage  and  the  constitution  of  an  easement  or 
servitude  being  among  the  principal  acts  of  this  kind.  The 
characteristic  feature  of  acts  of  management  is  that  they  do 
not  tie  up  the  property  for  more  than  a  very  short  period  and 
therefore  they  can  be  frequently  renewed."  ^^     The  code  of 

A  power  executed  in  a  private  instrument  is  proper  in  order  to  present  a 
judicial  demand  of  not  more  than  one  thousand  pesos,  but  not  to  answer 
counterclaims  exceeding  that  amount.  Mexico,  Trib.  Sup.  del  Dist.  Fed. 
2a  Sala,  Aug.  28,  1911,  Diar.  de  Jur.,  vol.  XXV,  p.  695. 

An  agent  does  not  exceed  his  powers  when  he  makes  a  contract  on  more 
advantageous  conditions  than  directed  by  his  principal.  Mexico,  Trib.  Sup. 
del  Dist.  Fed.,  3a  Sala,  Oct.  9,  1912,  Diar.  de  Jur.,  v.  XXVIII,  p.  294. 

A  power  of  attorney  executed  before  a  notary  public  constitutes  full  evi- 
dence. (See  chapter  on  Procedure.)  Mexico,  Trib.  Sup.  del  Dist.  Fed., 
Nov.  1,  1910,  Diar.  de  Jur.,  v.  24,  p.  473. 

"  Peru,  1297  c.  c. 

2«  Spain,  1713  c.  c;  Argentina,  1914  c.  c;  Bolivia,  1337  c.  c;  Brazil,  1295  c.  c; 
Chile,  2132  c.  c;  Colombia,  2158  c.  c;  Haiti,  1752  c.  c;  Honduras,  1892  c.  c; 
Mexico,  2350  c.  c;  Nicaragua,  2132  c.  c;  Panama,  1404  c.  c;  Peru,  1926  c.  c; 
San  Salvador,  2040  c.  c;  Santo  Domingo,  1988  c.  c;  Uruguay,  2056  c.  c; 
Venezuela,  1654  c.  c. 

29  Traite  E16mentaire  do  droit  civil,  v.  I,  p.  966. 


322  LATIN-AMERICAN    COMMERCIAL    LAW 

Chile  makes  an  enumeration  that  can  be  appHed  generally. 
It  provides  that  a  power  does  not,  as  a  rule,  authorize  the 
agent  to  do  more  than  undertake  acts  of  administration,  for 
example,  to  pay  the  debts  and  collect  the  credits  of  the 
principal,  both  being  incidental  to  his  regular  business,  to 
institute  or  prosecute  judicial  actions  against  debtors;  to 
begin  possessory  actions  and  interrupt  the  running  of 
prescriptive  periods  or  statutes  of  limitation  in  connection 
with  matters  arising  out  of  the  principal's  business;  to  make 
contracts  for  the  repair  of  things  entrusted  to  his  manage- 
ment; and  to  purchase  the  necessary  materials  for  the  culti- 
vation of  lands  and  the  operation  of  mines,  factories  or 
industries  placed  in  his  charge. 

To  undertake  acts  which  cannot  be  classified  as  those  of 
administration  or  management  a  special  power  is  required; 
thus  it  is  necessary  to  draw  a  special  power  or  insert  a 
special  clause  in  a  general  power  in  order  to  authorize  an 
agent : 

(a)  to  compromise  a  claim; 

(6)  to  sell  or  in  any  other  way  dispose  of  property; 

(c)  to  mortgage  property; 

(d)  to  submit  cases  of  the  principal  to  arbitration; 

(e)  to  do  any  other  act  which  may  affect  the  owner- 
ship of  property  of  the  principal.^" 

In  Colombia,  ^^  Ecuador,  ^^  Guatemala,  ^^  Haiti,  ^^ 
Honduras, ^^  Mexico, ^^  Nicaragua,^''  Peru,^^  San  Salva- 
dor, ^^  Santo  Domingo  ^°  and  Venezuela, ^^  a  special 
power  is  also  necessary  in  order  to  receive  money  due 
the  principal. 

In  Costa  Rica  ^^  a  most  general  (generalisimo)  power 

'"Spain,  1713,  1714  c.  c;  Argentina,  1915  c.  c;  Bolivia,  1337,  1338  c.  c; 
Brazil,  1295  c.  c;  Colombia,  2158,  2167  c.  c;  Ecuador,  2119,  2128,  2130  c.  c; 
Guatemala,  2192  c.  c;  Haiti,  1752,  1853  c.  c;  Honduras,  1892  c.  c;  Mexico, 
2350,  2387  c.  c;  Nicaragua,  2141,  2142,  2143  c.  c;  Panama,  1404  c.  c;  Peru, 
1927  c.  c;  San  Salvador,  2049,  2050  c.  c;  Santo  Domingo,  1988  c.  c;  Uruguay, 
2056  c.  c;  Venezuela,  1654,  1655  c.  c. 

"  Art.  1640  c.  c.  '^  Art.  2130  c.  c.  »»  Art.  2192  c.  c. 

34  Art.  1752  c.  c.  ^^  Art.  1892  c.  c.  ^  Art.  2387  c.  c. 

2'  Art.  2143  c.  c.  's  Art.  1927  c.  c.  s*  Art.  2051  c.  c. 

*»  Art.  1988  c.  c.  *'  Art.  1654  c.  c.  «  Art.  1253  c.  c. 


COMMERCIAL   AGENCY  323 

entitles  the  agent  to  sell,  mortgage  or  in  any  other  way 

dispose  of  or  burden  the  estate  of  the  principal,   to 

accept  or  reject  inheritances,  to  represent  the  principal 

in  court,  to  enter  into  any  kind  of  contracts,  and  to 

perform  any  other  legal  act  which  the  principal  himself 

might  undertake,  except  certain  acts  involving  family 

relations  and  the  making  of  gifts. 

The  code  of  Argentina   enumerates  so  elaborately  the 

cases  in  which  a  special  power,  or  special  mention  of  such 

authority  in  a  general  power  is  required,   that  it  seems 

advisable  to  transcribe  the  provision  in  full,  for  it  may  serve 

as  a  guide  in  drawing  powers  for  countries  of  the  civil  law, 

notwithstanding  the  fact  that  in  some  of  them  various  of 

these  acts  require  no  special  power. 

According   to    the   Argentine   code   special   powers   are 
necessary : 

1st.  to  make  payments  which  are  not  the  usual 
payments  of  the  business; 

2d.  to  effect  novations  which  may  extinguish  ob- 
ligations already  existing  at  the  time  the  power  was 
granted; 

3d.  to  compromise,  submit  cases  to  arbitration, 
submit  to  the  jurisdiction  of  judges  not  normally  com- 
petent in  the  case,  waive  the  right  of  appeal  or  the 
operation  of  statutes  of  limitation  already  run; 

4th.  to  make  any  gratuitous  waiver,  or  remission  or 
composition  of  debts,  except  in  the  event  of  the  bank- 
ruptcy of  the  debtor; 

5th.  to  contract  marriage  in  the  name  of  the  prin- 
cipal; 

6th.  to  acknowledge  natural  children; 
7th.  to  enter  into  any  contract  the  object  of  which  is 
to  convey  or  acquire  ownership  in  real  estate  with  or 
without  consideration. 

8th.  to  make  gifts,  other  than  presents  of  small  sums 
to  the  employees  or  persons  in  the  service  of  the  busi- 
ness; 

9th.  to  lend  or  borrow  money,  unless  the  business  of 


324  LATIN-AMERICAN   COMMERCIAL   LAW 

the  principal  consists  in  lending  and  borrowing  at 
interest,  or  when  loans  are  a  consequence  of  the  manage- 
ment, or  if  it  is  absolutely  necessary  to  borrow  money  to 
preserve  the  property  or  things  managed; 

10th.  to  lease  for  more  than  six  years  the  real  prop- 
erty in  his  charge; 

11th.  to  accept  deposits  in  the  name  of  the  principal, 
unless  the  business  consists  in  receiving  deposits  and 
consignments,  or  the  deposit  is  incidental  to  the  manage- 
ment; 

12th.  to  obligate  the  principal  to  render  some  service, 
to  be  a  bailee  or  to  do  something  gratuitously; 
13th.  to  form  an  association; 
14th.  to  obligate  the  principal  as  a  surety; 
15th.  to  create  or  assign  real  rights  in  immovables; 
16th.  to  accept  inheritances; 

17th.  to    acknowledge    obligations    antedating   the 
power.  ■^^ 
A  special  power  to  compromise  does  not  include  the  power 
to  submit  to  arbitration.^'' 

A  special  power  to  sell  does  not  include  the  power  to 
mortgage,  nor  to  receive  the  price  of  the  sale  when  time 
for  payment  has  been  granted ;  nor  does  a  power  to  mortgage 
include  the  power  to  sell.^^ 

A  special  power  to  do  certain  acts  of  a  specified  nature 
must  be  limited  to  the  acts  for  which  it  was  granted,  and 
cannot  be  extended  to  other  analogous  acts,  even  though 
the  latter  could  be  considered  as  a  natural  consequence  of 
those  which  the  principal  has  empowered  the  agent  to  per- 
form.'*^ 

A  special  power  to  mortgage  real  estate  of  the  principal 
does  not  include  the  power  to  mortgage  it  for  debts  ante- 
dating the  power.  ^'^ 

The  power  to  contract  an  obligation  includes  the  power 
to  perform  it,  provided  the  principal  delivers  to  the  agent 
the  money  or  the  thing  which  must  be  given  in  payment. 

"  Art.  1915  c.  c.        **  Art.  1916  c.  c.        «  Art.  1917  c.  c. 
«8  Art.  1918  c.  c.        «  Art.  1919  c.  c.        «  Art.  1920  c.  c. 


48 


COMMERCIAL    AGENCY  325 

A  power  to  sell  the  property  of  an  inheritance  does  not 
include  the  power  to  assign  it  before  having  received  it/^ 

A  power  to  collect  debts  does  not  include  the  power  to 
sue  the  debtors,  or  to  receive  one  thing  in  lieu  of  an- 
other, or  to  make  novations,  or  grant  total  or  partial 
releases.^" 

Powers  executed  by  corporations,  partnerships  or  an  agent. 

Powers  of  attorney  executed  by  corporations,  partner- 
ships, or  persons  who  act  as  agents  of  another,  as  attorneys, 
guardians,  receivers  in  bankruptcy,  executors  of  a  last  will, 
etc.,  must  bear  evidence  that  the  person  executing  them 
for  the  corporation  or  partnership  or  in  behalf  of  another 
had  authority  to  bind  the  association  or  person  for  which 
or  for  whom  he  is  acting. 

In  the  case  of  a  corporation  it  is  necessary  to  transcribe: 
a,  that  part  of  the  charter  which  shows  that  the  corporation 
was  properly  organized,  where  and  when  it  was  organized, 
and  the  scope  of  the  association;  h,  that  part  of  the  articles 
of  incorporation  or  by-laws  which  authorizes  the  directors 
or  other  officers  to  execute  the  power,  or,  in  lieu  thereof, 
the  corresponding  part  of  the  minutes  of  the  general  meeting 
of  stockholders,  in  which  a  particular  officer  or  person  was 
authorized  to  execute  the  power;  c,  when  the  person  was 
not  directly  designated  by  the  stockholders'  meeting,  a 
copy  of  the  minutes  showing  the  election  of  directors  must 
be  included;  d,  the  corresponding  part  of  the  directors' 
meeting  to  prove  that  they  decided  to  grant  the  power  or 
in  which  they  authorized  any  of  their  members  to  execute 
it,  in  case  the  granting  of  the  power  is  within  the  authority 
of  the  directors. 

In  powers  granted  by  partnerships  it  is  necessary  to 
transcribe  that  part  of  the  articles  of  agreement  which 
mentions  the  date  and  place  of  organization,  its  line  of  busi- 
ness and  the  names  of  the  managers  thereof  as  well  as  their 
power  to  appoint  a  representative  for  the  partnership;  or 
in  lieu  thereof,  a  copy  of  the  minutes  of  the  partners'  meeting 

"  Art.  1921  c.  c.  ^  Art.  1922  c.  c. 


326  LATIN-AMERICAN   COMMERCIAL   LAW 

in  which  they  decided  to  appoint  an  attorney  and  execute 
the  power,  must  be  inserted. 

In  case  the  power  is  executed  by  an  attorney  properly 
authorized  thereto,  the  part  of  the  power  granted  to  the 
attorney  by  the  principal,  showing  the  place  and  date  of 
its  execution,  the  name  of  the  notary  who  authenticated 
the  same,  and  the  clause  in  which  the  authorization  to 
execute  a  power  is  given,  should  be  inserted. 

When  a  guardian  or  receiver  or  executor  of  a  last  will  or 
any  other  person  who  derives  his  authority  from  a  judicial 
or  extrajudicial  aet  is  to  execute  a  power,  everything  proper 
to  show  the  authority  derived  therefrom  should  be  in- 
cluded. 

Legalization  of  powers. 

Besides  the  formal  requisites  mentioned  above,  it  is 
necessary  to  legalize  the  power,  and  for  that  purpose  the 
signature  of  the  notary  who  authenticated  that  of  the 
grantor  must  in  turn  be  authenticated  by  the  county  clerk, 
and  the  consul  of  the  country  where  the  power  is  to  be 
exercised  must  attest  that  the  corporation  or  partnership, 
as  the  case  may  be,  is  legally  established,  and  that  the 
signature  of  the  county  clerk  is  genuine.  If  the  power  is 
signed  in  a  county  where  there  is  no  consul  of  the  country 
in  which  the  power  is  to  be  exercised  the  signature  of  the 
county  clerk  must  be  authenticated  by  the  secretary  of  the 
State,  and  that  of  the  latter  by  the  consul. 

When  an  agency  is  commercial. 

The  word  "agency"  (mandato)  can  be  applied  in  every 
case  in  which  one  person  acts  for  another,  regardless  of  the 
character  of  the  business  and  of  the  persons  concerned. 
When  an  agency  is  conmiercial  it  is  governed  by  the  code 
of   commerce. 

The  codes  of  Latin-America  are  not  uniform  in  their 
criteria  for  classifying  an  agency  as  commercial.  They 
follow  two  systems,  namely: 

1.  The  Subjective  System.    An  agency  is  commercial 


COMMEKCIAL   AGENCY  327 

when  the  purpose  of  the  parties  is  to  perform  commer- 
cial acts/^ 

2.  The  Compound  System.  An  agency  is  commer- 
cial when,  besides  covering  commercial  transactions, 
both  parties  are,  or  at  least  one  of  them  is,  a  merchant, 
in  the  following  manner: 

(a)  both  parties,  in  Bolivia;  ^^ 
(6)  either    of    the    parties,    in    Spain,  ^^    Brazil,  ^^ 
Hondm-as  ^^  and  Panama;  ^^ 
(c)  the  agent  in  Nicaragua  ". 
In  Costa  Rica  ^^  and  Guatemala  ^^  the  agent  at  least 
must  be  capable  of  trading. 

"Argentina,  223;  Chile,  233;  Colombia,  331;  Ecuador,  352;  Mexico,  273; 
Panama,  3  and  580;  San  Salvador,  122,  155;  Uruguay,  335;  Venezuela,  327. 

The  nature  of  the  business  for  which  a  power  is  given,  and  not  the  char- 
acter of  the  parties,  makes  an  agency  commercial.  Colombia,  Corte  Sup.  de 
Just.,  Casaci6n,  Aug.  23,  1912;  Gaceta  Jud.,  vol.  21,  p.  370. 

The  power  given  by  one  merchant  to  another  to  sell  chattels  with  a  view  to 
speculating  is  commercial.  Cuba,  Trib.  Sup.,  February  3,  1903;  Gaceta, 
Sept.  11,  1903. 

"  Bolivia,  107.  .  "  Art.  244.  "  Art.  165. 

"  Art.  157.  M  Art.  237.  67  ^rt.  57. 

»8  Art.  63. 

59  Art.  61. 

The  contract  of  commission  does  not  change  its  character  by  reason  of  the 
circumstance  that  the  commissionaire  advances  funds,  which  must  be  paid  back 
to  him  out  of  the  price  of  the  thing  to  be  sold.  Spain,  Trib.  Sup.,  July  17, 
1886;  Gaceta  of  Aug.  28,  1886. 

The  commission  given  by  one  merchant  to  another  to  sell  movable  property, 
with  a  view  to  making  profits,  is  commercial.  Cuba,  Trib.  Sup.  Habana, 
Feb.  3,  1903;  Gaceta  of  Sept.  11,  1903. 

An  essential  element  of  the  contract  of  commission  is  that  it  relates  to  com- 
mercial acts  and  that  the  comisionista  acts  in  his  own  name.  Brazil,  Revista, 
No.  8379,  Sept.  27,  1872;  Gaceta  Jur.,  v.  I,  p.  315. 

The  fact  that  a  person  sends  merchandise  to  a  commercial  house  to  be  sold  in 
another  place  constitutes  a  commission.  Brazil,  Trib.  do  Comm.  da  Corte, 
Nov.  11  and  28,  1873;  Gaceta  Juridica,  v.  I,  p.  396. 

By  the  nature  of  the  contract  of  comisidn  the  factor  (comisionista)  has  the 
right  to  be  compensated  for  his  services.  Mexico,  3a  Sala  Tril).  Sup.  del  Dist. 
Fed.  Mexico,  May  20,  1907,  Delgado  v.  W.  Herrmann  y  Compania,  Diario  de 
Jurisp.,  V.  12,  p.  329. 

A  comision  is  a  contract  of  agency  applied  to  commercial  acts;  it  consists 
in  entrusting  some  one  with  one  or  more  mercantile  acts  in  behalf  of  the  prin- 
cipal; the  fact  that  a  price  was  previously  fixed  for  merchandise  that  the 
comisionista  was  bound  to  deal  with,  does  not  change  the  character  of  the 


328  LATIN-AMEKICAN   COMMERCIAL   LAW 

Criteria  for  distinguishing  a  commercial  agency  from  a 
commission  business  (comision). 

The  criteria  adopted  by  the  codes  in  classifying  the 
different  ways  in  which  a  person  may  be  represented  in 
commercial  transactions,  are  as  follows: 

First  System.  Commission  differs  from  a  commer- 
cial agency  in  that  the  latter  requires  that  the  agent 
invariably  deal  in  the  name  of  the  principal,  while  the 
commission  merchant  may  transact  business  in  his 
own  name  or  in  that  of  his  principal.^" 

Second  System.  Commercial  agency  consists  in 
empowering  another  to  perform  some  commercial  act 
in  behalf  and  in  the  name  of  the  principal;  commission 
consists  in  empowering  another  to  perform  such  act 
in  his  own  name,  but  for  the  account  of  the  principal.®^ 
Third  System.  Commission  is  an  agency  apphed 
to  specific  acts  of  commerce.  The  commissionaire  may 
deal  in  his  own  name  or  in  that  of  his  principal.^ ^ 

Completion  of  the  contract. 

The  contract  is  completed  when  the  comisionista  has 
accepted  the  agency  entrusted  to  him. 

Formerly  when  merchants  were  the  only  class  that  could 
trade,  the  acceptance  of  a  commission  was  compulsory,  an 
obligation  correlative  to  the  commercial  privileges  con- 
ferred; but  now  the  person  entrusted  with  a  cormnercial 

contract.  Mexico,  3a  Sala  Trib.  Sup.  del  Dist.  Fed.,  Jan.  20,  1908,  The 
National  Supply  and  Construction  Co.  S.  A.  v.  Moenen  Gerardo,  Diario  de 
Jur.,  V.  15,  p.  421. 

o"  Spain,  245,  246;  Bolivia,  107,  123;  Brazil,  165;  Guatemala,  61,  63;  Hon- 
duras, 158,  159;  Nicaragua,  57;  Panama,  637;  Peru,  238,  239. 

The  difference  between  an  agent  (comisionista)  and  a  factor  does  not  lie  in 
the  fact  that  the  former  is  charged  with  a  single  commercial  transaction,  as  he 
may  be  charged  with  several  in  the  name  of  the  principal;  but  in  the  circum- 
stance that  the  factor  is  provided  with  general  powers.  Both  the  comisionista 
and  the  factor  are  accountable  to  the  principal.  Spain,  Trib.  Sup.,  June  28, 
1910;  Gaceta  of  Oct.  7,  1910,  p.  417. 

"Argentina,  222;  Ecuador,  352;  Haiti,  90;  San  Salvador,  155;  Santo  Do- 
mingo, 94;  Uruguay,  300;  Venezuela,  327. 

62  Chile,  235;  Colombia,  333;  Costa  Rica,  64,  65;  Mexico,  273. 


COMMERCIAL  AGENCY  329 

agency  can  either  accept  or  refuse.  The  acceptance  may 
be  express  or  imphed.  Acceptance  is  express  when  the 
comisionista  answers,  accepting  the  agency;  it  is  imphed 
when  he  performs  some  of  the  acts  entrusted  to  him.^^ 

Obligations  in  case  of  refusal. 

In  case  the  person  entrusted  with  the  performance  of 
some  commercial  business  refuses  to  accept  the  charge,  he 
has,  nevertheless,  two  obligations: 

(a)  to  advise  the  principal  of  his  refusal  by  the 
quickest  method,  confirming  such  refusal  in  writing 
and  mailing  it  immediately  after  receiving  the  com- 
mission. 

(6)  to    carefully   preserve   the   goods    sent    by    the 

comitente  until  the  latter  names  another  agent,  or  until 

a  court  takes  charge  of  the  goods  on  the  agent's  petition. 

Failure  to  comply  with  either  of  these  two  obligations 

renders   the  comisionista   liable  for  any  damage   thereby 

caused  the  principal.'''* 

In  Mexico  '^•'  the  comisionista  may  in  the  following  cases 
sell  the  goods  sent  by  the  principal  through  brokers  or  two 
merchants,  who  must  first  certify  the  amount  and  price 
thereof : 

(a)  when  the  apparent  value  of  the  consigned  goods 

8»  Spain,  249;  Argentina,  238;  Bolivia,  114;  Brazil,  141;  Chile,  245;  Colom- 
bia, 346;  Costa  Rica,  70;  Ecuador,  358;  Guatemala,  68;  Honduras,  162; 
Mexico,  276;  Peru,  242;  Uruguay,  342;  Venezuela,  333. 

In  the  contract  of  comisidn,  acceptance  is  shown  by  the  fact  that  the  comi- 
sionista performs  the  same.  Mexico,  2a  Sala  del  Trib.  Sup.  del  Dist.  Fed., 
Feb.  26,  1907,  Sanchez  Ramos  v.  Fundaci6n  de  Sinaloa,  Diario  de  Jurisp., 
V.  12,  p.  257. 

fl^  Spain,  248;  Argentina,  235,  236;  Chile,  243;  Colombia,  344;  Costa  Rica, 
67,  68;  Ecuador,  356;  Guatemala,  66;  Honduras,  161;  Nicaragua,  60;  Panama, 
584,  635;  Peru,  241;  San  Salvador,  125;  Uruguay,  339,  340;  Vonozuela,  331. 

According  to  articles  2070  and  2071  of  the  code  of  civil  procedure  of  Cuba 
the  judge  to  whom  the  application  referred  tf)  in  article  248  of  the  code  of  com- 
merce must  be  mad(;  is  the  judge  of  first  instance,  when  the  goods  an^  located  in 
the  capital  of  a  judicial  district;  to  the  municij)al  judge  in  other  cases,  and  to 
the  Cuban  consul  in  foreign  countries.  Betancourt,  Codigo  de  Cornercio 
vigenle  de  la  Republica  de  Cuba,  p.  115. 

86  Art.  279. 


330  LATIN-AMERICAN    COMMERCIAL    LAW 

cannot  cover  the  expenses  of  their  transportation  and 
receipt ; 

(h)  when,  after  the  comisionista  has  advised  the 
principal  of  his  refusal  of  the  agency,  the  latter  fails 
to  appoint  a  new  agent  to  receive  the  goods.  The  net 
proceeds  of  the  sale  of  the  goods  must  be  deposited 
at  the  disposal  of  the  principal  in  a  credit  institution; 
and  should  there  be  none,  then  with  a  person  designated 
by  the  court. 

Relations  between  the  parties  when  the  comisionista  deals 
in  his  own  name. 

When  the  comisionista  transacts  business  in  his  own 
name,  without  disclosing  that  of  his  principal,  he  is  directly 
liable  as  if  the  business  were  for  his  own  account,  to  the 
person  with  whom  he  transacts  the  same;  such  person  has 
no  right  of  action  against  the  principal,  nor  the  latter  against 
the  former.  The  reciprocal  liability  of  the  principal  and 
of  the  comisionista  to  each  other  is  always  reserved.^® 

«« Spain,  246;  Argentina,  233;  Brazil,  150;  Chile,  255;  Colombia,  357;  Costa 
Rica,  66;  Ecuador,  353,  354;  Guatemala,  63,  64;  Honduras,  159;  Mexico,  284; 
Nicaragua,  59;  Panama,  638;  Peru,  239;  Uruguay,  337;  Venezuela,  328. 

An  obligation  contracted  by  a  comisionista  of  an  insurance  corporation  in  its 
name  binds  the  latter  directly;  the  functions  of  the  comisionista  cease  as  soon  as 
he  receives  the  premium  from  the  insured,  and  delivers  the  policy  to  him. 
Spain,  Supremo  Trib.,  Feb.  16,  1863;  Gaceta  of  Feb.  19,  1863. 

When  a  com,isionista  acts  in  his  own  name  the  principal  has  no  action  against 
third  parties  who  contracted  with  the  former  in  regard  to  the  object  of  the 
commission,  unless  the  comisionista  assigns  his  rights  to  the  principal,  accord- 
ing to  law.  The  third  party  has  no  action  against  the  principal  in  such  case. 
Ihid.,  June  30,  1883;  Gaceta  of  Sept.  23,  1883. 

When  the  plaintiff  in  a  suit  against  an  industrial  association  for  pajonent  of 
professional  services  rendered  at  the  request  of  a  person  who  was  the  manager 
of  the  association,  has  not  proved  that  there  was  any  legal  relation  between  the 
plaintiff  himself  and  the  defendant  association,  nor  that  the  latter  authorized 
its  agent  to  demand  the  services,  the  plaintiff  cannot  recover  judgment. 
Ihid.,  Oct.  26,  1898;  Gaceta  of  Nov.  15,  1898. 

Even  though  the  comisionista  has  contracted  in  the  name  and  for  the  ac- 
count of  the  principal,  and  notwithstanding  that  the  latter  has  ratified  the 
transaction,  the  comisionista  can  institute  actions  derived  therefrom,  when 
he  has  been  given  power  therefor,  and  also  when,  though  in  the  beginning  he 
had  not  the  power  he  afterwards  acquired  all  rights  belonging  to  the  principal. 
Ihid.,  Dec.  29,  1903;  Gacetas  of  Jan.  26  and  30,  1904. 


COMMERCIAL   AGENCY  331 

In  Chile  ^^  and  Colombia  ^^  the  comisionista  may  reserve 
for  himself  the  privilege  subsequently  to  disclose  the  name 
of  his  principal;  when  afterwards  he  discloses  the  name, 
the  comisionista  is  relieved  of  any  obligation,  and  the  prin- 
cipal is  substituted,  with  retroactive  effect,  in  all  the  rights 
and  obligations  derived  from  the  contract. 

The  code  of  Panama  provides  that  the  comisionista  who 
deals  in  his  own  name  is  personally  and  exclusively  liable 
to  the  third  person  dealing  with  him,  even  though  the  prin- 
cipal is  present  at  the  time  the  contract  is  entered  into  and 
discloses  himself  as  the  person  interested  in  the  business,  or 
if  it  is  common  knowledge  that  the  transaction  is  made  for 
his  account. 

That  code  provides, ^^  furthermore,  that  the  principal  has 
no  direct  right  of  action  against  third  parties  with  whom 
the  comisionista  dealt  in  his  own  name.  He  can,  however, 
compel  the  latter  to  transfer  to  the  principal  any  rights  he 
may  have  against  such  third  parties. 

Relations  between  the  parties  when  the  comisionista  deals 
in  the  principal's  name. 

If  the  comisionista  transacts  business  in  the  name  of  the 
principal  he  must  announce  that  fact;  and  if  the  contract 
is  in  writing,  he  must  state  the  fact  therein  or  in  the  subscrib- 
ing clause,  giving  the  name,  surname,  and  domicil  of  his 
principal.  In  this  case  the  contract  and  any  actions  arising 
therefrom  bind  the  principal  and  the  person  or  persons  who 
contracted  with  the  comisionista,  but  the  latter  is  bound 
with  respect  to  such  person  or  persons  as  long  as  he  does 
not  prove  the  existence  of  the  power,  should  the  principal 
deny  it,  without  prejudice  to  the  mutual  rights  and  obli- 
gations between  the  principal  and  the  comisionista?^ 

In  Chile,^^  Colombia  ^-  and  Panama,^^  the  principal  can 
declare  to  third  parties  who  have  dealt  with  the  comisionista 

"  Art.  256.  «8  Art.  359.  89  Art.  640. 

™  Spain,  247;  Chile,  260;  Colombia,  360,  362;  Ecuador,  355;  Guatemala,  64; 
Honduras,  160;  Peru,  240. 

"  Art.  258.  "  Art.  361.  "  Art.  642. 


332  LATIN-AMERICAN    COMMERCIAL    LAW 

that  the  contract  was  made  in  behalf  of  the  principal  him- 
self, thus  assmning  the  obligations  of  the  contract.  This 
declaration  leaves  subsisting  the  relations  already  created 
between  the  comisionista  and  the  third  parties,  and  its  effect 
is  to  make  the  principal  the  surety  of  the  comisionista  in  all 
contracts  executed  by  him  in  the  name  of  his  principal. 

Effects  in  regard  to  third  parties. 

When  a  contract  is  entered  into  by  the  comisionista  in 
the  name  of  the  principal  with  all  legal  formalities,  the 
latter  must  accept  all  the  consequences  thereof,  his  rights 
against  the  comisionista  for  negligence  or  fault  being  re- 
served.'^^ 

A  comisionista  who,  without  express  authorization  of 
the  principal  arranges  a  transaction  under  conditions  more 
onerous  than  is  customary,  is  liable  to  the  principal  for 
any  loss  he  may  thus  cause  him;  the  fact  that  he  trans- 
acted business  at  the  same  time  for  his  own  account  under 
similar  circumstances  not  being  admissible  as  an  excuse.''^ 

^SSpain,  253;  Brazil,  149;  Chile,  260;  Colombia,  362;  Costa  Rica,  90;  Ecu- 
ador, 384;  Guatemala,  87;  Honduras,  166;  Mexico,  285;  Panama,  639;  Peru, 
247;  Uruguay,  336;  Venezuela,  357. 

According  to  articles  247  of  the  code  of  commerce  and  1727  of  the  civil  code, 
the  principal  must  abide  by  the  consequences  of  the  contract  entered  into  ac- 
cording to  his  direction.  Articles  260  of  the  commercial  code  and  1902  of  the 
civil  code  are  not  applicable  to  a  case  in  which  the  responsibility  of  the  prin- 
cipal is  not  derived  from  faults  or  omissions  of  the  agent  in  fulfilling  his  obliga- 
tions.   Spain,  Sup.  Trib.,  June  16,  1903;  Gaceta  of  Aug.  21,  1903. 

The  agent  who  receives  bills  of  exchange  to  his  order,  payable  at  certain 
periods  after  sight,  covering  the  price  of  merchandise  received  by  the  agent 
and  drawn  upon  the  buyer  thereof,  cannot  refuse  to  surrender  the  merchandise 
when  the  buyer  accepts  the  bills  of  exchange,  upon  the  ground  that  he  has  not 
yet  paid  the  amomit  of  the  bills,  inasmuch  as  the  sale  is  in  that  case  made  on 
credit  and  vests  the  title  to  the  goods  in  the  buyer.  Cuba,  Trib.  Sup.,  Oct.  13, 
1905;  Gaceta  of  May  16,  1906. 

A  contract  made  by  an  agent  in  the  name  of  his  principal  can  be  nullified 
when  it  is  notoriously  detrimental  to  the  latter.  Costa  Rica,  Corte  de  Casa- 
ci6n,  Feb.  8,  1812,  Sentencias  de  la  Corte  de  Casaddn,  1912,  1st  semester,  p.  52. 

'6  Spain,  258;  Argentina,  272;  Bolivia,  121;  Brazil,  183;  Chile,  296;  Colombia, 
400;  Costa  Rica,  79;  Guatemala,  76,  79;  Honduras,  171;  Nicaragua,  69;  Peru, 
251;  Uruguay,  377. 

In  case  the  agent  has  not  obeyed  the  instruction  of  the  principal  the  agent 
must  pay  damages,  if  it  is  proved  that  there  were  any,  but  the  transaction  is 


COMMERCIAL   AGENCY  333 

Obligations  of  comisionista. 

After  accepting  the  coinrQission  (comisi6n)  a  comisionista 
is  obliged: 

(a)  To  carry  out  the  commission.  A  comisionista  who, 
without  legal  cause,  fails  to  execute  a  commission  which 
he  has  accepted  or  begun  to  perform,  is  liable  for  all 
damages  the  principal  may  suffer  by  reason  thereof. ""^ 

Cases  in  which  the  execution  of  an  accepted  commission 
is  not  compulsory. 

The  execution  of  commissions  requiring  the  disburse- 
ment of  funds  is  not  compulsory,  even  though  accepted, 
until  the  principal  places  the  sum  necessary  for  the 
purpose  at  the  disposal  of  the  comisionista. 

The  comisionista  may  also  suspend  the  taking  of 
further  action  with  regard  to  the  commission  entrusted 
to  him  when,  after  having  disbursed  the  sum  received, 
the  principal  refuses  to  remit  additional  fluids  requested 
by  the  co7nisionista.'^'^ 

If  an  agreement  has  been  concluded  to  the  effect 
that  the  comisionista  shall  advance  the  funds  necessary 
for  the  execution  of  the  commission,  he  is  obliged  to 
supply  them,  except  in  the  case  of  suspension  of  pay- 
ments or  bankruptcy  of  the  principal/^ 

In  Argentina,^^  Chile,^''  and  Colombia,^^  the 
comisionista  may  renounce  the  comision  any  time,  but 
he  must  advise  the  principal  thereof.  Nevertheless, 
he  must  pay  any  damages  the  principal  may  sustain 
thereby. 

not  considered  as  having  been  undertaken  for  the  account  of  the  agent.  Spain, 
Sup.  Trib.,  Oct.  13,  1902;  Gacela  of  Dec.  9,  1902. 

'« Spain,  252;  Argentina,  239;  Bolivia,  114;  Brazil,  143;  Chile,  245;  Colom- 
bia, 346;  Costa  Rica,  73;  Ecuador,  358;  Guatemala,  68;  Honduras,  165; 
Mexico,  276;  Nicaragua,  64;  Uruguay,  343;  Venezuela,  333. 

"Spain,  250;  Argentina,  224;  Bolivia,  117;  Chile,  272;  Colombia,  376; 
Costa  Rica,  71;  Ecuador,  359;  Guatemala,  69;  Honduras,  163;  Mexico,  281; 
Nicaragua,  63;  Panama,  593;  Peru,  243;  Uruguay,  345;  Venezuela,  333. 

^*  Spain,  251;  Argentina,  241;  Bolivia,  118;  Guatemala,  70;  Honduras,  164; 
Mexico,  282;  Panama,  593;  Peru,  244;  Uruguay,  345. 

"  Art.  224.  8"  Art.  243.  "  Arts.  342,  344. 


334  LATIN-AMERICAN    COMMERCIAL   LAW 

The  power  cannot  be  delegated. 

The  comisionista  must  personally  execute  the  com- 
mission, and  cannot  delegate  it  without  the  prior 
consent  of  the  principal;  but  he  may  under  his  own 
responsibility  employ  his  own  subordinates  in  those 
routine  duties  which,  according  to  general  commercial 
customs,  are  usually  entrusted  to  them.^^ 

In  Argentina,  ^^  Panama,  ^^  and  Uruguay,  ^^  there 
is  an  exception  to  the  rule  above  mentioned,  in  that 
the  comisionista  may  employ  a  substitute  in  the  agency, 
although  an  express  power  therefor  has  not  been  given, 
when  the  character  of  the  transaction  requires  it  or  when 
it  becomes  necessary  because  of  some  unfore  seen  event. 

The  delegation  can  be  made  in  the  name  of  the 
comisionista  or  in  that  of  the  principal.  In  the  first 
case,  the  comision  subsists  through  the  delegating 
comisionista.  In  the  second  case,  the  original  comision 
is  extinguished  and  a  new  one  arises  between  the  prin- 
cipal and  the  delegate.  If  the  agent  makes  a  dele- 
gation with  the  authorization  of  the  principal,  the 
delegate  being  selected  personally  by  the  comisionista, 
the  latter  is  liable  for  the  acts  of  the  former;  if  not  so 
selected,  he  is  released  from  liability.^® 

(6)  To  obey  the  instructions  of  the  principal.  In  no 
case  can  the  comisionista  disobey  an  express  direction 
of  the  principal,  without  becoming  liable  for  all  damage 
he  may  occasion  by  reason  thereof.  Similar  liability 
is  incurred  by  a  comisionista  in  case  of  malice  or  aban- 
donment.^^ 

82  Spain,  261;  Bolivia,  115;  Brazil,  146;  Chile,  261;  Colombia,  363;  Costa 
Rica,  83;  Ecuador,  365;  Guatemala,  80;  Honduras,  174;  Mexico,  280;  Nicar- 
agua, 72;  Peru,  255;  Venezuela,  338. 

An  agency  can  be  delegated  when  the  law  of  the  place  where  the  power  was 
given  allows  the  agent  to  do  so.  Mexico,  Trib.  Sup.  del  Dist.  Fed.,  2a  Sala., 
Sept.  11,  1911,  Diario  de  Jur.,  vol.  29,  p.  156. 

«3  Art.  251.  «*  Art.  646.  s^  Art.  355. 

^  Spain,  262;  Argentina,  252;  Chile,  263,  265;  Colombia,  364,  366;  Ecuador, 
365;  Honduras,  174;  Panama,  648;  Peru,  256;  Uruguay,  355;  Venezuela,  338. 

8'  Spain,  256;  Argentina,  225,  238;  Bolivia,  116;  Brazil,  168,  169;  Chile,  268; 


COMMERCIAL   AGENCY  335 

(c)  To  consult  the  principal  in  unforeseen  circum- 
stances. In  matters  not  expressly  foreseen  and  pro- 
vided for  by  the  principal,  the  comisionista  must  con- 
sult him,  provided  the  nature  of  the  business  permits. 
But  when  the  comisionista  is  authorized  to  act  at  his 
discretion,  or  when  consultation  is  not  possible,  he 
must  proceed  with  prudence  and  in  accordance  with 
commercial  customs,  acting  in  the  business  as  if  it  were 
his  own.  If  in  the  judgment  of  the  comisionista  an  un- 
foreseen accident  makes  the  execution  of  the  instruc- 
tions received  hazardous  or  prejudicial,  he  may  sus- 
pend performance  of  the  commission,  notifying  the 
principal  of  the  reasons  therefor  by  the  speediest  means 
of  communication.^^ 

{d)  To  use  proper  diligence  in  the  discharge  of  his  com- 
mission. A  comisionista  must  observe  the  laws  and 
regulations  with  regard  to  the  transaction  entrusted 
to  him,  and  is  liable  for  the  results  of  violations  or 
omissions.  If  he  acted  under  express  orders  of  the 
principal,  any  liabilities  which  may  arise  are  incurred 
by  both.89 

The  comisionista  must  frequently  communicate  to 
the  principal  any  information  which  may  be  of  im- 
portance in  securing  the  successful  outcome  of  the 
transaction,   sending  by  mail  any  contracts  he  may 

Colombia,  370;  Costa  Rica,  74;  Ecuador,  363;  Guatemala,  72;  Honduras,  169; 
Mexico,  286;  Peru,  249;  Uruguay,  346;  Venezuela,  336. 

8»  Spain,  255;  Argentina,  245;  Bolivia,  119;  Chile,  269;  Colombia,  371; 
Costa  Rica,  75;  Ecuador,  363,  364;  Guatemala,  73;  Honduras,  168;  Mexico, 
287;  Nicaragua,  65,  66;  Peru,  249. 

*9  Spain,  259;  Argentina,  244;  Colombia,  352;  Costa  Rica,  80;  Guatemala, 
77;  Honduras,  172;  Mexico,  291;  Nicaragua,  68;  Panama,  596;  Peru,  252; 
Uruguay,  348. 

A  commercial  agent  is  bound  to  perform  his  oliligations  in  accordance  with 
his  contract  and  with  the  provisions  of  the  commercial  and  civil  code.  Spain, 
Trib.  Sup.,  July  7,  1871;  Gaceta  of  Aug.  15,  1871. 

The  fact  that  an  agency  is  commercial  docs  not  prevent  the  application  of 
the  pertinent  provisions  of  the  civil  code,  as,  for  instance,  article  2155,  accord- 
ing to  which  the  agent  is  liable  evcsn  for  slight  neglig<mce.  Colombia,  Corte 
Sup.  de  Just.  Casacidn,  Aug.  22,  1912;  Gacela  Jiul.,  vol.  21,  p.  370. 


336  LATIN-AMERICAN   COMMERCIAL   LAW 

have  executed,  on  the  same  day  or  the  day  after  they 
were  concluded.^^ 

Comisionistas  cannot  handle  goods  of  the  same  kind 
belonging  to  different  parties,  bearing  the  same  mark, 
without  distinguishing  them  by  a  countermark,  in 
order  to  avoid  confusion  and  for  the  purpose  of  desig- 
nating the  respective  property  of  each  principal." 

(e)  To  execute  the  commission  in  good  faith.  No 
comisionista  can  purchase  for  himself  or  for  another 
what  he  has  been  commissioned  to  sell,  nor  can  he  sell 
what  he  has  been  commissioned  to  purchase,  without 
leave  of  the  principal.  Furthermore,  he  may  not  alter 
the  trade-marks  on  goods  which  he  has  purchased  or 
sold  for  the  account  of  another.^- 

(/)  To  account  to  his  principal.  The  comisionista  is 
obliged  to  render  a  specific  and  proper  account  of  the 
amounts  received  for  the  account  of  the  principal, 
paying  over  any  balance  in  his  favor  at  the  time  and  in 
the  manner  prescribed  by  the  principal.  This  account 
must  be  drawn  from  his  books.  In  case  of  tardiness,  he 
must  pay  the  legal  rate  of  interest.^^ 

9"  Spain,  260;  Argentina,  245;  Bolivia,  131;  Chile,  250;  Colombia,  351; 
Costa  Rica,  81;  Ecuador,  364;  Guatemala,  78;  Honduras,  173;  Mexico,  290; 
Panama,  589;  Peru,  253;  San  Salvador,  130;  Uruguay,  349;  Venezuela, 
237. 

Failure  to  give  the  notice  provided  for  in  articles  248  and  253  of  the  code  of 
commerce,  does  not  excuse  the  principal  who  failed  to  send  a  consular  invoice 
from  repaying  to  the  agent  the  fine  he  was  compelled  to  pay.  Peru,  Corte 
Suprema  de  Just.,  Nov.  24,  1908,  Mirgenhi  v.  Maggioncalda,  Anales  Judiciales, 
v.  IV,  p.  594. 

"Spain,  268;  Argentina,  265,  266;  Chile,  314,  315;  Colombia,  419,  420; 
Costa  Rica,  111;  Ecuador,  382;  Guatemala,  106;  Honduras,  181;  Nicaragua, 
84;  Peru,  262;  Venezuela,  355. 

82  Spain,  267;  Argentina,  262,  263;  Bolivia,  125;  Costa  Rica,  108;  Guatemala, 
105;  Honduras,  180;  Mexico,  299;  Nicaragua,  82;  Panama,  650;  Peru,  261; 
Uruguay,  367. 

93  Spain,  263;  Argentina,  277;  Bolivia,  133;  Chile,  279,  280;  Colombia,  383- 
384;  Costa  Rica,  86;  Ecuador,  369;  Honduras,  176;  Mexico,  298;  Nicaragua, 
74;  Panama,  610;  Peru,  257;  Uruguay,  382;  Venezuela,  342. 

An  agent  is  bound  to  surrender  to  his  principal  all  amounts  received  for  the 
account  of  the  latter;  the  circumstance  that  the  agent  is  a  partner  of  the  prin- 
cipal cannot  be  invoked  against  this  rule,  so  long  as  the  partnership  is  not 


COMMERCIAL   AGENCY  337 

Special  liabilities  of  a  comisionista. 

In  the  performance  of  his  commission  a  comisionista  may 
incm*  certain  Habilities,  some  of  which  are  as  follows : 

For  the  goods  he  receives.  The  comisionista  is  liable  for 
the  goods  he  may  receive,  under  the  terms,  the  condi- 
tions and  according  to  the  description  stated  in  the 
consignment,  unless  he  proves,  on  receiving  them,  that 
they  had  sustained  damage  and  deterioration  on 
comparing  their  condition  with  that  stated  in  the 
bill  of  lading,  or  the  instructions  received  from  the 
principal.^'' 

For  sales  on  credit.  A  comisionista  cannot  without 
authorization  from  the  principal,  lend  or  sell  on  credit. 
If  he  does,  the  principal  may  demand  cash  payment 
from  the  comisionista  leaving  him  any  interest,  profits, 
or  advantages  that  may  arise  from  the  transaction.  If  a 
comisionista  with  due  authorization  sells  on  credit,  he 
must  inform  the  principal,  giving  him  the  names  of  the 
purchaser.  Should  he  not  do  so,  the  sale  will  be  con- 
sidered as  made  for  cash,  in  so  far  as  the  principal  is 
concemed.^^ 

In  Argentina,^^  Brazil,^^  Chile,^^  Colombia,^^  Costa 
Rica,^°°  Nicaragua, ^°^  Panama,^"-  Uruguay  ^°^  and  Vene- 
zuela, ^°^  the  comisio7iista    is    presumed    to    be    auth- 

liquidated  and  a  balance  found  due  by  the  principal  to  his  agent.  Colombia, 
Sup.  Corte  de  Justicia,  Casacion,  Sept.  17,  1910;  Gaceta  Jud.,  vol.  29,  p.  86. 

«^  Spain,  265;  Argentina,  247,  249;  Bolivia,  120;  Brazil,  170,  172;  Chile,  248, 
250,  302;  Colombia,  347,  408,  409;  Costa  Rica,  96;  Ecuador,  360;  Guatemala, 
90,  93;  Honduras,  178;  Mexico,  294;  Nicaragua,  78;  Panama,  585;  Peru,  259; 
San  Salvador,  126,  128;  Uruguay,  250,  253;  Venezuela,  334. 

96  Spain,  270,  271;  Bolivia,  128;  Guatemala,  98;  Honduras,  193,  194;  Mexico, 
301;  Peru,  264,  265. 

The  comisionisla  who  sells  on  credit  is  obliged  to  give  notice  thereof  to  his 
principal;  otherwise  it  is  understood  that  the  transaction  was  made  for  cash, 
notwithstanding  that  the  custom  of  the  place  was  to  sell  such  goods  on  credit. 
He  is  ol)liged  also  to  give  notice  to  the  j)rincipal  when  a  bill  of  exchange  has  not 
been  paid,  and  of  cases  in  which  it  is  suspected  that  the  debtor  is  bankrupt. 
Brazil,  Rev.  No.  4560,  Jan.  13,  1852,  Jurisprudencia  Com.,  p.  58. 

98  Art.  257.  97  Art.  176.  »«  Art.  253. 

99  Art.  355.  !"» Arts.  101,  104.  i"!  Art.  80. 
'"2  Arts.  656,  657,  658.              '»'  Art.  362.  ">*  Art.  350. 


338  LATIN-AMERICAN   COMMERCIAL   LAW 

orized  to  sell  on  credit  when  it  is  the  custom  of  the 
place,  in  the  absence  of  orders  to  the  contrary. 

For  delay  in  collecting  claims.  The  comisionista  is 
responsible  for  damage  caused  by  his  failure  to  collect 
credits  of  the  principal  when  due,  unless  he  proves  that 
he  made  timely  use  of  the  legal  means  for  obtaining 
payment.  ^°-^ 

For  not  insuring  merchandise  transported.  A  comi- 
sionista who  has  been  du-ected  to  insure  merchandise  for 
transportation  is  responsible  in  damages  if  he  fails  to  do 
so,  provided  he  has  been  supplied  with  sufficient  funds 
to  pay  the  premium  of  insurance  or  has  bound  himself 
to  supply  them,  and  has  not  given  timely  notice  to  the 
principal  of  the  impossibility  of  insuring  the  merchan- 
dise. 

Should  the  insurer  become  a  bankrupt  during  the 
running  of  the  risk,  the  comisionista  is  obliged  to  renew 
the  insurance  unless  the  principal  has  provided  other- 
wise. 

For  cash  received.  All  the  risks  of  the  cash  in  posses- 
sion of  the  comisionista  are  for  his  account.  ^°® 

Del  credere  agent. 

If  a  comisionista  receives  for  a  sale,  besides  the  ordinary 
commission,  an  extra  commission  called  guaranty  commis- 
sion {del  credere)  the  risks  of  collection  are  borne  by  him,  and 
he  is  obliged  to  pay  the  principal  the  proceeds  of  the  sale  at 
the  periods  agreed  upon  by  the  purchaser.  ^°^      The  extra 

1"*  Spain,  273;  Argentina,  260;  Bolivia,  132;  Costa  Rica,  106;  Ecuador,  380; 
Honduras,  186;  Mexico,  303;  Peru,  267;  Uruguay,  365;  Venezuela,  353. 

108  Argentina,  273;  Bolivia,  129;  Brazil,  181;  Costa  Rica,  78;  Ecuador,  362; 
Honduras,  170;  Mexico,  292;  Panama,  597;  Peru,  250;  Uruguay,  375;  Vene- 
zuela, 335. 

10^  Spain,  272;  Argentina,  256;  Bolivia,  142;  BrazU,  179;  Chile,  317;  Colom- 
bia, 424;  Costa  Rica,  105;  Ecuador,  381;  Guatemala,  102;  Honduras,  185; 
Nicaragua,  81;  Panama,  654;  Peru,  266;  Uruguay,  360;  Venezuela,  354. 

A  person  is  entitled  to  be  paid  a  commission  even  though  he  is  not  inscribed 
in  the  commercial  registry  as  a  broker,  if  he  is  inscribed  as  a  commission  mer- 
chant. Argentina,  Cam.  de  Apel.  Com.  Buenos  Aires,  April  18,  1914,  J.  M. 
Faro  V.  N.  T.  Mario,  Jurisp.  de  los  Tribs.  Macs.,  April,  1914,  p.  264. 


COMMERCIAL   AGENCY  339 

commission  is  compensation  for  insuring  the  solvency  of  the 
buyer  and  the  prompt  payment  of  the  debt. 

Obligations  of  the  principal. 

The  obUgations  of  the  principal  may  be  summarized  in  the 
words,  to  compensate  and  to  indemnify  the  comisionista. 

The  principal  is  obliged  to  pay  the  comisionista  the 
commission  fees,  unless  there  is  an  agreement  to  the  con- 
trary. Should  there  be  no  agreement  with  regard  to  the 
fees,  they  must  be  fixed  in  accordance  with  the  mercantile 
practices  and  customs  of  the  place  where  the  commission  is 
executed.  The  principal  is,  furthermore,  obliged  to  reim- 
burse the  comisionista  in  cash,  after  receiving  a  proper 
account,  for  all  expenses  and  disbursements,  with  legal 
interest  from  the  day  they  were  incurred  to  the  day  of 
payment.  The  commission,  advances  and  other  charges 
that  the  comisionista  may  have  incurred  or  earned  on  ac- 
count of  merchandise  sent  on  consignment,  may  be  deducted 
from  the  proceeds  of  the  sale.^°^ 

Lien  of  the  comisionista. 

The  comisionista  has  a  lien  on  the  goods  sent  to  him  on 
commission  for  the  payment  of  his  compensation  and 
advances.  Consequent  thereon,  the  comisionista  is  said  to 
have  the  following  privileges: 

(a)  the  merchandise  a  comisionista  receives  on  con- 
signment cannot  be  taken  from  hii;n  until  he  is  reim- 
bursed for  his  advances,  expenses  and  commission 
charges; 

(6)  the  comisionista  must  be  paid  out  of  the  proceeds 
of  the  merchandise  or  must  be  preferred  over  the  other 
creditors   of    the   principal,    after    the    transportation 

As  the  commission  del  credere,  charged  b>  the  comisionista  to  the  principal,  is 
natural  in  the  contract  of  commission,  it  does  not  constitute  an  innovation 
therein.  Brazil,  Rev.  9022  of  Feb.  17,  1877,  and  Accordao  revisor  dc  Rel.  del 
Maranhao  of  June  5,  1877,  0  Direilo,  vol.  12,  p.  (503  and  vol.  13,  p.  713. 

^"^  A  demand  for  payment  of  a  commission  is  improper  after  the  closing  of  a 
current  account  which  fixes  the  legal  relations  of  the  parties.  Colombia,  Corte 
Sup.  Casaci6n,  July  6,  1899;  Gacela  Jud.,  v.  14,  p.  307. 


340  LATIN- AMERICAN   COMMERCIAL   LAW 

charges  have  been  paid.  In  order  to  enjoy  this  prefer- 
ence, the  merchandise  must  be  in  the  possession  of  the 
consignee  or  comisionisia,  or  be  at  his  disposal  in  pubUc 
stores  or  warehouses,  or  be  consigned  to  him,  the  bill  of 
lading  or  transportation  contract  having  been  received 
by  him,  signed  by  the  carrier.  ^°^ 

'"3  Spain,  276,  277,  278;  Argentina,  279;  Bolivia,  139,  143,  144;  BrazU,  185, 
186,  189;  Chile,  274,  278,  284;  Colombia,  378,  379,  388;  Costa  Rica,  77,  84,  95, 
116;  Ecuador,  367,  371,  372;  Guatemala,  111;  Haiti,  92;  Honduras,  189,  190, 
191;  Mexico,  304,  305,  306;  Nicaragua,  73,  89;  Peru,  270,  271,  272;  San  Sal- 
vador, 123,  136;  Santo  Domingo,  95;  Uruguay,  359,  380,  381,  384;  Venezuela, 
345. 

The  rules  which  govern  the  contract  of  agency  are  applicable  to  that  of  com- 
mission; therefore  the  principal  must  pay  the  stipulated  compensatiOii  at  the 
place  where  the  commission  was  executed,  unless  otherwise  agreed,  according 
to  the  constant  policy  of  the  Tribunal  Supremo  in  the  application  of  articles  277 
of  the  code  of  commerce  and  1728  of  the  civil  code.  Spain,  Sup.  Trib.,  Oct.  23, 
1906;  Gaceta  of  Nov.  11,  1906,  and  Nov.  18,  1903;  Gaceta  of  Dec.  4,  1903. 

Article  276  of  the  code  of  commerce  establishes  a  guaranty  in  favor  of  the 
comisionisia,  consisting  in  a  lien  or  privilege  for  his  compensation  and  expenses 
incurred  in  the  discharge  of  the  commission,  on  the  price  of  the  merchandise 
sold,  with  preference  to  all  other  creditors  of  the  principal;  but  it  does  not 
establish  a  limitation  on  the  freedom  of  the  parties  to  stipulate  the  compensa- 
tion due  to  the  agent.  Spain,  Trib.  Sup.,  Oct.  13,  1898;  Gaceta  of  Oct.  31, 
1898. 

The  natural  consequence  of  a  contract  of  comisidn  is  that  the  principal  is 
under  obligation  to  pay  the  comisionista  all  expenses  incurred  and  proved. 
Spain,  Trib.  Sup.,  Jime  28,  1887;  Gaceta  of  Aug.  18,  1887. 

Whether  in  the  case  of  a  comisidn  or  of  a  commercial  agency,  the  obligation 
of  the  principal,  according  to  articles  244,  277,  278,  of  the  code  of  commerce,  in 
connection  with  articles  1728  and  1729  of  the  civil  code,  is  to  pay  the  comision- 
ista or  the  agent,  at  the  place  in  which  the  services  were  rendered,  the  amount 
of  expenses  incurred  by  the  agent  as  well  as  the  compensation  stipulated. 
Spain,  April  6,  1904,  Colec.  Leg.  de  Espafia,  Jur.  Civ.,  1904,  vol.  II,  p.  39. 

A  comisionista  has  a  right  to  demand  compensation  from  the  principal  for 
his  services  only  when  there  has  been  an  agreement  in  regard  to  the  amount  of 
the  compensation.  He  has  no  right  to  demand  indemnity  for  expenses  in- 
curred except  to  the  amount  legally  proved.  Mexico,  2a  Sala  Sup.  Trib.  del 
Dist.  Fed.,  Aug.  2,  1906,  Gaudry  v.  Comand6n  &  Cia.,  Diario  de  Jurisp., 
vol.  9,  p.  411. 

The  comisionista  has  the  right  to  demand  from  the  principal  payment  of  the 
compensation  agreed  to,  as  soon  as  the  fact  on  which  such  payment  depends  has 
occurred;  and  the  principal,  on  the  other  hand,  is  obliged  to  pay  the  comision- 
ista the  stipulated  compensation.  Mexico,  Juzgado  4°  de  lo  Civil,  Mexico, 
Dist.  Fed.,  Sept.  22,  1905,  Casino  v.  Fonderia  del  Pignon  S.  A.,  Diario  de 
Jurisp.,  vol.  7,  p.  729. 

The  comisionista  who,  in  accordance  with  the  contract,  has  made  advances 


COMMERCIAL   AGENCY  341 

In  Chile,  the  comisionista  has  also  the  privilege  of  being 
paid,  in  preference  to  any  other  creditors  of  the  principal, 
out  of  the  proceeds  of  the  merchandise  consigned  to  him, 
whatever  the  form  of  the  proceeds  may  be  at  the  time  of  the 
bankruptcy  of  the  principal. 

Termination  of  the  comision. 

The  comision  expires: 

(a)  by  revocation.  The  principal  may  revoke  the 
commission  entrusted  to  an  agent  at  any  stage  of  the 
business,  by  notice  to  the  comisionista;  but  the  prin- 
cipal is  always  bound  by  the  results  of  the  transactions 
which  took  place  before  the  agent  was  informed  of  the 
revocation.  ^^'^ 

In  Chile  ^^^  the  principal  cannot  revoke  the  commis- 
sion at  his  will,  after  it  has  been  accepted,  if  the  comi- 
sionista or  a  third  party  has  an  interest  in  its  perform- 
ance. 

(6)  by  rescission.  A  contract  of  comision  is  rescinded 
by  the  death  or  incapacity  of  the  comisionista  but  it  is 
not  rescinded  by  the  death  or  incapacity  of  the  princi- 
pal, although  it  may  be  revoked  by  his  representative. ^^^ 

In   Colombia, ^^^   however,    when   the   comision   was 

for  the  account  of  the  principal  has  no  right  to  be  paid,  in  case  of  bankruptcy 
of  the  principal,  ii.  preference  to  the  other  creditors.  Peru,  Corte  Suprema  de 
Justicia,  June  20,  1909,  Butr6n  v.  Empresa  de  Gas  de  Arequipa,  Anales  Ju- 
diciales,  vol.  5,  p.  189. 

""Spain,  279;  Colombia,  341;  Costa  Rica,  90;  Ecuadoi,  384;  Honduras, 
192;  Mexico,  307;  Nicaragua,  77;  Peru,  273;  Venezuela,  257. 

111  Art.  241. 

112  Spain,  280;  Bolivia,  146;  Chile,  240;  Colombia,  339;  Ecuador,  385;  Hoi  - 
duras,  193;  Mexico,  308;  Nicaragua,  77;  Peru,  274;  Venezuela,  358. 

A  power  of  attorney  given  by  a  debtor  to  his  creditor  to  sell  realty  mort- 
gaged to  such  creditor,  does  not  terminate  by  the  fact  that  the  debtor  becomes 
a  bankrupt.  Argentina,  Cam.  la  de  Apcl.  de  lo  Civ.  Buenos  Aires,  April  16, 
1914,  Jur.  de  los  Tribs.  Nacs.,  April,  1914,  p.  157. 

ii»  Art.  340. 

A  power  of  attorney  to  institute  a  judicial  action  has  special  rules,  one  of 
which  is  that  it  is  extinguished  (art.  354  of  the  code  of  civil  procedure;)  by  the 
death  of  the  princii)al  if  the  comfjlaint  has  not  been  answered;  otherwise  it  will 
survive.  The  reason  for  this  is  that  the  plaintiff  is  not  bound  to  carry  on  the 
suit  as  long  as  the  defendant  haa  not  answered  the  complaint;  the  termination 


342  LATIH-AMERICAN   COMMERCIAL   LAW 

made  less  in  consideration  of  the  comisionista  person- 
ally than  in  that  of  the  firm  he  represented,  the  death 
of  the  comisionista  does  not  put  an  end  to  the  comision 
if  the  firm  subsists. 
In  San  Salvador,"'*  a  comision  is  always  rescinded  by  the 
death  either  of  the  principal  or  of  the  agent. 

Commercial  travelers. 

The  best  way  of  developing  business  and  at  the  same  time 
obtain  fresh  and  reliable  information  of  the  needs  of  the 
people  in  the  Latin-American  countries,  as  well  as  rehable 
knowledge  of  the  standing  of  merchants  and  facts  of  impor- 
tance from  a  business  point  of  view,  is  usually  to  send  a 
commercial  traveler  to  those  countries.  This  method, 
however,  is  inconvenient  and  expensive  due  to  the  fact  that 
the  traveling  agent  has  to  submit  to  regulations  which  vary 
from  place  to  place  and  has  to  pay  fees  in  every  town.  To 
overcome  these  difficulties  the  International  High  Commis- 
sion in  Washington  has  proposed  to  each  country  of  Latin- 
America  a  uniform  treaty.  This  has  aheady  been  signed  by 
the  representatives  of  Ecuador,  Guatemala,  Haiti,  Nicar- 
agua, Panama,  Paraguay,  San  Salvador,  Uruguay  and 
Venezuela  and  it  has  already  been  ratified  by  the  govern- 
ments of  Guatemala,  Panama  and  Uruguay.  According  to 
the  provisions  of  the  treaty,  traders  can  act  in  the  territorj^  of 
any  of  the  other  high  contracting  parties  either  by  themselves 
or  by  agents,  by  pajdng  for  a  single  Ucense  which  shall  be 
vahd  in  its  whole  territory'. 

A  certificate  issued  in  the  country  where  the  trader  resides 
must  be  presented  showing  the  character  of  the  commercial 
traveler.  Said  certificate  shall  be  issued  by  the  official  de- 
signated by  each  county,  vised  by  the  consul  of  the  nation  in 
which  the  applicant  intends  to  work.  Upon  presentation  of 
this  document,  the  authorities  of  the  other  country  will  issue 

of  the  power  under  those  circumstances  cannot  injure  the  heirs  of  the  principal. 
Colombia,  Corte,  Sup.  de  Justicia,  Casaci6n,  Sept.  15,  1900;  Gaceta  Jud., 
vol.  15,  p.  125,  and  Dec.  15,  1900,  lb.,  p.  126. 
"^  Art.  135. 


COMMERCIAL   AGENCY  343 

the  national  license  above  referred  to.  Traveling  agents  can 
sell  their  samples  without  an  importer's  special  license.  All 
samples  without  commercial  value  are  held  free  of  duty.  By 
samples  without  commercial  value  it  is  understood  those 
which  are  marked,  sealed  or  otherwise  rendered  useless  to 
such  a  degree  that  they  cannot  be  applied  to  other  uses. 
Samples  with  commercial  value  are  provisionally  admitted 
under  bond  for  the  payment  of  custom  duties  in  case  they 
are  not  reexported  within  a  period  of  six  months. 

The  duties  shall  be  paid  on  that  part  of  the  samples  which 
has  not  been  reexported. 

Persons  who  travel  with  a  view  to  studying  the  market 
business,  although  they  may  initiate  commercial  relations, 
but  who  do  not  sell  any  goods;  those  who  transact  business 
through  local  agencies  which  pay  regular  license  or  other 
duties  to  which  those  agencies  may  be  subject;  and  travelers 
who  are  buyers  exclusively,  do  not  need  any  license. 


CHAPTER  XIX 

MERCANTILE   DEPOSIT 

Mexico. — Verdugo,  Agusttn:  Diferencias  entre  dep6sito  y  prestamo.  El 
Derecho.    Mexico,  1895,  p.  34. 

When  the  deposit  is  mercantile. 

There  are  different  systems  in  Latin- America  to  determine 
whether  the  deposit  is  mercantile.^    They  are  as  follows: 

1.  (a)  At  least  the  depositary  must  be  a  merchant; 
(6)  the  thing  must  be  an  object  of  commerce;  and 
(c)  the  deposit  in  itself  an  act  of  commerce  or  the 

cause  or  effect  of  a  commercial  act.^ 

2.  (a)  One  of  the  parties  must  be  a  merchant; 

(6)  it  must  originate  in  or  give  rise  to  a  commer- 
cial act;  and 
(c)  must  not  be  gratuitous.^ 

3.  (a)  Both  parties  must  be  merchants; 

(b)  the   thing   deposited   must  be   a   commercial 
object  and; 

(c)  the  deposit  must  be  the  result  of  a  commer- 
cial transaction.^ 

4.  (a)  One  of  the  parties  must  be  a  merchant;  and 
(h)  the  deposit  must  arise  from  a  commercial  act.^ 

1  Spain,  303;  Argentina,  572,  573;  Bolivia,  342;  Brazil,  280;  Costa  Rica,  351; 
Ecuador,  517;  Guatemala,  386;  Mexico,  332;  Nicaragua,  227;  Peru,  297;  San 
Salvador,  470;  Uruguay,  721;  Venezuela,  487. 

2  Spain,  Peru,  Venezuela. 
^  Argentina. 

*  Bolivia,  Costa  Rica,  Ecuador,  Guatemala. 

^  Brazil. 

In  order  that  a  deposit  be  mercantile,  the  statement  made  by  the  debtor 
that  he  binds  himself  according  to  the  law  of  deposit  is  not  enough ;  it  is  neces- 
sary that  the  contract  contain  all  legal  requirements.  Brazil,  Trib.  de  Just,  de 
S.  Paulo,  April  28,  1899;  Gaceta  Jur.  de  S.  Paulo,  v.  20,  p.  477. 

Failure  to  state  in  a  mercantile  contract  of  deposit  that  it  is  derived  from 
mercantile  transactions  creates  the  presumption  that  the  contract  is  simulated. 
Trib.  de  Justicia  de  S.  Paulo,  Sept.  13,  1899,  Rev.  de  Jurisp.,  v.  14,  p.  261. 

344 


MERCANTILE    DEPOSIT  345 

5.  The  thing  deposited  must  be  commercial  or  the 
deposit  a  consequence  of  a  commercial  transaction.^ 

6.  The  deposit  is  presumed  to  be  commercial  when 
one  of  the  parties  is  a  merchant,  unless  by  the  circum- 
stances of  the  business  it  appears  otherwise/ 

7.  This  is  like  the  third  one,  but  requires  in  addition 
that  the  deposit  should  not  be  gratuitous.* 

Depositary  must  be  compensated. 

The  depositary  is  entitled  to  receive  compensation  for  the 
deposit,  unless  otherwise  agreed.  If  the  parties  did  not 
stipulate  for  the  rate  of  such  compensation,  it  must  be  fixed 
according  to  the  usages  of  the  place  in  which  the  deposit 
was  made.^ 

In  Bolivia  the  depositary  fee,  in  the  absence  of  special 
agreement,  is  from  four  to  six  per  cent  per  annum  of  the 
value  of  the  deposited  things.^" 

In  Argentina  ^^  and  Uruguay,  ^^  the  fact  that  the  deposi- 
tary does  not  charge  any  compensation  makes  the  deposit 
non- mercantile. 

Manner  of  perfecting  the  deposit. 

According  to  the  Roman  traditions  the  contract  of  de- 

The  owner  of  a  public  security  deposited  in  a  bank  makes  a  request  on  a 
certain  person  by  means  of  a  letter,  that  after  the  death  of  such  owner  the 
security  be  given  to  a  third  party.  The  owner  dies  and  the  person  referred  to 
complies  with  the  charge,  but  the  owner  in  his  will  instituted  a  different  person 
for  his  heir,  and  this  latter  demands  the  delivery  of  the  security  to  him.  The 
court  assented  to  his  petition  on  the  ground  that  the  last  will  of  the  owner  was 
to  be  observed  in  preference  to  a  private  letter.  Spain,  Trib.  Sup.,  Oct.  29, 
1912;  Gaceta,  Oct.  4,  1913,  p.  141. 

A  depositary  is  responsible  for  the  surrender  of  the  deposited  object  to  the 
depositor  and  for  his  negligence  in  not  exhausting  all  means  of  investigation 
concerning  the  title  of  the  person  who  withdraws  the  deposit.  Spain,  Trib. 
Sup.,  June  24,  1914;  Gacelas  of  Dec.  5  and  7,  1914,  p.  466,  and  Dec.  26,  1906; 
Gaceta  of  May  26,  1908,  p.  97. 

8  Mexico.  '  Nicaragua.  *  Uruguay. 

9  Spain,  304;  Brazil,  282;  Chile,  809;  Colombia,  942;  Costa  Rica,  352; 
Ecuador,  518;  Guatemala,  389;  Honduras,  549;  Mexico,  333;  Nicaragua,  229; 
Peru,  298;  San  Salvador,  472;  Uruguay,  722;  Venezuela,  488. 

10  Arts.  139,  343.  "  Art.  573.  >2  Art.  722. 


346  LATIN-AMERICAN    COMMERCIAL   LAW 

posit  is  by  its  nature  a  ''real"  one,  that  is,  a  contract  which 
cannot  be  considered  perfect  until  its  subject-matter  is 
dehvered  to  the  depositary.  This  is  the  system  followed  by 
the  codes  of  Spain, ^^  Brazil,"  Mexico  ^^  and  Peru.^^ 

In  other  countries  the  deposit  is  a  contract  perfected  by  the 
mere  consent  of  the  parties,  like  agency  or  commission,  and 
the  rules  which  govern  commercial  agency  are  applied  to 
the  deposit  except  when  there  is  a  modifying  provision  in  the 
law.  17 

Obligations  of  the  bailee. 

In  the  Roman  law  and  in  those  systems  derived  from  it 
up  to  the  time  the  new  codes  came  into  force,  there  was  a 
general  principle  in  the  matter  of  deposit  that  by  its  nature, 
the  depositary  had  no  right  to  demand  any  compensation, 
and  consequently  his  obligations  were  hmited  in  such 
manner  that  he  was  not  responsible  to  the  bailor  except  for 
his  own  fraud.  Ideas  have  since  changed;  the  depositary  is 
expressly  authorized  by  the  law  to  demand  compensation 
in  the  absence  of  agreement  to  the  contrary,  and  his  respon- 
sibility has  therefore  increased. 

The  codes  of  Spain,  ^^  Mexico  ^^  and  Peru  ^°  provide  that 
the  depositary  is  liable,  in  the  preservation  of  the  deposit, 
for  all  injuries,  damage  and  losses  which  the  things  suffer  by 
reason  of  his  malice  or  negligence,  as  well  as  for  those  due  to 
the  nature  or  defects  of  the  things  themselves,  if  he  did  not 
make  all  necessary  efforts  to  avoid  them  or  to  remedy  them, 
notifying  the  bailor  thereof  as  soon  as  the  defects  became 
manifest.  ^1 

1'  Art.  305.  "  Art.  281.  »  Art.  334. 

i«  Art.  299. 

"Argentina,  574;  Bolivia,  343;  Chile,  807,  808;  Colombia,  940,  941;  Costa 
Rica,  353,  354;  Ecuador,  521;  Guatemala,  390,  391;  Honduras,  547,  548; 
Nicaragua,  228;  Panama,  830,  831;  San  Salvador,  470,  471;  Uruguay,  723; 
Venezuela,  490. 

18  Art.  306.  19  Art.  335.  «>  Art.  300. 

21  A  contract  in  which  the  buyer  of  goods  agrees  to  keep  them  on  deposit 
until  he  pays  the  price  thereof  is  governed  by  the  law  of  mercantile  deposit. 
Mexico,  3a  Sala  del  Triba  Sup.,  del  Dist.  Fed.,  Sept.  20,  1912,  David  Medgley 
&  Sons  V.  L.  Garcia  Teruel,  Diar.  de  Jur.,  vol.  XXVII,  p.  604. 


MERCANTILE    DEPOSIT  347 

Uruguay  ^^  provides  that  the  depositary  is  liable  even  for 
unforeseen  events: 

(a)  when  he  is  in  default  in  returning  the  deposit; 
(6)  when  the  deposit  consists  of  money  and  he  has 
converted  it  to  his  own  use; 

(c)  when  he  binds  himself  for  unforeseen  events  or 
they  are  due  to  his  fault. 

Deposit  consisting  of  money. 

There  may  be  two  cases  of  bailment  of  money,  viz. : 

(a)  when  the  coins  of  which  it  consists  have  been 
specified  or  the  money  has  been  delivered  in  sealed  bags 
(ear  marked) ;  ^^ 

(6)  when  the  coins  are  not  specified  nor  contained  in 
sealed  bags. 
In  the  first  case  any  increase  or  decrease  in  the  value  of  the 
money  is  for  the  account  of  the  bailor.-^ 

In  Spain,  Mexico  and  Peru  the  risks  of  the  deposit  in  this 
case  rest  on  the  depositary,  unless  he  proves  that  the  loss 
was  due  to  unforeseen  events  or  jorce  majeure. 

When  the  deposit  is  made  without  specifying  the  coins  or 
without  the  money  being  contained  in  sealed  bags,  there  are 
various  systems,  namely: 

(a)  The  liability  of  the  depositary  is  governed  by  the 
general  rules,  with  all  the  rigor  provided  by  the  codes 
of  Spain,  2^  Mexico,  ^'^  Peru  ^^  and  Panama. ^^ 

When  the  debtor  of  a  certain  amount  of  money  bearing  interest  is  ordered  by 
a  judge  to  keep  that  amount  in  deposit  awaiting  a  judgment  in  a  judicial  case, 
the  amount  ceases  to  bear  interest  from  the  date  of  the  order  until  payment  is 
provided  for.  Peru,  Corte.  Sup.,  Aug.  18,  1910,  Anales  Judidales,  vol.  VI,  p. 
330. 

"  Art.  727. 

2'  Money  can  only  be  the  subject-matter  of  a  contract  of  deposit  when  it  is 
delivered  in  such  form  that  it  can  be  identified,  as  within  a  closed  chest  or 
sealed  package,  etc.  The  contract  of  deposit  must  be  made  in  writing.  Brazil, 
2a  Cam.  da  Corte  de  Apel.,  Aug.  23,  1908,  Rev.  de  Direito,  v.  9,  p.  530. 

2^  Spain,  307;  Argentina,  576;  Costa  Rica,  3.56;  Guatemala,  395;  Mexico, 
336;  Nicaragua,  229;  Peru,  301;  Panama,  835;  Uruguay,  725. 

"  Art.  307.  ^  Art.  336.  27  Art.  ;501. 

^  Art.  835. 

When  a  deposit  is  made  in  a  general  partnership  {sodedad  colectiva)  and  the 


348  LATIN-AMERICAN    COMMERCIAL    LAW 

(6)  The  depositary  cannot  use  the  bailed  money 
under  penalty  of  paying  all  damages,  even  though  they 
are  due  to  unforeseen  events,  and  must  furthermore  pay 
interest.  ^^ 

In  Argentina  and  Uruguay  the  rate  of  interest  is 
that  which  is  usual  in  the  place;  in  Costa  Rica  it  is  the 
legal  rate,  and  in  Guatemala  the  maximun  of  the  com- 
mercial rate. 

(c)  The  depositary  who  employs  the  deposit  for  his 
own  use  must  pay  interest  thereon  and  is  furthermore 
subject  to  the  provisions  of  the  penal  code  in  case  of 
embezzlement.  ^° 

(d)  The  depositary  who  uses  the  deposited  money 
loses  all  right  to  receive  the  stipulated  or  usual  compen- 
sation, even  in  cases  in  which  by  law  or  by  agreement 
he  is  permitted  to  demand  it.^^ 

(e)  The  depositary  becomes  the  owner  of  the  money 
given  to  him  in  deposit;  but  he  must  return  the  amount 
received  as  soon  as  requested  to  do  so,  for  otherwise  he 
is  responsible  in  damages.  ^^ 

(/)  The  depositary  who  fails  to  surrender  the  deposit 
within  forty-eight  hours  after  judicial  request  therefor, 
must  be  imprisoned  until  he  complies  with  such  obliga- 
tion or  pays  the  value  of  the  deposit.  ^^ 

Obligations  of  the  bailee  in  case  of  deposit  of  documents. 

The  depositary  of  securities  or  stock  which  carry  interest  is 

same  is  not  returned  to  the  bailor  who  demands  it,  a  criminal  proceedtag  may 
be  instituted  against  the  partner  responsible  for  the  conversion,  but  not  against 
the  partnership  itself,  as  legal  entities  cannot  be  held  criminally  liable.       Co- 
lombia, Corte  Sup.,  Oct.  13,  1896;  Gaceta  Judicial,  vol.  XII,  p.  124. 
2^  Argentina,  575;  Costa  Rica,  355;  Guatemala,  394;  Uruguay,  724. 

30  Bolivia,  344. 

31  Chile,  810;  Colombia,  943;  Ecuador,  520;  Honduras,  550;  San  Salvador, 
473. 

32  Nicaragua,  229;  Venezuela,  309,  335. 
'3  Brazil,  284. 

The  period  of  imprisonment  for  the  depositary  who  fails  to  deliver  the  thing, 
subject-matter  of  the  deposit,  cannot  exceed  three  months.  Brazil,  Trib.  de 
Rio  Grande  do  Sul,  Nov.  25,  1904,  Rev.  de  Direito,  v.  I,  p.  439. 


MERCANTILE    DEPOSIT  349 

bound  to  collect  the  interest  when  due,  as  well  as  to  take  such 
steps  as  may  be  necessary  to  preserve  the  corresponding 
rights  in  accordance  with  general  rules. ^^  Peru  ^^  makes 
similar  provision,  excepting  the  case  of  an  express  stipulation 
to  the  contrary. 

Change  in  the  nature  of  the  contract. 

Whenever,  with  the  consent  of  the  bailor,  the  bailee  dis- 
poses of  the  things,  subject-matter  of  the  deposit,  whether 
for  his  own  benefit  or  in  order  to  carry  on  the  business  of  the 
bailor,  the  rights  and  obligations  of  a  bailor  no  longer  sub- 
sist, and  the  rules  of  mercantile  loan  or  agency  or  those  of  the 
new  substituted  contract  must  be  applied.  ^^ 

Case  of  violent  substitution  of  the  deposit. 

The  depositary  who  is  dispossessed  by  force,  and  receives 
instead  of  the  thing  deposited,  money  or  any  other  equiva- 
lent thing,  is  bound  to  give  the  bailor  what  he  has  received 
in  exchange." 

Deposits  made  in  credit  institutions. 

Deposits  made  in  banks,  general  warehouses,  credit  in- 
stitutions or  any  other  corporation,  must  be  governed  in  the 
first  place  by  the  by-laws  of  said  institution;  should  there 
be  no  provision  in  this  respect  in  the  by-laws,  they  are  con- 
trolled by  the  principles  of  the  commercial  code.^^ 

34  Spain,  308;  Argentina,  577;  Bolivia,  345;  Brazil,  286,  277;  Chile,  811; 
Colombia,  944;  Costa  Rica,  354;  Ecuador,  519;  Guatemala,  395;  Honduras, 
551;  Mexico,  337;  Nicaragua,  231;  Panama,  836;  San  Salvador,  474;  Uruguay, 
728;  Venezuela,  489. 

35  Art.  308. 

38  Spain,  309;  Mexico,  338;  Peru,  303;  Panama,  837. 

A  deposit  of  money  which  bears  interest  is  governed  by  the  law  of  loans. 
Colombia,  Corte  Sup.,  Oct.  13,  1896;  Gaceta  Judicial,  v.  XII,  p.  124. 

3^  Argentina,  578;  Uruguay,  729. 

38  Spain,  310;  Argentina,  579;  Brazil,  304;  Panama,  838;  San  Salvador,  475; 
Uruguay,  740. 


CHAPTER  XX 

COMMERCIAL  LOANS. 

A  loan  is  a  contract  by  virtue  of  which  a  person  deUvers  a 
thing  of  his  own  to  another  in  order  that  the  latter  may  use 
it  during  the  period  agreed  upon.  As  the  things  subject- 
matter  of  this  contract  cannot  at  times  be  utilized  except 
by  consuming  or  destroying  them,  and  as  at  times  it  is 
possible  to  use  them  without  destroying  them,  the  contract 
is  of  two  types :  in  the  first  case  the  loan  is  called  mutuo,  and 
in  the  second  comodato.^ 

In  mercantile  affairs  the  mutuo  or  loan  for  consumption 
is  the  more  important. 

Mercantile  character  of  a  loan. 

There  are  various  systems  for  distinguishing  a  mercantile 
from  a  civil  loan,  as  follows: 

1st  System.  A  loan  is  commercial  when:  (a)  one  at 
least  of  the  contracting  parties  is  a  merchant,  and,  (6) 
the  thing  lent  is  destined  to  mercantile  transactions. - 
In  Peru  it  is  enough  to  declare  in  the  document  that 
the  things  are  to  be  used  in  trade. 

1  Simulation  of  a  contract  of  loan  the  amount  of  which,  it  is  alleged,  was 
never  received  by  the  so-called  debtor  can  be  proved  by  coordinated  circum- 
stantial evidence.  The  fact  that  it  bears  no  authenticated  date  is  one  of 
those  circumstances.  Argentina  Cam.  de  Ap.  Civil,  Buenos  Aires,  Jime  17, 
1914,  Jurisp  de  los  Trib.  Nacs.,  June,  1914,  p.  211. 

A  loan  contracted  by  the  manager  of  a  general  partnership  is  void  when  his 
powers  prohibit  him  to  enter  into  such  a  contract.  Mexico,  Juzgado  2°  de  lo 
Civ.  de  la  Capital,  Feb.  3,  1913,  J.  G.  Gonzalez  v.  Claudio  Pellandini  e  Hijo, 
LHar.  de  Jur.,  vol.  XXVIII,  p.  529. 

A  promise  to  lend  a  certain  amount  of  money  on  condition  to  have  it  guar- 
anteed by  a  mortgage,  is  a  bilateral  contract,  and  therefore  the  person  who 
offered  to  lend  the  money  is  not  in  default  as  long  as  the  other  party  does  not 
execute  the  mortgage.  Colombia,  Casaci6n,  Nov.  2,  1907;  Gaceta  Judicial, 
vol.  XVIII,  p.  203. 

2  Spain,  311;  Nicaragua,  217;  Peru,  205. 

350 


COMMERCIAL   LOANS  351 

2d.  System.  When,  (a)  the  thing,  subject-matter  of 
the  contract  is  considered  a  commercial  article,  or  is 
destined  for  trade,  and  (6)  the  debtor,  at  least,  is  a 
merchant.^ 

Sd  System.  When,  (a)  the  debtor  at  least  is  a 
merchant  and  (6)  the  contract  was  made  with  the  ex- 
press condition  that  the  thing,  subject-matter  of  the 
contract,  is  intended  for  commercial  transactions.'' 

4th  System.  When,  (a)  the  debtor  at  least  is  a  mer- 
chant, and  (b)  the  thing  subject-matter  of  the  contract 
is  a  commercial  article,^ 

5th  System.  When  the  contract  is  made  by  a  mer- 
chant in  relation  to  commercial  transactions.^ 

6th  System.  When  the  contract  is  made  with  the 
understanding  and  statement  that  the  things,  subject- 
matter  thereof  are  destined  for  trade,  even  though  none 
of  the  parties  is  a  merchant.^ 

7th  System.  When,  (a)  the  contract  is  made  with 
the  understanding  and  statement  that  the  things, 
subject-matter  thereof  are  intended  for  mercantile 
transactions,  or  (b)  when  it  is  made  between  merchants. 
In  both  cases  the  contract  is  presumed  to  be  mercantile.^ 

8th  System.  When  the  thing,  subject-matter  of  the 
contract  is  intended  for  any  commercial  transaction.^ 

Interest  on  mercantile  loans. 

As  the  characteristic  feature  of  every  commercial  trans- 
action is  profit,  it  would  seem  natural  that  commercial  loans 
should   always   draw   interest.     Nevertheless   not   all   the 
codes  agree  on  this  matter.    They  may  be  grouped  as  follows : 
System  of  Spain.    Loans  do  not  draw  interest,  unless 
so  stipulated  in  writing.  ^° 

'  Argentina,  558. 

*  Bolivia,  335;  Costa  Rica,  334;  Guatemala,  376;  Uruguay,  701;  Venezuela, 
482. 

6  Brazil,  247.  «  Colombia,  21.  ^  Ecuador,  507. 

8  Mexico,  358.  "  Panama,  795. 

'"Spain,  314;  Costa  Rica,  341;  Nicaragua,  318;  Peru,  300;  Uruguay,  711. 


352  LATIN-AMERICAN   COMMERCIAL   LAW 

System  of  Argentina.  Loans  do  not  draw  interest 
unless  so  stipulated,  whether  in  ^Titing  or  other- 
wise." 

System  of  Brazil.  In  commercial  loans  interest  is 
due,  even  though  not  so  stipulated,  when  it  is  per- 
mitted by  the  commercial  code  or  when  it  is  awarded 
in  a  judgment.^- 

System  of  Chile.  Mercantile  loans  bear  legal  interest 
unless  otherwise  stipulated.  ^^ 

Freedom  of  the  parties  to  stipulate  for  interest. 

Money  being  considered  subject  to  the  law  of  supply  and 
demand,  all  the  countries  of  Latin- America  grant  unlimited 
freedom  to  the  parties  to  stipulate  any  rate  of  interest  they 
see  fit." 

The  only  exception  to  this  rule  is  Ecuador,  where  the 
maximum  interest  allowed  is  12%  yearly.  ^^ 

Legal  interest. 

Except  in  Ecuador  by  legal  interest  is  meant  not  a  maxi- 
mum rate  permitted  to  the  parties,  but  a  fixed  rate  appli- 
cable only  when  interest  is  due  according  to  law  or  when 
the  parties  have  not  agreed  upon  the  rate. 

There  are  three  systems  for  the  computation  of  legal 
interest,  namely: 

let  System.  Legal  interest  is  the  rate  used  by  the 
banks.  ^^ 

11  Argentina,  560;  Uruguay,  707. 

An  action  to  nullify  a  contract  upon  the  ground  that  the  "cause"  thereof  was 
a  usurious  loan  is  not  maintainable.  Buenos  Aires,  Cam.  de  Apel.  Civ.  de  la 
Cap.,  Nov.  25,  1913,  JuHsp.  de  los  Trib.  Macs.,  Nov.,  1913,  p.  253. 

12  Brazil,  248. 

"Chile,  798;  Colombia,  931;  Ecuador,  511;  Honduras,  538;  Panama,  796; 
Venezuela,  484. 

"Spain,  315;  Argentina,  .565;  Bolivia,  341;  Brazil,  248;  Chile,  798;  Colom- 
bia, 931;  Costa  Rica,  345;  Guatemala,  383,  384;  Honduras,  538;  Mexico, 
361;  Nicaragua,  218;  Panama,  796;  Peru,  310;  Uruguay,  712;  Venezuela, 
484. 

15  Art.  513. 

1*  Argentina,  565;  Uruguay,  712. 


COMMERCIAL    LOANS  353 

2d  System.  It  is  that  usual  among  the  merchants 
of  the  place.  ^^ 

3d  System.    It  is  6%  per  annum.  ^^ 
In  Colombia  ^^  the  rate  of  interest  in  case  of  default,  is 
the  highest  prevailing  in  the  market;  in  other  cases  it  is  the 
average  rate  in  the  market. 

Interest  in  case  of  default. 

If  the  parties  have  stipulated  a  rate  of  interest  should  the 
debtor  be  in  default,  the  principle  of  freedom  of  contract 
requires  the  enforcement  of  said  stipulation.  In  case  they 
have  not  stipulated  for  interest,  the  interest  due  after  de- 
fault is  the  legal  rate;  but  there  are  cases  in  which  the  parties 
have  agreed  upon  a  certain  interest  for  the  life  of  the  con- 
tract without  any  provision  for  the  event  of  default.  In  the 
latter  case  there  are  two  systems,  viz: 

1st  System.    Interest  must  be  paid  at  the  legal  rate,-° 
2d  System.      The  rate  of  interest  stipulated  for  the 
life  of  the  contract  is  the  rate  due  after  default.  ^^ 

In  Colombia-  in  the  absence  of  stipulation  the 
interest  in  case  of  default  is  the  highest  rate  prevailing 
during  the  period  of  default. 

Interest  in  case  of  loans  of  merchandise. 

Interest   on  loans   contracted   between  merchants  must 

"  Chile,  801;  Guatemala,  384;  Honduras,  541;  Panama,  796;  Venezuela,  484. 

18  In  Bolivia,  law  of  Nov.  5,  1840;  Costa  Rica,  344,  and  Mexico,  362,  the 
rate  is  6%;  in  Ecuador,  12%,  art.  512;  in  Uruguay,  Art.  712,  as  amended  by 
law  of  April  26,  1882,  is  9%. 

'9  Art.  219. 

20  Spain,  316;  Costa  Rica,  335;  Mexico,  362;  Peru,  311. 

When  a  judicial  demand  comprises  at  the  same  time  liquid  and  unliquid 
amounts  and  no  period  was  stipulated  for  the  payment  thereof,  interest  must 
be  paid  on  the  first  from  the  day  the  action  was  instituted.  Mex.  3a  Sala  del 
Trib.  Sup.  del  Dist.  Fed.,  Sept.  13,  1893,  An  de  Leg.  y  Jur.,  Sec.  de  Jur.,  vol. 
XI,  p.  8. 

The  borrower  of  money  is  bound  to  pay  the  same  plus  interest  at  the  rate 
agreed  upon,  from  the  day  of  maturity  to  the  day  of  payment.  Mex.,  3a  Sala 
Del  Trib.  Sup.  del  Dist.  F(d.,  Sept.  5,  1912,  Diar.  de  Jur.,  vol.  XXVII,  p.  483. 

"  Argentina,  .560;  Bolivia,  336;  CUiile,  802;  Colombia,  935;  Guatemala,  383; 
Honduras,  542;  Nicaragua,  218;  Panama,  800;  Uruguay,  717. 

"  Art.  219. 


354  LATIN-AMERICAN   COMMERCIAL   LAW 

always  be  stipulated  in  money  even  though  the  thing  sub- 
ject-matter of  the  contract  consists  of  commercial  goods. ^^ 
In  Chile,  Colombia,  Guatemala  and  Honduras  the  price 
of  the  goods  at  the  time  the  pajTnent  is  made  is  the  basis 
for  the  computation,  while  in  Venezuela  it  is  the  price  of 
the  goods  the  day  of  the  contract. 

Compound  interest. 

The  question  whether  interest  due  bears  interest  is  deter- 
mined according  to  the  following  systems: 

1st  System.  Unpaid  interest  does  not  bear  interest; 
the  parties,  however,  can  capitaUze  liquid  and  unpaid 
interest  and  in  that  case  this  sum  bears  interest.  ^^ 

2d  System.  Interest  accrued  can  draw  interest  in 
case  judicial  complaint  is  brought  against  the  debtor 
or  when  there  has  been  a  special  agreement.  In  the 
first  case  it  is  necessary  that  the  interest  of  one  year 
at  least  be  due.  The  liquid  balances  of  transactions 
closed  at  the  end  of  the  year  also  draw  interest.  After 
suit  is  begun,  interest  cannot  draw  interest.  ^^ 

3d  System.  Interest  accrued  draws  interest  only 
by  agreement  of  the  parties  or  by  a  final  judicial  de- 
cision. Interest  accruing  after  suit  brought  cannot 
be  capitalized.^^ 

4th  Ssytem.  It  is  prohibited  to  charge  interest  upon 
interest  in  the  case  of  annual  liquid  balances  of  current 
accounts.  After  the  debtor  is  served  with  a  summons 
the  accrual  of  interest  to  capital  ceases.  ^^ 

"  Argentina,  563;  Chile,  800;  Colombia,  933;  Costa  Rica,  340;  Guatemala, 
381;  Hondxiras,  540;  Nicaragua,  219;  Panama,  314;  Uruguay,  710;  Venezuela, 
484. 

24  Spain,  317;  Mexico,  363;  Peru,  312. 

25  Argentina,  569,  570;  Panama,  803. 

In  order  that  interest  on  a  sum  produce  interest  it  is  necessary  that  the 
parties  agree  to  it  after  such  interest  is  already  due,  or  else,  that  once  the  sum 
is  liquid  and  the  judge  orders  its  payment  the  debtor  fails  to  comply  with  the 
ruling.  Argentina,  Cam.  Fed.  De  Ap.  Parand,  June  17,  1914,  Jurisp.  de  los 
Tribs.  Nacs.,  June,  1914,  p.  92. 

28  Bolivia,  339,  340;  Costa  Rica,  348,  349. 

2'  Brazil,  253. 


COMMERCIAL   LOANS  355 

5th  System.  Interest  can  draw  interest  after  a  judi- 
cial suit  or  by  mutual  agreement,  provided  the  suit 
or  the  agreement  involve  interest  accrued  for  at  least 
one  year.  2^ 

6th  System.  Interest  does  not  draw  interest  except 
when  the  balance  of  an  account  has  been  fixed  by  mu- 
tual agreement  or  by  judicial  decision  provided  payment 
be  demanded  at  once.-^ 

7th  System.  Interest  draws  new  interest  and  its 
capitalization  is  effected  according  to  the  rules  of  the 
civil  code.^'' 

8th  System.  Interest  accrued  draws  new  interest 
by  special  agreement.  Interest  due  over  one  year  or 
balances  of  closed  transactions  or  of  current  accounts 
annually  settled  bear  interest  also.^^ 

Kind  of  money  which  must  be  returned. 

When  loans  are  made  in  merchandise  with  the  obligation 
of  returning  the  merchandise  in  kind  it  is  clear  enough  that 
the  price  may  change  between  the  time  of  contract  and 
payment.  When  the  loan  is  made  in  money  the  parties 
do  not  always  realize  that  although  dealing  in  the  same 
coins  they  are  really  dealing  with  different  values,  because 
money  is  used  to  denominate  prices  of  commodities,  and 
other  commodities  are  never  used  to  denominate  the  price 
of  currency.  The  value  of  money  can  change  not  only  as  a 
result  of  the  operation  of  economic  laws,  but  also  as  a 
consequence  of  alterations  in  the  monetary  system  of  a 
country.  These  changes  affect  transactions  in  such  manner 
that  it  not  infrequently  happens  that  under  the  same 
nominal  amount  the  creditor  receives  a  very  different  value 
from  that  which  the  parties  had  in  mind  at  the  time  of  their 
agreement.  In  order  to  make  the  legal  relation  more  equi- 
table the  parties  themselves  at  times  provide  in  these  con- 
tracts that  payment  must  be  made  in  a  certain  kind  of  money 

«  Chile,  804;  Coloml)ia,  937. 

*8  Ecuador,  514;  Guatemala,  385;  Nicaragua,  225;  Venezuela,  485. 

»»  Honduras,  544.  "  Uruguay,  718,  719. 


356  LATIN-AMERICAN    COMMERCIAL    LAW 

irrespective  of  the  legal  currency,  or  stipulate  for  payment  in 
foreign  coins  which  are  not  subject  to  the  same  depreciation 
or  alteration  as  the  national  money. 

Such  a  stipulation  aims  to  equalize  the  condition  of  the 
parties,  to  make  certain  the  amount  received  and  paid  and 
therefore  to  create  confidence  between  the  parties  and  is 
generally  accepted  by  the  law,  which  provides  that  when 
loans  consist  of  money  the  obligation  of  the  debtor  is  to  pay 
according  to  its  legal  value,  unless  otherwise  stipulated.  ^- 

Mexico,^^  on  the  contrary,  provides  that  pajTQent  must  be 
made  by  delivering  an  equal  amount,  according  to  the  mone- 
tary law  of  the  RepubUc  at  the  time  payment  is  made;  this 
provision  cannot  be  waived  by  the  parties,  unless  they 
stipulate  that  payment  is  to  be  made  in  foreign  currency. 
This  article  sacrifices  equity  and  certainty,  so  important  in 
commercial  transactions,  to  an  impossible  stability  of  the 
national  monetary  system,  and  at  the  same  time  creates  an 
advantage  in  favor  of  foreign  coins.  ^^ 

32  Spain,  312;  Chile,  797;  Colombia,  930;  Costa  Rica,  339;  Ecuador,  510; 
Guatemala,  380;  Honduras,  537;  Peru,  307;  Panama,  805;  Uruguay,  702. 

33  Art.  359. 

3*  WTien  a  loan  is  made  in  foreign  coins  and  it  is  stipulated  that  the  money 
shall  be  paid  in  those  same  coins  the  stipulation  must  be  complied  with,  but  if 
those  species  are  not  in  the  market,  payment  must  be  made  in  national  cur- 
rency at  the  rate  of  exchange  current  on  the  day  paymei  t  takes  place.  Mex- 
ico, 3a  Sala  del  Trib.  Sup.  of  the  Fed.  Dist.,  May  12,  1894,  Anuario  de  Leg.  y 
Jur.,  Sec.  de  Jur.,  vol.  XI,  p.  157. 

During  the  revolt  of  Carranza  against  the  government  of  Huerta  the  former, 
for  the  first  time  in  the  history  of  Mexico,  began  to  issue  paper  money  which 
the  people  of  the  places  occupied  by  the  revolutionists  were  forced  to  receive  in 
exchange  for  their  own  metallic  money.  Othei  rebel  chiefs  soon  followed  that 
example  and  issued  paper  money  without  stint,  and  without  any  considera- 
tion to  the  actual  amount  needed  for  circulation.  In  many  cases  the  issue  was 
not  even  reduced  to  a  certain  amount  by  any  decree,  and  the  currency  of  the 
country  was  thus  left  to  the  mercy  of  irresponsible  military  leaders.  Many 
issues  of  every  description  flooded  the  market,  every  chief  repudiating  the 
paper  of  his  opponents;  and  Carranza  went  so  far  as  to  nullify  his  own  issues. 
The  people  were  tired  of  such  a  state  of  affairs,  and  agreed  as  by  general  accord, 
not  to  take  any  more  of  such  worthless  paper.  The  government  found  itself 
helpless  before  the  popular  and  general  attitude  and  the  paper  was  suppressed 
in  fact  within  the  lapse  of  one  day.  The  legal  and  economic  situation  thereby 
derived  was  unprecedented;  obligations  contracted  under  the  regime  of  the 
paper  money  were  due  and  enforceable  after  that  currency  had  disappeared  and 


COMMERCIAL    LOANS  357 

Nicaragua/^  on  the  other  hand,  influenced  by  equitable 
considerations,  destroys  entirely  the  essential  of  money,  by 
providing  that  the  debtor  must  pay  back  an  equal  amount 

gold  was  in  circulation;  associations  were  formed  with  shares  whose  value  was 
computed  in  paper,  some  had  been  totally  paid  in  that  currency  while  the  new 
payments  were  demanded  in  gold.  The  most  essential  principles  of  equity 
called  for  a  settlement  of  such  an  incongruous  situation.  The  banks  were 
closed;  money  had  been  sent  out  of  the  country;  industries  of  every  kind  were 
on  the  verge  of  ruin,  and  bankruptcy  seemed  inevitable  if  payments  could  be 
exacted  at  once.  In  order  to  meet  these  pressing  needs  the  government  on 
September  15,  1916,  issued  a  law  called  "Law  of  payments  (Ley  de  pagos)  to 
regulate  the  relations  between  creditors  and  debtors.  Such  law  failed  to 
satisfy  the  necessities  and  a  short  time  after,  on  December  14,  1916,  a  new 
decree  provided  a  moratorium  on  all  debts  covered  by  the  law  of  payments. 
Article  2  of  this  decree  provided  that  neither  the  debtor  could  be  compelled 
to  pay  nor  the  creditor  to  receive  payments;  that  all  pending  judicial  pro- 
ceedings started  by  debtors  with  a  view  to  having  a  judicial  deposit  of  the 
money  owed  to  their  creditors,  and  relieving  themselves  by  paying  in  paper 
money  were  to  be  suspended  (Art.  5).  Obligations  contracted  after  September 
9th  of  that  year,  in  which  special  stipulation  of  payment  in  metallic  specie  was 
made  were  not  covered  by  the  moratorium  (Art.  3).  Payments  of  rents  were 
also  excluded  from  the  moratorium,  but  those  of  rural  property  not  exceeding 
$50  a  month  were  reduced  to  50%;  those  of  more  than  $50  and  not  exceeding 
$100  a  month  were  reduced  to  75%,  and  those  exceeding  $100  to  be  paid  in  full. 
Rents  of  houses  not  exceeding  $30  a  month  were  reduced  to  40%;  those  of 
more  than  $30  and  not  exceeding  $50  were  reduced  to  a  half ;  and  those  exceeding 
$50  a  month  were  reduced  to  75%  (Art.  7).  On  December  20  of  that  same  year 
a  decree  excepted  the  insurance  companies  from  the  moratorium.  All  future 
payments  to  them  were  to  be  made  in  gold,  and  past  payments  in  paper  were 
to  be  liquidated  on  the  basis  of  a  table  fixing  the  price  of  the  paper  money  at 
various  dates;  after  the  liquidation  was  made  that  way  the  insured  was  re- 
quired to  pay  the  balance  within  sixty  days,  or  otherwise  the  amount  of  the 
policy  was  to  be  reduced  accordingly.  No  provision  was  made  for  payments 
by  the  underwriters  to  the  policy-holders  during  the  regime  of  paper  money. 
On  April  13,  1918,  a  new  law  of  payments  was  enacted  dividing  obhgations  to 
pay  money  into  four  classes,  namely:  (a)  those  contracted  before  April  15, 
1913;  (6)  those  contracted  on  or  after  April  15,  1913,  and  before  November  30, 
1916;  (c)  those  contracted  during  the  latter  period  when  an  express  stipulation 
of  paying  in  specific  money  was  made,  and  (d)  those  contracted  between 
November  30th  and  December  14th,  1916.  Obligations  contracted  after 
December  14,  1916,  and  those  in  which  banks  of  issue  were  involved,  are  not 
subjected  to  the  provisions  of  such  law;  th(!  first  ones  could  be  enforced  accord- 
ing to  the  general  principles  of  law,  and  the  second  ones  were  to  be  the  subject- 
matter  of  a  special  law.  Contracts  of  lease  contiiuied  to  be  subject  to  th(;  law 
of  December  24,  1917.  Obligations  of  class  "a"  were  to  l)e  paid  in  silver;  the 
moratorium  being  lift(;d  in  r(!gard  to  them  up  to  25%  of  the  capital  and  the 

"Art.  221. 


358  LATIN-AMERICAN    COMMERCIAL   LAW 

according  to  the  nominal  value  which  money  had  at  the 
time  of  the  transaction,  so  that  the  same  intrinsic  value  be 
paid. 

Time  for  making  payment. 

When  no  period  has  been  provided  for  making  payment, 
the  creditor  can  demand  it  according  to  the  following 
systems : 

1st  System.    Thirty  days  after  a  request  for  payment 
is  made  before  a  notary;  or  according  to  law.^^ 

total  of  the  interest.  In  obligations  of  class  "b"  the  moratorium  was  also 
lifted  up  to  25%  of  the  capital  and  the  whole  of  the  interest  due,  but  both 
capital  and  interest  were  reduced  according  to  the  following  table: 

1913         1914         1915  1916 

January par  74  c.        28  c.  9  c. 

February par  69  c.        26  c.  8  c. 

March par  63  c.        22  c.  5  c. 

AprU par  58  c.         18  c.  7  c. 

May par  66  c.         17  c.        20  c. 

June par  65  c.         17  c.         12  c. 

July 90  c.        62  c.         10  c.         10  c. 

August 79  c.        63  c.         13  c.  7  c. 

September 73  c.        40  c.         13  c.  5  c. 

October 72  c.        40  c.         14  c.  3  c. 

November 71  c.        39  c.         14  c.  1 J^  c. 

December 71c.        37  c.         12  c.        — 

In  obligations  of  class  "c"  25%  of  the  capital  and  the  total  interest  due  are 
exigible;  the  capital  as  well  as  the  interest  must  be  paid  in  national  gold 
coins,  at  par.  Obligations  included  in  class  "d"  can  be  enforced  in  toto  as  per 
capital  and  interest,  and  shall  be  paid  in  the  money  stipulated  in  each  case. 
The  payment  of  capital  and  interest  on  obligations  in  which  the  moratorium  is 
lifted  by  the  aforesaid  law  must  be  paid  in  four  bimesters,  one-fourth  of  the 
exigible  amount  to  be  paid  in  each  bimester;  the  first  pajonent  is  to  be  made 
two  months  from  the  date  of  demand  (interpelaci6n),  or  from  the  date  fixed  by 
the  corresponding  decision  in  case  of  litigation.  Finally,  on  August  16,  1918, 
the  Secretary  of  Hacienda  issued  a  circular  N.  38  in  which  various  amend- 
ments were  made  to  the  law  of  payments  in  reference  to  contributions  to  the 
capital  of  partnerships  or  of  shares  of  stock  companies,  or  made  on  current 
account,  or  for  price  of  property  sold,  and  excepting  from  the  law  of  pay- 
ments obligations  of  paying  in  the  special  kind  of  paper  called  "emisi6n  de 
Veracruz,"  fixing  as  a  basis  for  the  liquidation  of  such  obligations  10%  in- 
variably. 

38  Spain,  313  n.;  Colombia,  928;  Costa  Rica,  337;  Mexico,  360;  Peru,  307; 
Venezuela,  483. 


COMMERCIAL    LOANS  359 

2d  System.    Ten  days  after  the  request  for  payment.  ^^ 
3d.  System.    Fifteen  days  after  the  request  for  pay- 
ment. ^^ 
4th  System.  Ten  days  after  the  contract. ^^     When  the 
period  does  not  seem  to  be  clearly  stated,  the  court  must  fix 
a  reasonable  one  taking  into  consideration  the  terms  of  the 
contract,    the    nature   of    the    transaction   for   which   the 
loan  was  intended  and  the  personal  circumstances  of  the 
lender  and  borrower.^" 

Effects  of  receipts. 

A  receipt  for  the  capital  sum  given  by  the  creditor,  without 
expressly  reserving  to  himself  the  right  to  interest,  stipulated 
or  legally  due,  extinguishes  the  obligation  of  the  debtor.  "^^ 

A  receipt  for  interest  given  without  condition  or  reserve 
is  presumptive  evidence  of  payment  of  interest  previously 
due.  42 

In  Chile, '*^  Colombia, "^^  Ecuador  ^'^  and  Honduras  ^^  a 
receipt  for  interest  covering  the  three  last  periods  of  pay- 
ment is  presumptive  evidence  that  the  former  payments 
were  made,  unless  the  receipt  bears  a  clause  preserving  the 
rights  of  the  creditor. 

Application  of  payments. 

Payments  made  on  account,  when  their  application  is  not 
clearly  stated,  must  be  applied  first  to  accrued  interest  and 
afterwards  to  capital."*^ 

"  Argentina,  559;  Chile,  795;  Ecuador,  508;  Guatemala,  378;  Honduras, 
535. 

^  Nicaragua,  220. 

^^  Ecuador,  508;  Panama,  804;  Uruguay,  705. 

^0  Chile,  796;  Colombia,  929;  Costa  Rica,  338;  Ecuador,  509;  Guatemala, 
379;  Honduras,  536;  Uruguay,  706. 

«  Spain,  318;  Bolivia,  338;  Brazil,  252;  Costa  Rica,  350;  Ecuador,  516; 
Guatemala,  387;  Mexico,  364;  Nicaragua,  226;  Panama,  801;  Peru,  313; 
Uruguay,  716. 

^'^  Argentina,  567;  Uruguay,  718;  Venezuela,  786. 

"  Art.  803.  ^*  Art.  936.  «  Art.  515. 

«  Art.  543.  I 

"  Spain,  318;  Mexico,  364;  Panama,  313;  Peru,  313. 


360  LATIN-AMERICAN    COMMERCIAL    LAW 

Balances  of  accounts. 

Balances  of  accounts  relating  to  agencies,  or  advances  in 
mercantile  transactions,  are  considered  as  loans  and  gov- 
erned by  the  rules  applicable  to  loans.  ^^ 

«  Chile,  806;  Colombia,  939;  Honduras,  546. 


CHAPTER  XXI 

PLEDGE 

Character  of  a  pledge. 

By  the  contract  of  pledge  a  debtor  or  a  third  party  in  his 
behalf,  delivers  to  his  creditor  a  chattel  as  a  pledge  or 
guaranty.  This  contract,  consequently,  is  one  of  those 
called  real  because  its  completion  depends  not  only  on  the 
mere  consent  of  the  parties,  but  also  on  the  actual  delivery 
of  the  thing,  subject-matter  of  the  pledge,  and  such  pledge 
subsists  as  long  as  the  thing  is  in  the  possession  of  the 
creditor.^ 

When  a  contract  of  pledge  is  mercantile. 

The  codes  follow  different  systems  in  classifying  the 
contract  of  pledge  as  mercantile,  namely: 

1st  System.     It  is  commercial  when  made  in  order  to 
guarantee  a  commercial  transaction.  ^ 

2d  System.     It  is  commercial   when   made  between 
merchants,   in  relation  to  mercantile  transactions,   or 
when  it  derives  from  contracts  essentially  commercial.^ 
3d  System.     It  is  commercial  when  made  in  order  to 

1  Argentina,  580;  Brazil,  271;  Chile,  817;  Colombia,  950;  Ecuador,  524; 
Guatemala,  691;  Honduras,  557;  Mexico,  606,  608;  Panama,  816,  823;  Santo 
Domingo,  92;  Uruguay,  741,  752. 

A  clause  in  a  contract  declaring  that  the  thing  pledged  is  considered  de- 
livered by  the  mere  fact  of  the  stipulation,  cannot  substitute  the  actual 
surrendering  of  the  thing  to  the  creditor.  Brazil,  2a  Cam.  da  Corte  de  Apel., 
May  19,  1908,  Rio  de  Janeiro,  Rev.  de  Direito,  vol.  18,  p.  142. 

The  debtor  who  gives  a  pledge  by  means  of  the  clause  constituti  {i.  e.,  de- 
claring that  through  the  mere  stipulation,  without  actual  delivery,  he  conveys 
the  possession  of  the  pledge  to  the  creditor)  as  a  guaranty  for  a  certain  debt, 
is  responsible  to  the  creditor  under  the  law  of  deposit.  Brazil,  S.  Paulo, 
Feb.  1,  1899;  Gaceta  JurUica,  vol.  19,  196. 

''Argentina,  580;  Brazil,  271;  Guatemala,  687;  Peru,  315;  Santo  Domingo, 
91    and  Uruguay,  741. 

3  Chile,  1;  Colombia,  21. 

361 


362  LATIN-AMERICAN    COMMERCIAL   LAW 

guarantee  a  commercial  act.  When  made  by  a  merchant 
it  is  presumed  to  be  commercial,  except  when  otherwise 
expressed  in  the  contract,  or  when  the  contrary  is 
proved.'* 

4th  System.  It  is  commercial  when  made  in  order  to 
guarantee  a  commercial  obligation  or  when  by  itself  it 
is  a  mercantile  transaction.^ 

Form  of  the  contract. 

The  contract  of  pledge  does  not  need  any  formaUty  in 
order  to  be  enforceable,  because  the  only  requisite  is  the 
actual  delivery  of  the  thing  pledged.  In  regard  to  third 
parties,  however,  and  in  some  of  the  countries  it  cannot 
produce  any  effect  unless  it  is  made  in  writing.^ 

In  Brazil  ^  and  Uruguay  ^  the  contract  of  pledge  can  only 
be  proved,  as  to  the  parties  thereto  or  to  strangers,  by 
means  of  a  written  instrument. 

Mexico  provides  ^  that  the  contract  of  pledge  must  be 
executed  with  the  same  formalities  required  for  the  contract 
it  guarantees. 

Effects  of  a  pledge. 

A  pledge  confers  upon  the  pledgee  a  right  to  be  paid  with 
the  proceeds  of  the  sale  of  the  thing  pledged  before  other 
creditors  of  the  pledgor.  ^° 

The  code  of  Spain  covers  the  matter  of  pledge  of  exchange- 
quoted  articles  only;  and  that  of  Mexico,  while  deaUng  with 

^  Mexico,  605.  ^  Panama,  2. 

«  Argentina,  581;  Chile,  815;  Colombia,  948;  Ecuador,  522;  Guatemala,  689; 
Honduras,  553,  555;  Panama,  814;  Venezuela,  491. 

The  requisites  established  by  article  3217  of  the  civil  code  for  the  validity 
of  the  pledge  govern  also  the  mercantile  pledge.  Buenos  Aires,  Cam.  de 
Apel.  Com.,  November  5,  1912,  Jur.  de  los  Tribs.  Macs.,  Nov.,  1912,  p.  287. 

7  Arts.  271,  272. 

An  admission  of  the  defendant  as  to  the  existence  of  a  pledge  cannot  sub- 
stitute the  necessary  wTitten  document  to  prove  that  a  contract  of  pledge  was 
made.  Brazil,  Trib.  de  Justicia,  S.  Paulo,  December  6,  1895,  Rev.  Mensal, 
vol.  2,  p.  93. 

8  Art.  742.  3  Art.  607. 

10  Spain,   320;   Argentina,   582;   Brazil,    275;   Chile,   814;   Colombia,    947; 


PLEDGE  363 

commercial  pledges  in  general,  adopts  in  a  special  "chapter 
most  of  the  provisions  of  the  Spanish  code  in  regard  to 
pledges  of  such  articles.  According  to  these  two  codes  a 
mercantile  loan  guaranteed  by  securities  or  quoted  articles, 
made  in  a  wTitten  policy  through  an  exchange  agent,  in 
Spain,  or  a  broker  in  ^Mexico,  is  always  presumed  to  be 
commercial,  and  the  lender  is  entitled  to  collect  his  credit  in 
preference  to  the  other  creditors,  unless  they  pay  the  obliga- 
tion guaranteed  by  the  pledge. 

Enforcement  of  rights  of  pledgees. 

In  default  of  payment  and  of  special  stipulations  for  the 
case,  the  creditor  is  entitled  to  demand  the  sale  of  the  thing 
pledged  and  to  have  his  credit  paid  with  the  proceeds  thereof. 
In  regard  to  the  way  of  selling  the  pledged  object  there  are 
three  systems:  one  provides  for  an  extrajudicial  sale  of  the 
thing  pledged;  the  second,  for  a  judicial  sale,  and  the  third 
combines  the  two. 

Argentina,  ^^  Spain  ^-  and  Santo  Domingo  ^^  follow  the 
first  system,  Argentina  providing  that  when  no  special 
stipulation  is  made  for  the  sale  of  the  pledge  the  creditor 
must  proceed  to  effect  it  at  public  auction,  duly  announced 
three  days  in  advance.  If  the  pledge  consists  of  securities, 
shares  of  stock  or  other  negotiable  instruments  quoted  in  the 
exchange  or  public  market,  the  sale  can  be  effected  through 
brokers  at  the  current  price  on  the  day  after  the  debt  became 
due. 

In  Spain  the  creditor  must  present  the  paper  to  the  board 
of  exchange  agents,  which,  finding  their  serial  numbers 
corresponding  to  those  described  in  the  contract  of  pledge, 
must  sell  them  in  the  necessary  amount  through  an  exchange 

Ecuador,  524;  Guatemala,  688;  Honduras,  554;  Mexico,  609;  Panama,  818; 
Peru,  316;  Uruguay,  747;  Venezuela,  493. 

"  Art.  585. 

The  sale  made  by  a  creditor  of  the  thing  given  to  him  as  a  pledge,  without 
ful611ing  the  legal  formalities  thereof,  is  not  unlawful  when  the  creditor  gives 
notice  to  the  debtor  of  his  purpose  of  selling  the  pledge  that  way,  without  the 
debtor  objecting.  Buenos  Aires,  Cam.  de  Apel.  Crim.,  May  2,  1914,  Jur.  de 
los  Tnhs.  Nacs.,  May,  1914,  p.  220. 

>2  Art.  323.  "  Art.  93. 


364  LATIN-AMERICAN    COMMERCIAL    LAW 

agent,  on  the  day  of  their  presentation,  and  if  this  is  not 
possible,  on  the  day  after.  This  right  can  only  be  exercised 
by  creditors  at  the  meeting  of  the  exchange  next  after  the 
maturity  of  the  loan. 

In  Santo  Domingo  sales  of  pledges  of  every  kind  can  be 
made  through  agents  or  brokers.  The  parties,  however,  may 
ask  the  president  of  the  commercial  court  for  the  designation 
of  any  other  public  official  to  sell  the  pledge;  the  proceedings 
and  fees  must  be  those  provided  for  sales  through  brokers. 

The  second  system  is  adopted  by  Ecuador  ^^  and  Vene- 
zuela.^^ The  judge,  at  the  petition  of  the  creditor,  estab- 
lishes the  manner  in  which  the  sale  must  be  made  whether 
through  a  broker  or  at  public  auction;  the  petition  of  the 
pledgee  must  be  notified  to  the  debtor,  and  the  sale  cannot 
take  place  until  eight  days  after  the  notification.  The 
creditor  is  forbidden  to  apply  the  pledge  to  himself  or  to  sell 
it  in  a  form  different  from  that  above  described. 

The  third  system  is  followed  by  Brazil,  ^^  Mexico,  ^^  Peru  ^^ 
and  Uruguay.  ^^ 

In  Brazil  the  creditor  can  ask  the  courts  to  order  the  sale 
if  he  does  not  agree  with  the  debtor  upon  another  method  of 
procedure. 

In  Mexico  the  pledge  must  be  appraised  and  sold  by  two 
brokers,  one  named  by  each  party,  and  a  third  one  ap- 
pointed by  the  brokers  themselves  in  case  they  do  not  agree 
in  the  appraisal,  or  by  the  judge  in  default  of  brokers.  When 
there  are  no  brokers  in  the  locality  the  appraisal  and  sale  are 
made  by  two  resident  merchants. 

In  Peru  the  sale  must  be  made  according  to  the  rules 

1^  Arts.  526,  528.  ^^  Arts.  495,  498.  >«  Art.  275. 

There  is  no  simulation  of  the  contract  of  pledge  when,  for  reasons  of  safety 
and  prompt  liquidation  of  a  debt,  in  case  it  was  not  paid  at  maturity,  the 
debtor  conveys  the  title  to  the  pledged  securities  to  the  creditor.  Brazil, 
Rio  de  Janeiro,  Cam.  da  Corte  de  Apel.,  Dec.  5,  1905,  Rev.  de  Direito,  vol.  3, 
p.  165. 

The  pado  commissario,  by  virtue  of  which  a  creditor  is  authorized  to  own 
the  pledged  property  without  a  previous  valuation  thereof  is  void  de  jure;  but 
the  contract  of  pledge  is  valid.  Brazil,  Rio  de  Janeiro,  2a  Cam.  da  Corte  de 
Apel.,  Dec.  5,  1905,  lb. 

1'  Art.  611.  '«  Art.  319.  "  Art.  753. 


PLEDGE  365 

established  in  the  contract.  Should  there  not  be  any,  the 
creditor  can  ask  the  judge  of  first  instance  for  an  authoriza- 
tion to  sell  the  pledge.  If  it  consists  of  quoted  articles,  the 
judge,  without  hearing  the  debtor,  may  authorize  the  sale  at 
auction,  without  any  other  requisite  than  the  valuation  of  the 
pledge,  if  the  contract  fails  to  indicate  its  value.  The  pledge 
sold  in  this  way  cannot  be  replevied  by  its  lawful  owner,  in 
case  the  pledgor  was  not  such.  The  only  remedy  of  the  true 
owner  is  to  demand  damages  from  the  person  responsible  for 
the  acts  through  which  he  was  dispossessed. 

In  Uruguay,  if  there  is  no  agreement  between  the  parties, 
the  pledge  is  sold  at  auction  by  judicial  decree,  ten  days  after 
the  request  of  payment  upon  the  debtor.  In  case  the  latter 
agrees  to  the  sale  without  judicial  authorization,  it  must  be 
made  by  a  public  auctioneer,  if  the  pledge  consists  of  chattels, 
or  by  an  official  broker,  if  it  is  an  article  quoted  on  the 
exchange. 

In  other  countries  in  which  the  code  is  silent,  it  must  be 
understood  that  the  sale  requires  a  judicial  authorization. 

A  creditor  who  disposes  of  the  pledge  in  a  different  way 
than  that  provided  by  the  law  is  criminally  liable. -° 

Obligations  of  the  pledgee. 

As  the  pledgee  is  obliged  to  surrender  the  pledge  when  the 
debtor  pays,  the  pledgee  is  bound  to  keep  the  pledge  accord- 
ing to  the  law  of  deposit,  and  when  the  pledge  consists  of  a 
document  of  credit,  he  must  take  all  necessary  steps  to 
collect  it  when  due,  as  well  as  to  collect  interest  or  instal- 
ments on  the  same,  without  a  power  therefor  being  neces- 
sary.^^ 

20  Argentina,  688;  Brazil,  279;  Ecuador,  528;  Uruguay,  764. 

"  Argentina,  587,  588;  Brazil,  270,  277;  Chile,  818;  Colombia,  915;  Ecuador, 
525;  Guatemala,  692;  Honduras,  558;  Panama,  825,  826;  Uruguay,  754,  759; 
Venezuela,  494. 


CHAPTER  XXII 

PURCHASE  AND  SALE 

Mexico. — Deffis,  Armando:  El  traspaso  de  negociaciones  mercantiles  con- 
siderado  como  sucesi6n  por  universalidad.  Rev.  de  Leg.  y  Jur.  Mexico,  1S9S, 
2d  sems.,  p.  352. 

Perez,  E.,  and  Borja  Soriano,  M.:  Reglas  que  han  de  formar  el  criterio  del 
Notario  acerca  de  la  eficacia  de  los  titulos  para  transmitir  el  dominio  o  con- 
ceder  el  aprovechamiento  de  una  cosa.  Mexico.  Diario  de  Jurisprudencia. 
V.  3,  p.  272. 

Verdugo,  Agustin  iExigia  la  legislaci6n  antigua  para  la  compra-venta  de 
inmuebles  que  se  hiciese  constar  en  escritura  publica  so  pena  de  no  existir  el 
contrato?    El  Derecho,  1894,  p.  113. 

Character  of  the  contract  of  purchase  and  sale. 

The  contract  of  purchase  and  sale  is,  it  may  be  said,  the 
substantial  or  primary  contract  of  commerce.  The  others 
are  merely  secondary  contracts,  designed  ultimately  to 
facilitate  purchases  and  sales,  by  which  the  production  of 
any  part  of  the  world  is  placed  at  the  disposal  of  consumers 
in  the  rest  of  the  world.  It  is  therefore  natural  that  the 
fundamental  principles  of  the  contract  of  purchase  and  sale 
are  to  be  found  in  the  law  of  all  peoples. 

There  is,  however,  a  difference  in  the  definition  of  the  con- 
tract between  the  system  followed  by  the  Roman  law,  and 
that  instituted  by  the  code  Napoleon  and  adopted  by  some 
of  the  modern  codes. 

Roman  system. 

Purchase  and  sale  is  a  contract  by  which  one  of  the  parties 
binds  himself  to  deliver  something  to  another  who,  in  turn, 
binds  himself  to  pay  the  price  agreed  upon.  According  to 
this  definition  the  obligation  of  the  seller  is  not  to  transmit 
the  ''ownership"  of  a  thing  sold.  As  a  consequence,  the 
sale  of  a  thing  not  owned  by  the  seller  is  valid  and  bind- 
ing; his  principal  obligation  is  to  guarantee  the  buyer  a 

366 


PURCHASE    AND    SALE  367 

quiet  possession  of  the  thing  sold  and  not  the  ownership 
thereof.  ^ 

French  system. 

Some  codes,  adopting  the  theory  initiated  by  the  code 
Napoleon,  consider  purchase  and  sale  as  a  contract  by  which 
one  of  the  parties  binds  himself  to  transfer  the  ownership 
of  something  to  the  other  party,  who,  in  turn,  binds  himself 
to  pay  the  price  thereof.  ^ 

Comparison  of  the  two  systems. 

The  first  impression  produced  by  these  two  systems  is  in 
favor  of  the  second  one.  We  cannot  help  experiencing  a 
certain  surprise,  considering  the  great  influence  exercised 
by  the  Stoic  philosophy  on  the  Roman  law,  that  the  sale  of 
an  object  not  owned  by  the  seller  could  be  valid.  How  could 
the  Romans  accept  so  immoral  a  theory  concerning  the  most 
frequent  of  all  transactions? 

After  careful  study,  however,  we  perceive  the  reason  why 
even  now  opinion  is  divided  as  to  the  respective  merits  of 
the  two  systems  and  why  codes  as  modern  as  that  of  Panama 
prefer  the  theory  of  the  Roman  law  to  that  of  the  French. 
The  most  important  effect  of  the  contract  of  purchase  and 
sale  is  the  warranty  of  quiet  enjoyment,  i.  e.,  against  evic- 
tion, by  which  the  seller  covenants  to  keep  the  buyer  free 
from  disturbance  in  the  possession  of  the  thing  sold.  The 
question  naturally  arises,  how  can  this  be  one  of  the  effects 
of  the  contract,  if  the  contract  for  the  sale  of  a  thing  not 
our  own,  is  void?  If  the  contract  were  void,  it  would  create 
no  legal  rights  and  duties.  The  contract  of  sale  of  a  thing 
not  the  seller's  imposes  on  the  buyer,  however,  the  duty  of 
notifying  the  seller,  in  the  proper  way  and  at  the  proper 
time,  of  any  action  brought  by  the  true  owner  to  recover 

1  Spain,  1445  c.  c;  Argentina,  450,  453;  Bolivia,  1003  c.  c;  Chile,  1793, 
1815  c.  c;  Colombia,  1849,  1871  c.  c;  Ecuador,  169;  Honduras,  1605  c.  c; 
Nicaragua,  1793,  1815  c.  c;  San  Salvador,  1779,  1801  c.  c;  Panama,  740; 
Uruguay,  513;  Venezuela,  139. 

2  Brazil,  1122  c.  c;  Haiti,  1367,  1384  c.  c;  Guatemala,  1476,  1498  c.  c; 
Mexico,  2811,  2830;  Peru,  1002,  1017  c.  c;  Santo  Domingo,  1582,  1599  c.  c. 


368  LATIN-AMERICAN    COMMERCIAL   LAW 

the  possession  of  the  thmg  sold.  If  the  buyer  fails  to  comply 
with  this  duty  originating  in  the  contract  he  loses  all  rights 
against  the  seller  to  be  indemnified  for  his  loss.  All  these 
consequences  flow  naturally  from  the  theory  that  the  con- 
tract is  valid,  whether  or  not  the  thing  sold  belongs  to  the 
seller. 

The  contract  of  purchase  and  sale  is  consensual. 

The  contract  of  purchase  and  sale  is  complete  and  bind- 
ing by  the  mere  fact  of  agreement  of  the  parties  on  the  thing 
to  be  sold  and  its  price,  i.  e.,  the  contract  is  consensual. 
The  natural  consequence  of  this  classification  of  the  con- 
tract ought  to  be  that,  once  the  parties  have  arrived  at  an 
agreement,  title  to  the  thing  sold  vests  in  the  buyer  and  the 
right  to  recover  the  price  vests  in  the  seller.  The  risk  of 
the  thing  sold  should  also  be  on  the  vendee;  and  that  is  the 
case  in  civil  purchases  and  sales.  But  in  commercial  matters 
the  law  requires  in  some  cases,  as  will  presently  be  noted, 
the  actual  delivery  of  the  thing  sold  in  order  to  complete  the 
contract.^  In  this  respect  and  in  these  cases  the  mercantile 
contract  of  purchase  and  sale  has  some  similarity  to  con- 
tracts called  ''real,"  because  of  their  requirement  of  the 
actual  delivery  of  the  thing,  subject-matter  of  the  contract. 

When  the  contract  is  completed. 

According  to  the  theory  accepted  by  the  codes,  a  contract 

'  The  sale  or  assignment  gives  to  the  purchaser  or  transferee  merely  a 
personal  right  against  the  vendor  or  assignor,  but  it  gives  him  no  right  of 
ownership  in  the  thing  sold  or  the  credit  assigned  until  after  delivery  and 
taking  possession  thereof.  Brazil,  Accordao  revisor  de  Trib.  do  Com.  de 
Bahia,  Jurisp.  Comm.,  pp.  68  and  78. 

The  contract  of  purchase  and  sale  is  essentially  consensual,  and  therefore  it 
is  complete  and  binding  by  the  mere  consent  of  the  parties  as  to  the  thing  and 
the  price.  Costa  Rica,  Corte  de  Casaci6n,  June  1,  1903,  Francisco  v.  Vargas, 
'Sentencias  de  la  Corte  de  Casacidn,  1903,  p.  353. 

When  the  subject-matter  of  the  contract  of  purchase  and  sale  is  a  thing 
specifically  identified,  the  title  is  vested  in  the  buyer  by  the  mere  consent  of  the 
parties  as  to  the  thing  sold  and  the  price,  without  any  transfer  of  the  thing 
itself  being  necessary.  Mexico,  Juzgado  3°  de  lo  Civil  del  Dist.  Fed.,  Feb.  20, 
1911,  Ortiz  Saenz  y  Cia.  v.  Sebastian  B.  de  Mier,  Diario  de  Jurisp.,  v.  XXIII, 
p.  601. 


PURCHASE   AND   SALE  3G9 

of  purchase  and  sale  is  as  a  rule  perfected  between  the  vendor 
and  vendee  from  the  moment  they  agree  upon  the  thing, 
subject-matter  of  the  contract,  and  upon  the  price,  even 
though  neither  has  been  delivered.^ 

Even  a  promise  to  sell  and  to  buy  when  there  has  been  an 
agreement  as  to  the  thing  and  the  price,  gives  a  reciprocal 
right  to  both  parties  to  demand  compliance  with  the  contract. 

These  provisions  have  been  misconstrued  by  some  courts, 
who  have  reached  the  conclusion  that  by  operation  of  law 
and  by  the  mere  agreement  of  the  parties  as  to  the  thing 
to  be  sold  and  the  price  thereof,  property  is  conveyed  by 
the  vendor  to  the  vendee,  and  title  divested  from  the  seller 
and  vested  in  the  buyer,  in  spite  of  express  stipulations  to  the 
contrary;  and  further  that  no  right  of  ownership  can  after- 
wards be  claimed  by  the  seller;  he  has  only  a  personal  action 
against  the  buyer  for  payment  of  the  purchase  price.    The 

*  A  misunderstanding  between  partners  in  reference  to  goods  purchased 
by  one  of  them  does  not  excuse  the  non-fulfillment  of  the  contract  which  was 
perfected  by  the  consent  of  one  of  the  partners  whose  name  is  included  in  the 
firm  name  of  the  partnership.  Argentina,  Cam.  de  Apel.  Com.  Buenos  Aires, 
Feb.  15,  1913,  Chedil  Burtio  y  Cia.  v.  Cambrol  Hnos,  Jurisp.  de  los  Tribs.  Nacs., 
Feb.  1913,  p.  131. 

After  the  contract  of  purchase  and  sale  is  completed  by  agreement  of  the 
parties  as  to  the  thing  sold  and  its  price,  and  because  a  public  deed  was  exe- 
cuted when  that  formality  is  required  by  the  law,  the  buyer  has  no  right  of 
action  to  compel  the  seller  to  receive  the  price,  nor  can  the  latter  compel  the 
buyer  to  receive  the  thing  sold;  the  law  provides  the  buyer  with  an  action 
to  demand  the  thing,  and  the  seller  with  an  action  to  collect  the  price.  Colom- 
bia, Trib.  Sup.  del  Dist.  de  Antioquia,  June  10,  1895,  Cronica  Judicial  de 
Anlioqida,  v.  VII,  p.  2558. 

There  is  no  legal  prohibition  to  stipulate  in  the  contract  of  purchase  and 
sale  that  the  buyer  cannot  mortgage  the  thing  sold  as  long  as  the  price  is  not 
paid.  Colombia,  Dist.  Judicial  del  Centro  de  Antioquia,  April  9,  1897,  Crdnica 
Judicial  de  Antioquia,  v.  XII,  p.  1064. 

The  testimony  of  a  witness  is  admissible  to  prove  a  contract  of  mercantile 
sale,  as  the  law  does  not  require  any  special  formality  therefor.  Colombia, 
Dist.  Jud.  de  Panama,  June  14,  1897,  Registro  Jwi.  de  Panama,  v.  X,  p.  128. 

The  contract  of  purchase  and  sale  made  by  a  traveling  agent  authorized 
to  sell,  is  complete  and  bmds  the  princijjal  to  deliver  the  merchandise  sold. 
Mexico,  Juzgado  Cuarto  de  1°  Civil  del  Disto.  Fed.,  Nov.  4,  1912,  Diario  de 
Junsp.,  V.  XXVII,  p.  708. 

It  is  an  essential  requisite  in  order  to  make  the  promise  of  selling  binding  that 
the  price  be  certain.  Spain,  Trib.  Sup.,  May  18,  1908;  Gaceta  of  April  10,  1909, 
p.  33. 


370  LATIN-AMERICAN    COMMERCIAL   LAW 

weight  of  authority,  however,  is  opposed  to  this  interpreta- 
tion.^ 

When  the  contract  is  mercantile. 

The  purchase  and  sale  of  a  thing  is  mercantile  when  made 
in  order  to  resell,  whether  in  the  original  or  in  a  different 
form,  with  a  view  to  making  a  profit  by  the  resale.^ 

*  A  promise  to  sell  a  certain  thing  for  a  fixed  price  does  not  vest  title  to  the 
same  in  the  buyer  and  gives  the  latter  only  a  personal  action  against  the  seller 
for  the  performance  of  the  promise.  Spain,  Trib.  Sup.,  June  23,  1915;  Gaceta 
of  Nov.  29  and  30,  p.  503. 

A  contract  of  sale  is  valid  notwithstanding  that  the  subject-matter  of  the 
same  was  promised  to  be  sold  by  the  seller  to  another  party.  Spain,  Trib. 
Sup.,  Sept.  21,  1908;  Gaceta  of  Nov.  2,  1908. 

A  promise  to  sell  does  not  convey  title  in  the  thing  to  the  promisee,  nor  give 
him  any  real  action,  not  even  a  right  to  demand  the  thing  at  once;  he  has  only 
a  personal  action  against  the  promisor  to  perform  the  contract  or  to  pay 
damages  if  in  the  meantime  he  has  sold  the  thing  to  a  third  party.  Spain, 
Trib.  Sup.,  Dec.  6,  1904;  Gaceta  of  Dec.  29,  1904,  p.  393. 

A  promise  to  sell  cannot  produce  the  effect  of  an  actual  sale;  as  the  former 
does  not  transfer  the  title  in  the  thing,  subject-matter  of  the  contract,  it  does 
not  give  rise  to  a  real  action  for  specific  performance;  the  promisee  cannot 
recover  it;  he  can  only  bring  a  personal  action  against  the  promisor  to  compel 
him  to  perform  the  contract  which  cannot  be  complied  with  if  the  promised 
thing  has  passed  over  to  a  third  person, — the  right  of  the  promisee  to  dam- 
ages being  reserved.  Spain,  Trib.  Sup.,  Dec.  6,  1904;  Gaceta  of  Dec.  29,  1904, 
p.  393. 

The  condition  precedent  in  a  contract  of  purchase  and  sale  of  personal 
property  that  the  title  in  the  property  shall  not  pass  to  the  buyer  until  full 
payment  of  the  price  agreed  to  is  perfectly  valid.  Mexico,  Suprema  Corte  de 
Justicia  de  la  Naci6n,  Amparo,  Riestra  v.  Juzgado  Rimero  de  Dist.  Fed., 
March  16,  1907,  Diario  de  Jurisp.,  v.  17,  p.  663. 

^  Spain,  325;  Argentina,  451;  Costa  Rica,  306;  Honduras,  97;  Mexico,  371; 
Nicaragua,  198;  Panama,  2;  Peru,  320;  Uruguay,  513. 

The  agreement  of  resale,  authorized  by  the  civil  code,  may  also  be  included 
in  a  commercial  contract,  because  it  is  not  contrary  to  its  character  as  such 
and,  furthermore,  the  civil  law  governs  commercial  transactions  when  there  is 
no  provision  applicable  in  the  code  of  commerce.  Argentina,  Cam.  de  Apel. 
Com.  Buenos  Aires,  April  19,  1913,  Pradere  v.  Colombato,  Jurisp.  de  los 
Tnhs.  Nacs.,  April,  1913,  p.  238. 

Brazil:  The  purchase  of  shares  of  stock  of  corporations  for  the  account  of 
another  is  not  in  itself  a  mercantile  act;  neither  is  the  agencj^  for  entering  into 
such  transactions  mercantile.  The  purchase  of  shares  is  only  mercantile  when 
it  is  made  with  a  view  to  reselling  them  wholesale  or  retail.  Brazil,  Accordaos 
de  Trib.  do  Comm.  da  Corte,  of  May  27  and  July  25,  1867,  Rev.  Juridica  of 
1868,  p.  126. 


PURCHASE   AND    SALE  371 

Brazil  requires,  furthermore,  that  the  buyer  be  a  mer- 
chant.^ 

When  the  contract  is  not  mercantile,  but  civil. 

In  addition  to  the  general  rules  which  serve  to  classify 
a  contract  of  purchase  and  sale  as  commercial,  mentioned 
in  chapter  II,  the  codes  of  Spain,^  Argentina,^  Costa 
Rica,^°  Honduras, ^^  Mexico,^-  Nicaragua, ^^  Panama, ^^  Peru,^^ 
San  Salvador,^*'  Uruguay  ^'^  and  Venezuela ^^  provide  that 
it  is  not  commercial  in  the  following  cases: 

(a)  purchase  of  articles  intended  for  the  domestic 
consumption  of  the  buyer  ;^^ 

(6)  sales  made  by  a  farmer  or  cattle-raiser  of  the 
products  of  his  crops  or  cattle,  or  those  of  a  similar 
character;  ^" 

(c)  sales  made  by  craftsmen  in  their  own  shops  of 
the  objects  they  manufacture;  -^ 

The  sale  of  meat  to  a  hotel  is  mercantile,  Brazil,  Ace.  da  Rel.  da  Corte, 
Nov.  21,  1873;  Gaceta  Juridica,  v.  1,  p.  383. 

The  purpose  of  obtaining  a  profit  by  the  resale,  when  expressed  in  the  con- 
tract of  purchase  and  sale,  or  shown  by  other  acts,  is  necessary  in  order  that 
the  contract  be  regarded  as  mercantile.  Should  that  purpose  not  be  ex- 
pressed or  shown  the  commercial  judge  has  no  jurisdiction  over  the  case,  and 
the  proceedings  brought  before  him  are  void.  Ecuador,  Corte  Suprema  de 
Justicia,  Feb.  27,  1886;  Gaceta  Judicial,  n.  125,  p.  1015. 

Sales  made  by  rural  associations  of  the  products  of  farms  controlled  by  them 
are  not  commercial.  Spain,  Trib.  Sup.,  Oct.  15,  1913;  Gacetas  of  Feb.  23  and 
26th,  1914,  p.  55. 

Business  consisting  in  the  purchase  of  raw  materials  in  order  to  transform 
them  into  chemicals  or  medicines  and  sell  them  to  pharmacists  is  considered 
as  a  mercantile  business  governed  by  the  code  of  commerce.  Spain,  Trib. 
Sup.,  April  21,  1911;  Gacetas  of  June  8  and  10th,  1912. 

The  occupation  of  buying  raw  materials  and  transforming  them  into  chemi- 
cals or  medical  preparations  is  mercantile,  and  the  person  engaged  in  it  must 
be  declared  in  bankruptcy  not  in  concurso.  Spain,  Trib.  Sup.,  April  21,  1911; 
Gacetas  of  June  8  and  19th,  1912,  p.  360. 

^  Art.  191.  8  Art.  326.  » Art.  452. 

!« Art.  307.  "  Art.  98.  12  ^rt.  76. 

"Art.  199.  "Art.  3.  "Art.  321. 

i«  Art.  81.  "  Art.  516.  18  Art.  5. 

''Spain,  Argentina,  Costa  Rica,  Nicaragua,  Panama,  Peru,  San  Salvador, 
Uruguay. 

^  Spain,  Argentina,  Colombia,  Costa  Rica,  Panama,  San  Salvador,  Uruguay. 

^^  Spain,  Peru,  San  Salvador. 


372  LATIN-AMERICAN    COMMERCIAL   LAW 

(d)  resale  by  a  non-merchant  of  the  surplus  stock 
bought  for  his  own  consumption;  ^^ 

(e)  purchase  of  real  estate  and  fixtures.  The  pur- 
chases of  fixtures  necessary  for  commercial  enterprises 
are,  however,  commercial;  ^^ 

(/)  sales  made  by  landlords  or  any  other  persons  of 
the  fruits,  goods  or  products  which  they  receive  as 
rent,  salary  or  compensation  of  any  kind;  ^^ 

(g)  purchases  made  by  public  officials  or  employees 
for  the  public  service.  ^^ 
Mexico  is  the  only  country  in  Latin-America  which  de- 
clares that  sales  made  by  farmers  of  the  products  of  their 
crops  are  commercial.  ^^ 

The  object  of  commercial  purchase  and  sale. 

Everything  not  excepted  by  the  law,  and  subject  to  in- 
dividual ownership,  may  be  the  subject-matter  of  the  con- 
tract of  commercial  purchase  and  sale. 

In  Spain, 2^  Argentina,-^  Costa  Rica,^^  Honduras,^"  Ni- 
caragua,^^ Peru  ^2  and  Uruguay,  ^^  the  law  expressly  refers 
only  to  the  contract  of  purchase  and  sale  of  movables  as  a 
mercantile  transaction,  leaving  to  the  courts  the  power  to 
decide,  as  the  case  may  arise,  whether  or  not  the  contract 
to  sell  and  purchase  real  estate  is  commercial. 

The  sale  of  live  stock  made  to  a  manufacturer  of  hams,  bacon,  etc.,  is  not  a 
commercial  act,  because  the  buyer  does  not  sell  the  things  he  buys  in  a  different 
form  than  that  in  which  he  acquired  them,  but  makes  an  entirely  different 
thing  which  is  the  product  of  his  industry.  Spain,  Trib.  Sup.,  Oct.  4,  1904; 
Gaceta  of  Oct.  26,  1904. 

The  acquisition  of  raw  materials  for  an  industry  and  the  acceptance  of  bills 
of  exchange  or  drafts  with  a  view  to  making  such  acquisition,  are  not  commer- 
cial acts,  i.  e.,  they  are  not  habitual  acts  of  trade  and  profit  which  give  to  the 
maker  of  the  same  the  character  of  a  merchant.  Spain,  Trib.  Sup.,  April  12, 
1907;  Gacela  of  Sept.  13,  1908,  p.  242. 

^2  Spain,  Argentina,  Costa  Rica,  Panama,  Peru,  San  Salvador,  Uruguay. 

2'  Argentina,  Costa  Rica,  Uruguay. 

"*  Argentina,  Costa  Rica,  Uruguay. 

26  Panama.  ^8  75^  gpc.  XXII.  "  Art.  325. 

28  Art.  451.  29  Art.  306.  «» Art.  97. 

"  Art.  198.  32  Art.  320.  "  Art.  515. 


PURCHASE    AND    SALE  373 

Determination  of  the  price. 

Inasmuch  as  the  substantial  elements  of  the  contract  of 
purchase  and  sale  are  the  object  and  its  price,  it  is  very 
important  to  determine  when  these  elements  have  become 
certain  in  the  minds  of  the  contracting  parties,  and  hence, 
from  what  moment  the  contract  exists. 

System  of  Spain.  In  order  that  the  price  may  be 
considered  fixed,  it  is  sufficient  that  it  be  fixed  with 
reference  to  another  determinate  thing,  or  that  the 
determination  thereof  be  left  to  the  judgment  of  a 
specified  person.  Should  such  person  be  unable  or 
unwilling  to  fix  the  price,  the  contract  will  be  void.^^ 
System  of  Chile.  In  Chile, ^^  Colombia,^''  Ecuador, ^^ 
Guatemala  ^^  and  Panama,  ^^  there  is  no  purchase  and 
sale  if  the  contracting  parties  do  not  agree  on  the  price 
or  on  a  method  to  fix  it;  but  if  the  thing  sold  was 
delivered,  it  is  presumed  that  the  parties  have  accepted 
the  market  price  thereof  at  the  day  and  place  of  the 
contract.  Should  there  be  differences  of  price  on  that 
day  and  at  that  place,  the  purchaser  must  pay  the 
average  price.  This  rule  is  also  applicable  where  the 
parties  have  referred  to  a  price  at  a  different  time  and 
place  from  those  of  the  contract. 

If  the  third  party  charged  with  fixing  the  price  does 
not  do  so,  for  any  reason  whatsoever,  and  the  thing  sold 
has  been  delivered,  the  contract  is  effective  at  the 
market  price  of  the  thing  on  the  day  of  the  transaction, 
or  at  the  average  price  should  there  be  several. 

System  of  Brazil.  In  Brazil  "*''  and  Uruguay,"*^  the 
fixing  of  the  price  may  be  left  to  the  judgment  of  a 

^*  Spain,  c.  c,  1447;  Argentina,  459;  Brazil,  194;  Mexico,  2813  c.  c;  Uruguay, 
524;  Venezuela,  140. 

The  price  in  a  contract  of  purchase  and  sale  is  certain  not  only  when  the 
parties  agree  upon  a  fixed  sum,  but  also  when  they  consent  to  having  the  price 
fixed  by  experts.  Spain,  Trib.  Sup.,  June  23,  1915;  Gacelas  of  Nov.  29  and  30, 
p.  503. 

"  Arts.  139,  140,  141.  ^  Arts.  229,  230,  231.  "  Arts.  183,  184,  185. 

38  Arts.  206,  207,  208.  '» Arts.  749,  750,  751. 

^  Art.  194.  "  Art.  524. 


374  LATIN-AMERICAN    COMMERCIAL    LAW 

third  party;  should  he  be  unable  or  unwilling  to  fix  the 
price,  it  must  be  fixed  by  experts. 

System  of  Venezuela.  In  Venezuela  a  mercantile  sale 
made  for  an  undetermined  price  is  valid,  provided  the 
parties  afterward  agree  on  the  method  of  determining  it. 
A  sale  made  for  "  a  just  price  "  or  "  for  the  current  price  " 
is  also  valid ;  the  price  must  be  fixed  in  accordance  with 
the  books  of  the  brokers  and  at  the  exchange  of  the  day 
and  place  of  the  sale.  The  determination  of  the 
price  may  be  left  to  the  judgment  of  a  third  party 
appointed  at  the  time  of  the  contract  or  afterwards.  In 
both  of  these  two  cases,  should  the  person  selected  be 
unable  or  unwilling  to  accept  the  charge,  and  the 
parties  cannot  agree  upon  another  third  party,  the 
competent  judge  must  appoint  him.^^ 

Specification  of  the  thing  sold. 

The  determination  of  the  thing  sold  is  another  substantial 
element.    Two  cases  may  occur: 

(a)  Purchase  made  by  sample.  When  the  purchase  is 
made  by  sample  or  with  reference  to  a  fixed  quality  well 
known  in  the  trade,  the  purchaser  cannot  refuse  to 
receive  the  goods  contracted  for,  if  they  are  in  accord- 
ance with  the  sample  or  the  quality  stipulated  in  the 
contract. 

Should  the  vendee  refuse  to  receive  the  goods  because 
of  their  failure  to  meet  these  requirements,  they  must  be 
examined  by  experts  who,  taking  into  consideration  the 
terms  of  the  contract  and  comparing  the  goods  with  the 
sample  displayed,  if  any,  must  decide  whether  the  goods 
should  or  should  not  have  been  received. 

(6)  Purchase  of  unspecified  things.  In  the  matter  of 
the  purchase  of  things  whose  qualities  have  not  been 
specified,  the  following  systems  may  be  mentioned: 

System  of  Spain.  In  the  purchase  of  goods  which 
have  not  been  seen  or  which  cannot  be  characterized  by 
a  fixed  quality  well  known  in  the  trade,  it  is  under- 

«  Art.  140. 


PURCHASE    AND    SALE  375 

stood  that  the  purchaser  reserves  for  himself  the 
privilege  of  examining  them  and  unrestrictedly  rescind- 
ing the  contract  if  the  goods  do  not  suit  him.  The 
purchaser  may  also  rescind  the  contract  after  examin- 
ing the  goods  if  the  parties  so  agreed.*^ 

System  of  Chile.     In  Chile,  "^^  Colombia/^  Ecuador  ^^ 
and  Guatemala/''  when  the  purchaser  of  a  thing  ex- 
pressly reserves  the  privilege  of  testing  or  examining  it, 
without  fixing  a  period  for  so  doing,  it  is  understood  that 
the  purchase  is  made  under  an  option  and  condition 
precedent  operative  for  a  period  of  three  days.     This 
period  is  counted  from  the  day  the  vendor  requests  the 
purchaser  to  make  the  test  or  examination;  should  the 
latter  fail  to  do  so  within  that  period,  he  is  deemed  to 
have  given  up  the  contract. 
In  the  case  of  a  purchase  by  order  {por  orden)  of  a  thing 
not  seen,  and  designated  by  kind  only,  it  is  understood  that 
the  vendee  on  receipt  thereof  has  the  privilege  of  rescinding 
the  contract  should  the  thing  not  be  sound  and  of  average 
quality.    In  case  the  thing  is  designated  at  the  same  time  by 
its  kind  and  quality,  the  buyer  can  rescind  the  contract 
should  the  thing  not  be  of  the  stipulated  kind  and  quality; 
if  the  parties  disagree  on  this  point,  experts  must  make  the 
decision."*^ 

Purchases  made  with  the  clause  "free  of  charges." 

When  a  thing  is  purchased  and  shipped  by  order,  with  the 
stipulation  that  it  is  free  of  charges  {franco  de  porte),  it  is 
understood  that  the  purchase  is  made  on  condition  that  the 
thing  reaches  its  destination.  Once  this  condition  is  fulfilled 
the  purchaser  cannot  rescind  the  contract,  except  for  non- 
compliance with  specifications.^^ 

"  Spain,  328;  Argentina,  455;  Costa  Rica,  308;  Honduras,  100;  Mexico,  374; 
Nicaragua,  200;  Panama,  742;  Peru,  323;  San  Salvador,  83;  Uruguay,  520. 
"  Art.  131.  ^5  Art.  222.  «  Art.  171. 

«Art.  198. 

«  Chile,  134;  Colombia,  224;  Ecuador,  174;  Guatemala,  201;  Panama,  745. 
"  Panama,  748. 


376  LATIN-AMERICAN   COMMERCIAL   LAW 

Obligations  of  the  vendor. 

The  obhgations  of  the  vendor  are  three,  namely: 
(a)  to  deliver  the  thing  sold; 
(6)  to  warrant  its  title;  and 
(c)  to  warrant  its  freedom  from  defects. 

Methods  of  making  delivery. 

The  delivery  of  the  thing  sold  may  be  made  either  physi- 
cally, by  actually  placing  it  in  the  hands  and  possession 
of  the  vendee,  or  symbolically.  ^° 

The  shipment  of  the  goods  by  the  vendor  to  the  domicil  of 
the  vendee  or  to  any  other  place  agreed  upon,  is  considered 
as  delivery,  unless  the  shipment  is  made  without  the  purpose 
of  conveying  title  to  the  purchaser,  as,  for  example,  when  the 
vendor  sends  the  merchandise  to  a  consignee,  with  the  order 
not  to  dehver  it  until  he  has  been  paid  the  price  or  received 
security  therefor.  ^^ 

Symbolic  delivery  (tradicion  "simbolica"). 
Besides  actual  delivery,  the  cormnercial  codes  of  Argen- 

When  merchandise  is  sold  "free  on  board  "  of  a  railroad  car  or  vessel  it  is 
understood  that  the  delivery  is  made  at  the  place  where  the  car  or  vessel  is 
located  and  the  judge  of  that  place  has  jurisdiction  of  all  questions  arising  out 
of  the  contract  of  purchase  and  sale.  Spain,  Trib.  Sup.,  July  8,  1909;  Gaceta 
of  March  11,  1910,  p.  47. 

^^  According  to  article  1462  of  the  civil  code  of  Spain  the  delivery  of  the 
thing  sold  is  made  when  the  deed  of  sale  is  executed;  it  is,  nevertheless,  neces- 
sary that  the  vendor,  at  the  time  of  the  execution  of  the  deed,  be  in  actual 
possession  of  the  thing  sold.  Spain,  Trib.  Sup.,  May  29,  1906;  Gaceta  of 
May  19,  1907,  p.  112,  and  Trib.  Sup.  of  Cuba,  March  30,  1904;  Gaceta  of 
Aug.  23,  1904. 

The  mere  fact  that  a  contract  of  purchase  and  sale  was  entered  into  at  a 
certain  place  does  not  necessarily  imply  that  the  subject-matter  of  the  contract 
was  delivered  at  that  same  place,  as  such  delivery  is  not  an  essential  requisite 
of  the  above  mentioned  contract.  Cuba,  Trib.  Sup.,  July  8,  1903;  Gaceta  of 
July  8,  1903. 

In  sales  of  merchandise  made  on  credit  the  place  of  delivery  is  the  commer- 
cial house  of  the  seller  even  though  the  merchandise  be  sent  to  the  domicU  of 
the  buyer;  the  sending  of  the  articles  to  the  address  of  the  buyer  is  equivalent 
to  delivery,  unless  otherwise  stipulated.  Spain,  Trib.  Sup.,  Feb.  1  and  8,  1907, 
and  Sept.  4  and  28,  1908;  Gaceta^  of  Feb.,  1907  and  Oct.  6,  1908. 

^1  Panama,  762;  Uruguay,  528;  Venezuela,  154. 


PURCHASE    AND    SALE  377 

tina/2  Brazil, ^^^  Chile, ^^  Colombia, '^^  Ecuador, ^^  Guatemala," 
Panama,  ^^  Uruguay  ^^  and  Venezuela  '^^  admit  of  a  symbolic 
or  conventional  delivery  in  the  following  forms: 

(a)  the  dehvery  of  the  keys  of  a  warehouse,  store- 
house, or  boxes  in  which  the  goods  sold  are  located ;  ^^ 

(b)  the  act  of  the  vendee  in  placing  his  mark  on  the 
goods  in  the  presence  of  the  vendor  and  with  his 
consent;  ^^ 

(c)  the  delivery  of  the  invoice  without  immediate 
objection  by  the  vendee;  ^^ 

(d)  the  clause  ''on  account  "  placed  in  a  bill  of  lading, 
if  not  objected  to  by  the  vendee  within  twenty-four 
hours  or  by  letter  sent  by  the  next  mail;  ^'^ 

(e)  the  declaration  made  in  books  of  public  record  in 
favor  of  the  buyer,  provided  both  parties  agree;  ^'^ 

(/)  the  authorization  of  the  vendor  to  the  vendee  to 
take  away  the  goods,  the  right  of  the  vendor  to  retain 
them  for  non-payment,  and  of  the  vendee  to  examine 
them  being  reserved;  ^^ 

(g)  any  other  act  considered  as  a  symbolic  delivery 
by  commercial  custom.^^ 

62  Art.  463.  "  Art.  200. 

"  Art.  239.  68  Art.  193. 

^  Art.  763.  69  Art.  529. 

*^  Argentina,  Brazil,  Panama,  Uruguay. 

*2  Argentina,    Brazil,    Chile,    Colombia, 
Uruguay,  Venezuela. 

8'  Argentina,    Brazil,    Chile,    Colombia, 
Uruguay,  Venezuela. 

^*  Argentina,  Brazil,  Uruguay . 

*6  Argentina,  Brazil,  Panama,  Uruguay. 

'8  Uruguay. 

*'  Chile,  Colombia,  Guatemala,  Panama. 

The  vendor  is  bound  to  deposit  the  goods  sold  as  a  condition  precedent  to 
demanding  the  payment  of  their  price,  only  when  he  has  not  delivered  them 
in  fact  or  symbolically  ■{tradiddn  ficla).  A  symbolic  delivery  takes  place  not 
only  when,  according  to  article  339  of  the  code  of  commerce,  the  goods  are 
placed  at  the  disposal  of  the  vendee  with  his  consent,  but  also  when,  at  the  time 
of  making  the  contract,  he  has  consented  to  have  the  vendor  place  the  thing 
sold  at  his  disposal;  inasmuch  as,  in  the  matter  of  the  form  in  which  delivery 
is  to  be  made,  as  well  as  in  all  other  circumstances  of  a  purchase  and  sale,  the 
parties  are  free  to  make  any  stipulation.  Spain,  Trib.  Sup.,  May  1,  1903; 
Gacela  of  May  20,  1903,  p.  334. 


6"  Art.  149. 

6'  Art.  216. 

«o  Art.  154. 

Ecuador, 

Guatemala,    Panama, 

Ecuador, 

Guatemala,    Panama, 

378  LATIN-AMERICAN   COMMERCIAL   LAW 

In  Mexico,  from  the  moment  the  purchaser  acknowledges 
the  fact  that  the  merchandise  bought  is  at  his  disposal,  he  is 
held  to  have  virtually  received  them  and  the  vendor  has  the 
rights  and  liabilities  of  a  mere  depositary.^* 

Place  of  delivery  of  the  thing  sold. 

The  delivery  must  be  made  at  the  place  agreed  upon; 
should  there  be  no  agreement  in  that  respect,  the  thing 
must  be  delivered  at  the  place  where  it  was  located  when 
sold.''^ 

Time  of  delivery. 

If  no  time  is  fixed  for  delivery  of  the  thing  sold,  it  must  be 
at  the  disposal  of  the  vendee  within  twenty-four  hours  after 
the  contract  was  completed.'" 

Partial  delivery. 

In  contracts  in  which  the  delivery  of  a  certain  amount  of 
merchandise  within  a  certain  time  is  stipulated,  the  pur- 
chaser cannot  be  compelled  to  receive  a  part  thereof  even  on 
the  promise  of  delivering  the  rest ;  but  if  he  accepts  deUvery 
of  a  part,  the  sale  is  deemed  consummated  with  respect  to 
the  goods  received,  reserving  the  right  of  the  purchaser  to 
demand,  as  to  the  rest,  the  fulfillment  of  the  contract  or  its 
rescission."^ 

•■8  Art.  378. 

The  seller  is  a  depositary  of  the  thing  sold  when  he  has  agreed  thereto  with 
the  buyer,  or  when  he  has  consented  to  keep  the  merchandise  at  the  disposal 
of  a  second  buyer  who  bought  it  from  the  original  one.  Mexico,  Juzgado  3° 
de  lo  Civil  del  Dist.,  Fed.,  Feb.  20,  1911,  "Ortiz  Saenz  y  Cia."  v.  Sebastian 
B.  de  Mier,  Diario  de  Jurisp.,  v.  XXIII,  p.  601. 

«=»  Argentina,  461;  Brazil,  199;  Chile,  144;  Colombia,  234;  Ecuador,  188; 
Guatemala,  211;  Panama,  758;  Uruguay,  527. 

™  Spain,  337;  Argentina,  464;  Chile,  144;  Colombia;  234;  Costa  Rica,  319; 
Ecuador,  188;  Guatemala,  211;  Honduras,  102;  Mexico,  379;  Nicaragua,  206; 
Panama,  758;  Peru,  332;  San  Salvador,  86;  Uruguay,  530. 

"Spain,  330;  Argentina,  468;  Brazil,  203;  Chile,  157;  Colombia,  249; 
Costa  Rica,  311;  Ecuador,  199;  Guatemala,  224;  Honduras,  102;  Mexico, 
375;  Nicaragua,  203;  Panama,  745;  Peru,  325;  San  Salvador,  84;  Uruguay, 
537. 


PURCHASE    AND    SALE  379 

Failure  to  deliver. 

"WTien  the  seller  fails  to  deliver  the  goods  he  is  subject  to 
suit  by  the  buyer,  as  follows: 

System  of  Spain.  If  the  vendor  does  not  deliver  the 
goods  purchased  within  the  stipulated  period,  the 
vendee  may  demand  the  fulfillment  or  the  rescission  of 
the  contract,  with  damages  for  the  delay  in  either  case.^- 

System  of  Argentina.  If  the  vendor  does  not  deliver 
the  goods  within  the  period  stipulated,  or  within 
twenty-four  hours,  if  no  period  has  been  stated,  the 
vendee  may  demand  the  rescission  of  the  contract  or  its 
fulfillment,  with  damages  for  the  default ;  or  he  may  ask 
for  authorization  to  buy  in  the  local  market,  for  the 
account  of  the  vendor,  an  equal  quantity  of  the  same 
goods.  Nevertheless,  when  the  default  in  delivery  is 
caused  by  destruction  or  injury  of  the  goods  through 
unforeseen  events  without  fault  on  the  part  of  the 
vendor,  the  latter's  liabihty  ceases,  the  contract  is 
rescinded  de  jure,  and  the  price  must  be  refunded  to  the 
vendee.'^  ^ 

System  of  Nicaragua.  If  the  vendor  fails  to  deliver  the 
goods  within  the  stipulated  period,  or  delivers  them  in 
defective  condition,  although  either  of  these  circum- 
stances be  due  to  unforeseen  events,  the  buyer  may 
rescind  the  contract,  and  demand  damages  if  slight 
negUgence  be  proved.  If  the  goods  were  destroyed  the 
rescission  occurs  de  jure;  and  damages  are  due  if  they 
became  lost  through  fault  other  than  the  vendee's.'^ 

Cases  in  which  the  vendor  disposes  of,  consumes  or  dam- 
ages the  goods. 
The  vendor  who,  after  the  sale,  disposes  of,  consumes  or 
injures  the  thing  sold,  is  obliged  to  give  to  the  vendee  an- 

"  Spain,  329;  Brazil,  202;  Chilo,  156;  Colombia,  248;  Costa  Rica,  310; 
Ecuador,  ,198;  Guatemala,  223;  Honduras,  101;  Mexico,  376;  Peru,  324; 
Panama,  754,  774;  Uruguay,  534. 

"  Argentina,  467;  Venezuela,  147. 

'*  Nicaragua,  201. 


380  LATIN-AMERICAN    COMMERCIAL   LAW 

other  of  the  same  kind,  quahty  and  quantity,  or  otherwise 
to  pay  him  the  value  thereof  according  to  the  appraisal 
made  by  expert  arbitrators  who  must  take  into  consideration 
the  use  to  which  the  purchaser  intended  to  put  it  and  the 
benefit  he  might  have  derived  therefrom,  and  must  dis- 
count the  price  should  the  purchaser  not  yet  have  paid  it.^^ 

Expenses. 

Expenses  incurred  in  a  contract  of  purchase  and  sale  must 
be  defrayed  as  follows: 

System  of  Spain.  The  expenses  caused  by  the  de- 
livery of  the  thing  sold  must  be  defrayed  by  the  vendor, 
unless'  otherwise  stipulated,  until  it  is  weighed  or 
measured  and  placed  at  the  disposal  of  the  vendee. 
The  expense  of  preserving  and  removing  it  from  the 
place  where  it  is  situated  are  for  the  account  of  the 
purchaser.^^ 

System  of  Brazil.  The  expenses  caused  by  the  exe- 
cution of  deeds  or  documents  and  transportation  and 
delivery  of  the  thing  sold  must  be  for  the  exclusive 
account  of  the  buyer.^^ 

When  the  obligation  of  delivering  the  thing  sold  terminates. 

The  obhgation  of  the  vendor  to  dehver  the  thing  sold, 
before  payment  of  the  purchase  price,  ceases  when  between 
the  act  of  sale  and  the  time  of  delivery,  the  financial  status 
of  the  vendee  is  impaired  and  he  does  not  give  sufficient 
guaranty  for  the  payment  of  the  price  when  due.^^ 

In  Venezuela  ^^  the  provision  is  of  a  more  general  char- 
acter, because  the  seller  has  a  vendor's  lien  on  the  goods 
sold,  while  in  his  possession,  until  the  full  payment  of  the 
purchase  price  and  accrued  interest. 

"  Brazil,  208;  Chile,  152;  Colombia,  242;  Ecuador,  196;  Guatemala,  219. 

7«  Spain,  338;  Argentina,  460;  Costa  Rica,  320;  Honduras,  110;  Mexico,  382; 
Nicaragua,  204;  Uruguay,  525. 

"  Brazil,  196. 

'8  Brazil,  198;  Chile,  147;  Colombia,  237;  Ecuador,  192;  Guatemala,  214; 
Panama,  761;  Uruguay,  526. 

79  Art.  153. 


PUECHASE   AND    SALE  381 

Warranty  of  title  (garantia  de  eviccion.) 

The  other  obhgation  of  the  vendor,  as  has  been  stated,  is 
to  warrant  the  title,  that  is,  the  legal  and  peaceful  possession 
of  the  thing  sold;  and  to  warrant  that  there  are  no  hidden 
defects  therein.^" 

The  warranty  of  title  is  more  frequently  used  in  civil  than 
in  commercial  sales;  for  that  reason  the  law-makers  do  not 
appear  to  have  perceived  any  special  reason  for  changing 
in  commercial  matters  the  general  principles  of  the  civil 
law.  Hence  we  believe  it  proper  to  explain  briefly  those 
principles,  as  they  are  established  in  the  civil  code  of 
Spain. 

The  warranty  of  title  becomes  effective  when  there  has 
been  an  eviction.  Eviction  takes  place  when  by  a  final 
judgment  and  by  virtue  of  a  right  antedating  the  sale,  the 
vendee  is  deprived  of  the  whole  or  of  a  part  of  the  thing 
purchased. 

The  vendor  is  liable  for  the  damages  arising  from  eviction 
though  the  contract  be  silent  on  the  subject.  The  contract- 
ing parties  may,  however,  increase,  decrease,  or  expressly 
waive  the  obligation  arising  out  of  the  warranty. 

80  Spain,  345;  Brazil,  215;  Chile,  154;  Colombia,  246;  Costa  Rica,  327; 
Ecuador,  190;  Guatemala,  221;  Honduras,  117;  Mexico,  384;  Nicaragua,  212; 
Panama,  770;  Peru,  340;  Uruguay,  549. 

The  heir  of  the  vendor  cannot  ask  for  the  nullity  of  a  sale,  because  he  is 
bound  to  warrant  the  title  thereof.  Argentina,  Cam.  Fed.  de  Apel.  La  Plata, 
May  28,  1913. 

Indemnity  to  a  buyer  in  case  of  eviction  is  only  proper  when  he  has  been 
deprived  of  the  whole  or  a  part  of  the  thing  by  a  final  judicial  decision,  pro- 
vided the  seller  was  summoned  and  notified  of  the  demand.  A  settlement 
made  by  the  buyer  with  the  plaintiff  in  such  suit,  without  the  concurrence  of 
the  seller,  cannot  prejudice  the  latter.  Spain,  Trib.  Sup.,  June  26,  1913; 
Gaceta  of  Feb.  14,  1914,  p.  537. 

The  seller  after  summons  is  served  upon  him  to  appear  in  a  suit  brought 
against  the  buyer  cannot  be  declared  to  be  in  default  {dedarado  en  rebeldia) 
because  he  is  not  bound  to  defend  the  buyer  but  to  indemnify  him  in  case  the 
plaintiff  recovers  the  thing  sold.  Spain,  Trib.  Sup.,  June  15,  1912;  Gacela  of 
June  18,  1914,  p.  493. 

A  judicial  decision  in  a  case  in  which  the  matter  of  eviction  has  been  one  of 
the  issues  in  litigation,  must  determine  when  the  defendant  is  deprived  of  the 
possession  of  the  thing  disputed;  otherwise  the  decision  may  be  set  aside. 
Spain,  Trib.  Sup.,  April  27,  1907;  Gacetus,  Jan.  30  and  Fel).  15,  1907,  p.  48. 


382  LATIN-AMERICAN    COMMERCIAL   LAW 

If  a  vendee  has  waived  the  covenant  of  warranty  against 
eviction  and  the  eviction  occurs,  the  vendor  need  return 
only  the  value  of  the  thing  at  the  time  of  the  eviction,  unless 
the  vendee  has  assumed  the  risk  of  eviction;  in  the  latter 
event,  the  vendor  need  make  no  compensation. 

When  a  warranty  has  been  expressed,  or  when  there  has 
been  no  mention  of  the  subject,  and  the  eviction  takes  place, 
the  vendee  has  the  right  to  demand  of  the  vendor : 

1st.  The  restitution  of  the  value  of  the  thing  at  the 
time  of  eviction,  whether  it  be  greater  or  less  than  the 
purchase  price; 

2d.  The  fruits  or  accrued  proceeds  thereof,  in  cases 
where  he  would  have  been  judicially  ordered  to  deliver 
them  to  the  person  who  won  the  suit; 

3d.  The  costs  of  the  suit  which  resulted  in  the 
eviction,  and  in  a  proper  case,  those  of  the  suit  instituted 
against  the  vendor  on  the  warranty; 

4th.  The  expenses  of  the  contract,  if  the  vendee 
paid  them; 

5th.  The  damages  and  voluntary  expenses  incurred 
to  improve  the  thing  sold,  should  the  sale  have  been 
made  in  bad  faith. 

Should  the  vendee  be  evicted  from  a  part  of  the  thing 
sold,  of  such  importance  in  relation  to  the  whole  that 
without  it  he  would  not  have  made  the  purchase,  he 
may  demand  the  rescission  of  the  contract;  but  with 
the   obligation   to   return   the   thing   without   encum- 
brances other  than  those  it  had  when  he  acquired  it. 
The  same  rules  are  applicable  when  two  or  more  things 
are  sold  together  for  a  lump  sum  or  at  a  special  price  for 
each,  if  it  clearly  appears  that  the  vendee  would  not  have 
purchased  one  without  the  other. 

Vindication  or  making  good  of  the  warranty  cannot  be 
demanded  until  a  final  judgment  has  been  rendered  by  which 
the  vendee  is  judicially  ordered  to  return  to  the  true  owmer 
the  thing  acquired  or  a  part  thereof. 

The  vendor  is  obliged  to  make  good  the  warranty  when- 
ever it  is  proved  that  he  was  given  notice  by  or  at  the  in- 


PUBCHASE    AND    SALE  383 

stance  of  the  vendee  of  the  suit  for  eviction.  In  the  absence 
of  such  notice,  the  vendor  is  not  bound  by  the  warranty. 

A  defendant  vendee  must  request,  within  the  period  fixed 
by  the  law  of  civil  procedure,  that  notice  of  the  complaint 
be  given  to  the  vendor  or  vendors  within  the  shortest  period 
possible.  This  notice  which  has  the  character  of  interpleader, 
must  be  served  in  the  manner  provided  for  summoning  de- 
fendants. 

The  time  of  the  vendee  to  answer  the  complaint  is  sus- 
pended until  the  expiration  of  the  time  granted  the  vendor 
and  prior  vendors,  covering  the  period  of  limitation,  to 
appear  and  answer  the  complaint;  this  period  is  the  same 
as  that  granted  all  defendants  by  the  law  of  civil  procedure, 
and  is  counted  from  the  date  when  the  summons  was  served 
upon  the  vendor.  Should  the  vendors  not  enter  a  timely 
or  proper  appearance,  the  vendee's  period  to  answer  begins 
to  run. 

Warranty  for  hidden  defects. 

With  respect  to  the  warranty  for  hidden  defects  in  or 
encumbrances  on  the  thing  sold,  the  general  principles  of 
law  are  in  no  wise  special  to  the  commercial  law,  but  are 
found  in  the  general  civil  law  of  the  civil  code.  A  few  words 
will  suffice  to  explain  the  matter. 

The  vendor  is  bound  to  warrant  against  any  hidden  de- 
fects in  the  thing  sold,  should  they  render  it  unfit  for  the 
use  for  which  it  was  intended,  or  if  they  should  so  impair 
such  use  that  the  vendee,  had  he  had  knowledge  thereof, 
would  not  have  purchased  the  thing  or  would  have  given 
a  lower  price  for  it;  but  the  vendor  is  not  liable  for  patent 
defects,  for  those  which  are  visible,  or  for  those  which  are 
not  visible  if  the  vendee  is  an  expert  who  might  easily  have 
discovered  them.^^  In  these  last  cases,  the  rule  caveat  emptor 
applies. 

*'  The  seller  of  goods  whioh  are  damaged  is  liable  for  hid(l(>n  defects  to  the 
purchaser  who  bought  them  supixwing  Ihcy  were  in  good  condition,  even  after 
delivery  of  said  goods.  Brazil,  Ace.  Da  Rel.  da  Corte,  No.  574S  of  I''cb.  9, 
1855,  Mafra,  Jurinp.  das  Trib.,  p.  313. 


384  LATIN-AMERICAN    COMMERCIAL   LAW 

The  action  for  rescission  on  account  of  hidden  defects 
which  could  not  be  perceived  at  the  time  the  goods  were 
examined,  may  be  brought  against  the  vendor  within  a 
period  which  varies  from  country  to  country.  In  Spain. ^- 
Honduras,^^  Mexico,^'^  Peru  ^°  and  San  Salvador,^^  the  period 
is  thirty  days;  in  Argentina  it  is  j&xed  by  the  tribunals  as 
the  case  may  require,  but  it  can  never  be  more  than  six 
months;  in  Chile,^^  Colombia,^^  Costa  Rica,^^  Guatemala,^" 
Nicaragua  ^^  and  Uruguay,^^  it  is  six  months;  in  Ecuador  ^^ 
it  is  six  months  in  domestic  trade  and  one  year  in  foreign 
trade;  and  finally,  in  Brazil,^*  there  is  no  special  term,  so 
that  the  period  presumably  is  that  fixed  by  the  general 
principles  of  the  statute  of  limitations. 

Period  for  making  claims  on  account  of  faults  in  quantity 
or  quality. 

When  the  goods  are  delivered  in  bales  or  wrapped  so  that 
they  cannot  be  examined,  the  vendee  may  make  claim  for 
any  shortage  in  quantity  or  defect  in  quality  within  three 
days  after  delivery.  In  the  first  case  he  must  prove  that  the 
outside  ends  of  the  pieces  have  remained  untouched;  and 
in  the  second  case,  that  the  defects  could  not  have  occurred 
by  an  unforeseen  event  or  fraudulently  while  in  his  pos- 
session. The  vendor  may  always  require  at  the  time  of 
delivery  that  a  thorough  examination  of  the  quantity 
and  quality  of  the  goods  be  made  by  the  vendee;  and 
in  that  event  there  will  be  no  ground  for  claims  after 
delivery. ^•'^ 

In  Chile,^*'  Colombia  ^^  and  Guatemala,^^  the  same  rule 
prevails,  but  the  vendee  at  the  time  of  receiving  the  goods 
baled  or  covered  must  expressly  reserve  his  privilege  of 
examining  them. 


82  Art.  342. 

83  Art.  114. 

8*  Art.  383. 

«5  Art.  337. 

8«  Art.  88. 

87  Art.  154. 

^  Art.  246. 

89  Art.  318. 

90  .\rt.  221. 

"  Art.  205. 

92  Art.  548. 

93  Art.  190. 

9^  Art.  210. 

95  Spain,  336; 

Argentina, 

472;  Honduras, 

108; 

Panama, 

772;  Uruguay,  546. 

»  Art.  159. 

97  Art.  251. 

98  Art.  226. 

PURCHASE    AND    SALE  385 

In  Costa  Rica  ^^  and  Nicaragua  ^"^  the  same  rule  prevails 
as  in  Argentina,  but  the  period  for  making  claims  is  eight 
days  after  delivery.    In  Brazil  ^°^  the  period  is  ten  days. 

Ecuador  ^*'-  and  Venezuela  ^°^  have  adopted  the  above- 
mentioned  rule  requiring  that  the  vendee  expressly  reserve 
his  privilege  of  examining  the  goods  at  the  time  of  delivery, 
but  the  period  for  claims  is  extended  to  eight  days. 

In  Mexico  ^°^  the  vendee  who  within  five  days  after 
receipt  of  the  goods  makes  no  claim  against  the  vendor  for 
defects  in  the  quantity  or  quality  thereof,  or  who  within 
thirty  days  from  the  time  of  receipt  makes  no  claim  for 
hidden  defects  loses  all  rights  against  the  vendor  arising  out 
of  these  causes. 

In  San  Salvador  ^°^  the  rule  of  Argentina  is  established; 
but  when  there  has  been  fraud,  the  vendee  is  entitled  to  ask 
for  the  rescission  or  the  fulfillment  of  the  contract  without 
the  special  limitation  incidental  to  the  action  on  the  warranty 
against  defects. 

Obligation  of  giving  an  invoice. 

No  seller  can  refuse  the  buyer  an  invoice  of  the  goods  sold 
and  delivered,  and  a  receipt  for  the  amount  received.  If 
there  is  no  statement  as  to  when  payment  is  to  be  made,  it  is 
presumed  that  the  sale  is  for  cash.  When  the  buyer  does  not 
object  to  the  invoice  within  eight  days  after  delivery  (in 
Argentina,  Brazil  and  Uruguay  within  ten  days)  it  is 
presumed  that  the  amount  of  the  invoice  is  a  correct  ac- 
count. ^°^ 

Risk  of  loss  of  the  thing  sold. 

Inasmuch  as  by  virtue  of  a  contract  of  purchase  and  sale 
the  title  to  the  thing  sold  is  divested  from  the  vendor  and 
vested  in  the  vendee  by  the  mere  agreement  of  the  parties, 

93  Art.  317.  !««  Art.  205.  i»i  Art.  211. 

lo^  Art.  191.  103  Art.  150.  "*  Art.  383. 

los  Art.  85. 

io«  .Argentina,  474;  Brazil,  219;  Chile,  160;  Colombia,  252;  Costa  Rioa,  324; 
Ecuador,  200;  Guatemala,  227;  NiearaKua,  209;  Panama,  77();  Uruguay,  557; 
Venezuela,  152. 


386  LATIN-AMERICAN    COMMERCIAL    LAW 

the  risk  of  loss  of  the  thing  ought  to  be  thenceforth  on  the 
vendee,  by  application  of  the  rule  ''risk  follows  title."  That 
is  the  rule  in  civil  transactions;  but  in  mercantile  purchase 
and  sale  when  delivery  has  not  been  made  we  find  the 
following  systems: 

System  of  Spain.  The  loss  or  impairment  of  the  thing 
sold,  due  to  unforeseen  events  and  without  fault  of  the 
vendor,  gives  power  to  the  vendee  to  rescind  the 
contract,  unless  the  vendor  has  been  entrusted  with  the 
deposit  thereof,  in  which  case  the  vendor  is  liable  only 
according  to  the  law  of  bailment.^"' 

System   of  Chile.     This   system  is   in   accord  with 
general  principles  inasmuch  as  the  risk  of  loss  or  impair- 
ment of  the  goods  after  completion  of  the  contract  rests 
on  the  buyer,  unless  otherwise  stipulated  or  unless  the 
loss  or  impairment  are  due  to  fraud  or  negligence  of 
the  vendor  or  to  inherent  vices  in  the  thing  sold.^"* 
The  risk  of  loss  and  injurj^  to  goods,  occurring  after  the 
contract  has  been  perfected  and  after  the  vendor  has  put 
them  at  the  disposal  of  the  vendee,  in  proper  time  and  place, 
rests  on  the  latter,  except  in  cases  of  fraud  or  negligence  of 
the  vendor.  ^°^ 

Cases  in  which  the  vendor  assumes  the  risk. 

Losses  of  and  injm'ies  to  the  goods,  though  due  to  unfore- 
seen events,  are  borne  by  the  vendor  in  certain  cases,  as 
follows:  ^1° 

(a)  if  the  sale  is  made  by  number,  weight,  or  measure, 
or  if  the  thing  sold  has  not  been  specified  by  marks  or 
signs  which  identify  it;  ^^^ 

i«"  Spain,  331;  Costa  Rica,  312;  Honduras,  103;  Mexico,  377;  Peru,  326; 
Uruguay,  541. 

108  Chile,  142;  Co'ombia,  232;  Ecuador,  186;  Guatemala,  209;  Panama,  756. 

109  Spain,  333;  Brazil,  206;  Costa  Rica,  313;  Honduras,  105;  Peru,  328; 
Uruguay,  541. 

""Spain,  334;  Brazil,  207;  Chile,  143;  Colombia,  233;  Costa  Rica,  314; 
Ecuador,  187;  Guatemala,  210;  Honduras,  106;  Panama,  757;  Peru,  329; 
Venezuela,  141. 

"'Spain,  Brazil,  Chile,  Colomljia,  Costa  Rica,  Ecuador,  Guatemala, 
Panama,  Peru. 


PURCHASE    AND    SALE  387 

(6)  if,  by  express  stipulation  or  commercial  usage, 
according  to  the  nature  of  the  thing  sold,  the  purchaser 
is  to  have  the  privilege  of  examining  it  before  accept- 
ance; ^^'- 

(c)  if  it  is  stipulated  that  the  thing  is  to  be  delivered 
after  certain  things  are  done  to  it;  ^^^ 

(d)  if  the  vendor  fails  to  deliver  the  thing  sold  after 
the  vendee  is  ready  to  receive  it.^^'*  The  codes  of  Chile, 
Colombia,  Ecuador,  Guatemala  and  Panama  in  refer- 
ring to  this  case,  provide  further  that  the  loss  does  not 
fall  on  the  vendor  when  it  would  have  occurred  even  had 
the  thing  been  in  the  possession  of  the  vendee; 

(e)  if  in  alternative  obligations  one  of  the  things  to  be 
delivered  is  lost  because  of  unforeseen  events.  When 
both  are  lost  and  the  loss  of  one  is  due  to  the  fault  of 
the  vendor,  he  must  pay  the  price  of  the  last  one  de- 
stroyed, if  he  had  the  privilege  of  choosing.  If  he  did  not 
have  that  pri\dlege,  and  one  of  the  things  was  lost  by  an 
unforeseen  event,  the  vendee  must  be  satisfied  with  the 
remaining  one;  but  if  the  loss  was  due  to  the  fault  of 
the  vendor  the  vendee  can  demand  either  the  delivery 
of  the  remaining  or  the  price  of  the  lost  one.^^' 

"Wlien  the  loss  or  injury  of  the  article  falls  on  the  vendor, 
he  must  refund  to  the  vendee  the  part  of  the  price  he  might 
have   received.  ^^"^ 

Obligations  of  the  vendee. 

The  obligations  of  the  vendee  are  two,  namely,  to  receive 
the  goods  sold  and  to  pay  their  price. 

Obligation  of  receiving  the  goods  sold. 

As  a  correlative  obligation  of  the  vendor  to  deliver  the 
thing  sold,   the  vendee  must  receive  it;  should  he  refuse 

''-  Spain,  Brazil,  Chile,  Colombia,  Costa  Rica,  Guatemala,  Panama,  Peru. 

"^  Spain,  Chile,  Colombia,  Costa  Rica,  Ecuador,  Peru. 

1'^  Brazil. 

"^  Chile,  Colombia,  E(!uador,  Guatomal.'i,  Panama. 

"8  Spain,  335;  Costa  Rica,  315;  Honduras,  107;  Panama,  769;  Peru,  330. 


388  LATIN-AMEEICAN   COMMEKCIAL   LAW 

without  reasonable  cause,  the  seller  can  demand  the  per- 
formance or  the  rescission  of  the  contract,  making,  in  the 
first  case,  a  judicial  deposit  of  the  goods  sold.  The  vendor 
can  also  make  such  deposit  when  the  buyer  delays  in  taking 
over  the  goods.  The  expenses  arising  out  of  the  deposit 
must  be  borne  by  the  party  who  made  it  necessary.  ^^^ 

In  Venezuela,  ^^^  when  the  buyer  does  not  perform  his 
obligation  to  receive  the  goods,  the  seller  has  a  right  either  to 
have  the  thing  sold,  or  to  deposit  it  with  a  reliable  person; 
should  there  be  none  such,  then  with  a  trustworthy  commer- 
cial house,  all  the  expenses  being  borne  by  the  buyer.  The 
sale  must  be  made  at  public  auction  or  at  current  prices,  if 
the  thing,  subject-matter  of  the  contract,  is  quoted  in  the 
exchange  or  market,  through  an  auctioneer  or  broker,  as  the 
case  may  be;  and  in  default  of  either,  through  a  person 
designated  by  the  judge.  The  vendor  has  the  right  to 
demand  from  the  vendee  the  difference  between  the  price  so 
obtained  and  the  contract  price,  as  well  as  payment  of 
damages. 

Obligation  to  pay  the  price.    When  it  begins. 

When  the  merchandise  is  placed  at  the  disposal  of  the 
buyer  and  he  is  satisfied  with  it,  or  when  it  has  been  deposited 
by  order  of  a  judge  after  the  buyer  refused  it  without  good 
reason,  the  obligation  to  pay  the  price  in  cash  or  at  the 
period  agreed  upon,  begins.  ^^^ 

1"  Spain,  332;  Brazil,  204,  205;  Chile,  153;  Colombia,  244;  Ecuador,  197; 
Guatemala,  220;  Honduras,  104;  Mexico,  376;  Nicaragua,  202;  Panama,  754, 
768;  Peru,  327;  Uruguay,  535,  536. 

Articles  332  and  339  of  the  code  of  commerce  which  refer  to  purchase  and 
sale  of  merchandise  or  goods  cannot  be  applied  to  the  sale  of  a  commercial 
house  in  bulk.    Cuba,  Trib.  Sup.,  Aug.  18,  1905;  GoAxta,  March  16,  1906. 

"8  Art.  147. 

lis  Spain,  339;  Argentina,  465;  ChUe,  155;  Colombia,  247;  Costa  Rica,  321; 
Guatemala,  222;  Honduras,  111;  Mexico,  378;  Panama,  764,  773;  Peru,  334; 
Uruguay,  531. 

The  vendor  who  has  not  been  paid  the  price  of  the  thing  sold,  can  obtain 
restitution  of  the  thing  or  payment  of  its  current  price  on  the  day  when  judg- 
ment was  rendered.  Argentina,  Cam.  Fed.  de  Apel.,  La  Plata,  July  1,  1914, 
Jurisp.  de  los  Trib.  Nacs.,  July,  1914,  p.  161. 

Payment  of  taxes  on  the  transfer  of  property  must  be  made  by  the  buyer, 


PURCHASE    AND    SALE  389 

Default  in  the  payment  of  the  price. 

Default  in  the  payment  of  the  price  of  the  thing  sold, 
renders  the  buyer  liable  for  payment  of  legal  interest  on  the 
amount  due  to  the  vendor,  as  follows:  ^-° 

System  of  Spain.  If  there  is  a  period  for  payment 
stipulated,  of  course,  as  in  all  other  contracts,  that 
stipulation  is  binding;  but  when  there  is  no  stipulation, 
default  begins  when  the  vendee  fails  to  pay  on  receipt 
of  the  goods,  and  from  that  moment  interest  begins  to 
nm.^-^ 

System  of  Argentina.  If  the  contracting  parties  did 
not  fix  any  period  for  the  payment  of  the  price  the 
vendee  must  be  allowed  a  period  of  ten  days  for  pay- 
ment; but  he  cannot  demand  delivery  of  the  goods 
without  paying  the  price  at  the  time  of  delivery. ^2- 

Eamest  money  (arras). 

When  in  commercial  purchase  and  sale  earnest  money  has 
been  given,  it  must  always  be  understood  as  given  on  ac- 
count of  the  price  and  as  evidence  of  ratification  of  the 
contract,  not  as  a  condition  precedent  to  the  performance  of 
the  contract  or  as  the  price  of  the  privilege  of  recantation  or 
withdrawal,  unless  otherwise  stipulated.  ^^^ 

unless  otherwise  agreed  upon,  because  such  taxes  are  comprised  among  the 
expenses  after  the  sale.    Cuba,  Trib.  Sup.,  Dec.  4,  1906;  Gaceta,  March  3,  1907. 
1^"  Spain,  341;  Costa  Rica,  322;  Ecuador,  201;  Honduras,  113;  Nicaragua, 
207;  Panama,  754;  Peru,  336;  Uruguay,  532. 

121  Spain,  339;  Argentina,  465;  Chile,  155;  Colombia,  247;  Costa  Rica,  321; 
Ecuador,  201;  Guatemala,  222;  Honduras,  111;  Mexico,  380;  Nicaragua,  207; 
Panama,  773;  Peru,  334;  Uruguay,  531. 

122  Argentina,  464;  Uruguay,  530. 

123  Spain,  343;  Argentina,  475;  Brazil,  218;  Costa  Rica,  326;  Honduras,  115; 
Mexico,  381;  Nicaragua,  211;  Panama,  755;  Peru,  338;  San  Salvador,  89; 
Uruguay,  558. 

If  the  seller  can  prove  that  he  could  convey  title  to  the  thing,  subject-matter 
of  a  contract  of  purchase  and  sale,  but  the  buj-  er,  without  good  rejison,  refused 
to  accept  it,  the  seller  can  ask  for  the  recission  of  the  contract  and  forfeiture 
of  the  earnest  money  given  by  the  buyer.  Buenos  Aires,  Cam.  2°  de  Apel. 
civil,  July  4,  1914,  Jurisp.  de  los  Tribn.  Macs.,  July,  1914,  p.  169. 

When  the  vendor  has  not  fulfilled  his  obligations  in  a  contract  of  purch:i.so 
and  sale,  he  is  bound  not  only  to  return  the  earnest  money  he  received  but  iu 


390  LATIN-AMERICAN    COMMERCIAL    LAW 

Priority  of  the  vendor's  credit. 

It  has  been  observed  that  once  the  parties  have  agreed 
upon  the  thing  and  its  price,  the  thing  belongs  to  the  vendee 
and  the  vendor  has  a  personal  action  against  him  for  pay- 
ment of  the  price.  Nevertheless,  so  long  as  the  goods  remain 
in  the  possession  of  the  vendor  (even  though  he  be  only  a 
depositary),  he  has  a  preferential  lien  upon  them  over  any 
other  creditor  of  the  vendee,  for  the  purchase  price  and 
interest  occasioned  by  the  default.  ^^'^ 

Contract  of  exchange  or  barter. 

The  rules  mentioned  in  deahng  with  the  contract  of 
purchase  and  sale  are  applicable  to  the  contract  of  barter  in 
so  far  as  the  circumstances  may  warrant. ^^^ 

Assignment  of  non-endorsable  credits. 

Mercantile  credits  neither  endorsable  nor  payable  to 
bearer  can  be  transferred  by  the  creditor  without  the  consent 
of  the  debtor,  merely  by  serving  notice  on  the  latter  in  the 
manner  provided  by  law.  From  the  moment  that  notice 
is  given  to  the  debtor,  he  is  bound  to  pay  to  the  assignee, 

addition  an  equal  amount  and  also  all  the  expenses  caused  by  the  non-fulfill- 
ment of  the  contract.  Argentina,  Cam.  2^  de  Apel.  Civ.  Buenos  Aires,  July  7, 
1914,  J.  del  Prado  v.  Calegari,  Jurisp.  de  Los  Trib.  Nacs.,  July,  1914,  p.  175; 
and  Cam.  1^  de  Apel.  Civ.,  March  21,  1914,  J.  Santamaria  v.  A.  Aguinariz,  lb., 
March,  1914,  p.  90. 

124  Spain,  340;  Argentina,  466;  Chile,  151;  Colombia,  241;  Costa  Rica,  323; 
Ecuador,  195;  Guatemala,  218;  Honduras,  112;  Mexico,  386;  Nicaragua,  208; 
Peru,  335;  San  Salvador,  87;  Uruguaj^,  533;  Venezuela,  153. 

When  a  thing  is  sold  on  credit,  and  it  was  delivered  to  the  buyer,  the  seller 
who  afterwaTds  receives  it  for  the  purpose  of  making  repairs  on  it  can  retain  it 
for  payment  of  the  repairs,  but  not  for  the  balance  due  on  the  price  thereof. 
Argentina,  Cam.  2^  de  Apel.  Civ.,  Buenos  Aires,  July  4,  1914,  Jurisp.  de  los 
Tribs.  Nacs.,  July,  1914,  p.  169. 

The  seller  can  retain  the  merchandise  when  the  sale  was  for  cash  and  the 
buyer  did  not  pay  the  price,  or  when  the  sale  was  on  credit  and  there  is  immi- 
nent risk  that  the  seller  will  not  be  paid.  M  exico,  Juzgado  3°  de  lo  Civil  del 
Dist.  Fed.,  Feb.  20,  1911,  Ortiz  Saenz  y  Cia.  v.  Sebastian  B.  De  Mier,  Diario 
de  JuHsp.,  vol.  XXIII,  p.  601. 

125  Spain,  346;  Brazil,  225;  Chile,  161;  Colombia,  253;  Costa  Rica,  333; 
Ecuador,  202;  Honduras,  122;  Mexico,  388;  Nicaragua,  216;  Panama,  783; 
Peru,  341;  San  Salvador,  90;  Uruguay,  577;  Venezuela,  156. 


PURCHASE    AND    SALE  391 

and  no  payment  made  to  any  other  person  is  considered 
valid.126 

The  assignor  is  responsible  for  the  lawful  existence  of  the 
credit  and  for  his  own  rights  in  it,  but  not  for  the  solvency 
of  the  debtor.  ^-^ 

SALE    OF   A    COMMERCIAL   HOUSE 

The  code  of  Panama  and  the  law  of  July  23,  1901,  of  Costa 
Rica  have  paid  special  attention  to  this  important  and  fre- 
quent transaction  among  merchants  and  have  provided 
special  rules  to  safeguard  the  interests  of  the  seller's  creditors, 
so  frequently  jeopardized  by  contracts  of  this  kind.  The 
provisions  of  both  the  code  of  Panama  and  the  law  of  Costa 
Rica  are  the  same,  namely: 

The  sale  or  transfer  for  any  reason  whatsoever  of  a  com- 
mercial house  is  of  no  effect  against  third  parties  if  it  has 
not  been  made  public  by  means  of  a  notice  inserted  three 
times  in  the  official  paper  and  in  another  paper  of  the 
locality,  if  there  is  any,  and  if  not,  in  a  paper  of  the 
nearest  place.  ^-^ 

The  provision  is  applicable  whether  the  commercial  house 
or  the  greater  part  thereof  is  sold  as  a  whole  or  in  two  or 
more  parts  whenever  the  parts  are  larger  than  those  required 
by  normal  transactions.  ^^^ 

The  purchaser  of  the  house  cannot  legally,  i.  e.,  without 
risk  of  creditor's  claims,  i:)ay  the  price  until  fifteen  days  after 
the  publication  of  the  first  notice  above  referred  to.  In  this 
period  the  da}^  of  publication  and  that  of  payment  are  not 
computed.  ^^° 

The  creditors  of  the  conraiercial  house  can  enforce  their 
claims  against  the  price  within  the  said  period  of  fifteen 

i2«  Spain,  347;  Chile,  162,  163;  Colombia,  254;  Costa  Rica,  329;  Ecuador, 
203;  Honduras,  123;  Mexico,  389;  Nicaragua,  213;  Panama,  786,  789;  Peru, 
342;  Uruguay,  563;  Venezuela,  155. 

1"  Spain,  348;  Costa  Rica,  331;  Honduras,  125;  Mexico,  391 ;  Nicaragua,  214; 
Panama,  785;  Peru,  343;  Uruguay,  567. 

128  Costa  Rica,  1;  Panama,  777.  '^o  Costa  Rica,  2;  Panama,  778. 

"°  Costa  Rica,  3;  Panama,  779. 


392  LATIN-AMERICAN    COMMERCIAL    LAW 

days,  notwithstanding  the  fact  that  their  claims  are  not  yet 
due. 

They  can  also  during  the  said  period  oppose  the  sale,  if 
they  prove,  by  means  of  an  appraisal  made  groso  modo,  that 
the  price  agreed  upon  is  ten  per  cent  less  than  the  normal 
obtainable  market  price;  or  if  they  bind  themselves  to  take 
over  the  business  at  the  terms  agreed  upon. 

The  appraisal  referred  to  must  be  made  by  experts.  For 
that  purpose  the  interested  person  must  apply  to  a  judge 
of  competent  jurisdiction,  setting  forth  his  demand  and 
naming  his  expert.  ^^^  The  law  of  Costa  Rica  adds  further 
that  the  judge  must  also  choose  an  expert  and  request  the 
vendor  to  choose  another  within  twenty-four  hours;  should 
he  fail  to  do  so,  the  judge  must  ex  officio  designate  an  umpire. 

The  privileges  thus  granted  the  creditors  may  be  exercised 
by  any  of  them;  it  is  understood  that  the  acting  creditor 
proceeds  in  the  common  interest,  and  that  the  advantages 
obtained  accrue  to  the  benefit  of  all. 

The  creditor  who  acts  has  a  right  of  priority  against  the 
sums  received,  as  reimbursement  for  all  expenses  incurred; 
but  the  allotment  of  the  balance  must  be  made  according 
to  the  priority  established  by  the  law.^^^ 

The  debtor-vendor  as  well  as  the  vendee  of  the  commer- 
cial house  can  in  his  turn  stop  the  action  of  the  creditors 
by  paying  in  full  those  whose  credits  are  due  and  by  paying 
with  a  discount  of  one-half  per  cent  per  month  or  guaran- 
teeing by  mortgage,  pledge  or  bond,  the  credits  not  yet 
due.^^^ 

1"  Costa  Rica,  4;  Panama,  780.  ^^^  Costa  Rica,  5;  Panama,  781. 

"^  Costa  Rica,  6;  Panama,  782. 


CHAPTER  XXIII 

CONTRACT  OF  TRANSPORTATION  OVERLAND 

Akgbntina. — Araoz,  Luis  F.:  Leyes,  decretos,  contratos,  etc.,  sobre  ferro- 
carriles  nacionales  desde  1854  a  1885.    Buenos  -Aires,  1891-1892,  2  v. 

Corvaldn,  Ernesto:  Jurisdiccion  administrativa  en  los  ferrocarriles  de  la 
republica,  2d  ed.    Buenos  Aires,  1911. 

Legislaci6n  postal  y  telegrdfica.  Convenciones — reglamentos — -adminis- 
traci6n.     1858-1900.     Publicaci6n  oficial.     Buenos  Aires,  1901. 

Leyes,  contratos  y  resoluciones  referentes  a  los  ferrocarriles  y  tranvias  a 
traccion  mecanica.    2d  ed.     Buenos  Aires,  1904. 

Ley  No.  5315  sobre  concesiones  de  ferrocarriles  y  su  decreto  reglamentario. 
Decreto  creando  la  comisi6n  administradora  del  fondo  de  caminos  y  su  decreto 
reglamentario.  Publicaci6n  oficial.  Buenos  Aires,  1908.  Also  1910  ed.  in- 
cluding the  laws  5703  and  6369. 

Parcel  post  convention  between  the  United  States  and  the  Argentine  Repub- 
lic.   Washington,  D.  C,  1915. 

Bolivia. — Martinez  Vaca,  Ricardo:  Legislacion  ferroviaria  (de  Bolivia)  La 
Paz  (1913?). 

Cuba. — Legislacion  de  ferrocarriles  y  tranvias  (Republic  of  Cuba)  Havana 
Rambla  Bouza  ed.,  1914. 

Mexico. — Castro,  Juan  S.:  Responsabilidad  civil  de  las  Empresas  Ferro- 
carrileras.     Mexico,  Rev.  de  Leg.  y  Jurisp.  1895,  1st  sems.,  p.  218. 

O'Reilly,  Francisco:  iDebe  el  porteador  dar  aviso  de  llegada  al  consignatario 
para  que  se  presente  a  recibir  la  carga?  Efectos  del  aviso  y  de  su  falta  con  rela- 
ci6n  a  la  responsabilidad  del  porteador.    El  Derecho.    Mexico,  1897,  p.  285. 

Simonds,  Louis:  Railroad  Law.    Mexico,  1904. 

Torres  Adalid,  Ignacio:  Observaciones  a  la  ley  de  29  de  abril  de  1899  y 
sobre  el  servicio  ferrocarrilero  de  Mexico.    Mexico,  1902. 

Spain. — Bravo  Molt6,  Emilio:  Legislaci6n  de  comunicaciones.  Madrid, 
1891.    2v. 

Foye,  R. :  Los  caminos  de  Hierro  de  Espana.  Recopilaci6n  ordenada  de  las 
disposiciones  legales  vigentes  .  .  .  construccion  y  explotaci6n,  legislaci6n  y 
juiisprudencia.    1894-1904.    5  v.  (app.  to  1911). 

Same:  Manual  del  contrato  de  transporte.    Barcelona,  1886. 

Garc6s,  Benito  Vicente:  Diccionario  razonado,  legislativo  y  prdctico  de  los 
ferrocarriles  espanoles  bajo  el  aspecto  legal  tecnico,  administrativo  y  comercial 
de  los  mismos,  con  la  colaboraci6n  de  Jos6  Gonzdlcz  Alvarez,  2d  ed.  Madrid, 
1875-1882.    4v. 

Gonzdlez  de  las  Cucvas,  Jose,  and  Sastre  y  Rodriguez,  F.:  Diccionario 
general  de  ferrocarriles.  Publicado  bajo  la  direcci6n  de  Fermlndez  del  Rinc6n. 
Madrid,  1887. 

Guti6rrez,  Francisco  de  AsJs:  Legislaci6n  de  correos.    Madrid,  1893. 

Martin— Gamero,  Andrds:  Constituci6n  y  organizaci6n  de  las  compafilas  de 

393 


394  LATIN-AMERICAN   COMMERCIAL   LAW 

ferrocarriles  y  cardcter  juridico,  condiciones  y  relaciones  de  sus  empleados. 
Madrid,  1891. 

Mout6n  y  Ocampo,  Luis:  Doctrina,  legislacion  y  jurisprudencia  sobre  fer- 
rocarriles y  tranvlas  .  .  .  comentadas,  concordadas  y  anotadas.  Madrid, 
1908. 

Torino,  Jose:  Legislaci6n  de  ferrocarriles  y  tranvias.  Concesi6n  y  construc- 
ci6n.    Madrid,  1902. 

Verdegay  y  Fisconich,  Eduardo:  Historia  del  correo  .  .  .  con  un  apendice 
que  comprende  la  legislaci6n  interior  de  los  palses  que  forman  la  uni6n  postal 
universal.    Madrid,  1894. 

Character  of  the  contract. 

By  the  contract  of  transportation  a  person  or  enterprise 
binds  himself  or  itself  to  convey  from  one  place  to  another, 
things,  persons  or  news  for  a  certain  price. 

The  transportation  of  news  by  mail  or  telegraph  is  usually 
a  monopoly  of  the  state,  and  subject,  like  the  telephonic 
services,  to  special  rules  which  are  not  discussed  in  this 
chapter. 

The  transportation  of  persons  and  things  is  divided  by 
the  codes  into  two  parts:  one  comprising  carriage  from  one 
place  to  another  over  land,  rivers,  lakes  or  canals;  the  other 
including  transportation  over-seas.  The  latter  is  here  left 
out  of  consideration. 

From  an  economic  point  of  view  transportation  is  one  of 
the  most  important  instruments  for  the  creation  of  wealth. 
This  is  almost  a  truism.  The  whole  machinery  of  civilized 
life  is  based  on  the  cooperation  of  all  the  peoples  of  the 
world,  made  possible  through  the  modern  means  of  trans- 
portation. 

From  a  legal  vie^vpoint  transportation  is  considered  far 
more  important  in  commercial  than  in  civil  matters.  The 
civil  codes  deal  with  it  as  one  of  the  forms  of  the  more  com- 
prehensive contract  of  hiring  of  services,  while  in  the  com- 
mercial codes  it  is  the  subject-matter  of  most  elaborate 
provisions. 

Transportation  as  a  commercial  act. 

In  distinguishing  commercial  from  civil  transportation 
we  find  the  same  variety  of  systems  already  observed  in  the 


CONTRACT  OF  TRANSPORTATION  OVERLAND      395 

classification  of  other  contracts.    These  may  be  summarized 
as   follows: 

1.  The  contract  of  transportation  overland  or  on 
inland  waterways  is  commercial:  (a)  when  merchandise 
is  the  object  thereof;  or  (b)  when,  whatever  the  object, 
the  carrier  is  a  merchant  or  habitually  engages  in  trans- 
portation for  the  public.^ 

2.  It  is  commercial  when  carried  on  by  overland 
or  river  transportation  enterprises.^ 

3.  It  is  commercial  when  the  subject-matter  of  the 
contract  is  merchandise  or  persons  who  engage  in  com- 
merce or  travel  on  commercial  pursuits.^ 

Form  of  the  contract. 

The  usual  form  in  which  the  contract  between  the  con- 
signor and  the  carrier  is  embodied  is  the  bill  of  lading 
(guia  or  carta  de  porte).  It  must  contain  the  following 
items :  ^ 

(a)  the  name,  surname  and  address  of  the  consignor 
{cargador)  .'^^ 

No  statement  of  the  address  of  the  consignor  is  re- 
quired in  Brazil; 

1  Spain,  349;  Honduras,  126;  Mexico,  576;  Panama,  2;  Peru,  344. 

2  Argentina,  8;  Chile,  3;  Colombia,  20;  Guatemala,  3;  San  Salvador,  3; 
Uruguay,  7;  Venezuela,  2. 

Contracts  are  only  commercial  when  the  parties  thereto  are  merchants;  and 
in  the  contract  of  transportation,  purchase  and  sale  and  certain  others  it  is 
also  necessary  that  the  subject-matter  of  the  contract  be  merchandise.  Colom- 
bia, Corte  Suprema  de  Justicia,  Sept.  30,  1889;  Gacela  Judicial,  v.  IV,  p.  146. 

'  Ecuador,  3.  A  person  who  hires  from  an  owner  a  beast  of  burden  and  the 
services  of  one  of  the  owner's  employees  for  transportation  of  merchandise 
does  not  make  any  contract  of  transportation,  and  is  not  responsible  for 
wrongs  done  by  the  employee.  Ecuador,  Corte  Suprema  de  Just.,  May  30, 
1885.    G.  Gomez  v.  A.  Flores;  Gacela  Judicial,  No.  113,  August  13,  1904. 

*  The  articles  of  the  codes  which  refer  to  the  requisites  of  bills  of  lading  are: 

Spain,  350;  Argentina,  165,  166;  Bolivia,  175;  Brazil,  100;  Chile,  175,  176; 
Colombia,  274,  275;  Costa  Rica,  7  and  8  of  law  of  Nov.  26  and  29,  1909, 
governing  transportation;  Ecviador,  211;  Guatemala,  139;  Haiti,  101;  Hon- 
duras, 127;  Mexico,  581,  582;  Nicaragua,  109;  Panama,  668,  670;  Peru,  345; 
San  Salvador,  92;  Santo  Domingo,  102;  Uruguay,  165;  Venezuela,  159. 

^  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Ecuador,  Guatemala,  Hon- 
duras, Mexico,  Nicaragua,  Panama,  Peru,  San  Salvador,  Venezuela. 


396  LATIN-AMERICAN    COMMERCIAL    LAW 

(6)  the  name,   surname  and  address  of  the  carrier 
(porteador)  .'^ 
In  Brazil  the  address  of  the  carrier  need  not  be  stated ; 

(c)  the  name,  surname  and  address  of  the  consignee 
{consignatario  or  destinatario)  or  the  person  to  whose 
order  the  cargo  is  to  be  dehvered,  unless  the  bill  of 
lading  runs  to  bearer.^ 

In  Bolivia,  Brazil,  Guatemala,  Haiti,  Santo  Domingo, 
Nicaragua  and  Uruguay  there  is  no  provision  for  bills 
of  lading  to  bearer.  Haiti,  Santo  Domingo  and  Uru- 
guay require  the  name  of  the  consignee  only,  not  his 
address; 

(d)  a  description  of  the  goods,  including  their  gen- 
eric character,  their  weight  and  the  external  marks  or 
signs  of  the  containers.^ 

(e)  the  transportation  fares  or  freight  charges;  ^ 
(J)  the  date  when  shipment  is  to  be  made;  ^ 
(g)  the  place  of  delivery  to  the  carrier;  ^° 

(h)  the  place  and  time  of  delivery  to  the  consignee;  ^^ 
(i)  the  damages  the  carrier  must  pay  in  case  of  delay, 
if  there  is  any  agreement  on  this  point;  ^- 

(j)  the  signatures  of  the  consignor  and  of  the  carrier.  ^^ 

s  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Costa  Rica,  Ecuador,  Guate- 
mala, Haiti,  Honduras,  Mexico,  Nicaragua,  Panama,  Peru,  San  Salvador, 
Santo  Domingo,  Venezuela. 

^  Spain,  Argentina,  Chile,  Colombia,  Ecuador,  Honduras,  Mexico,  Panama, 
Peru,  San  Salvador,  Venezuela. 

^  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador, 
Guatemala,  Haiti,  Honduras,  Mexico,  Nicaragua,  Panama,  Peru,  San  Salva^ 
dor,  Santo  Domingo,  Uruguay,  Venezuela. 

*  Spain.  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador, 
Guatemala,  Haiti,  Honduras,  Mexico,  Nicaragua,  Panama,  Peru,  San  Salva- 
dor, Santo  Domingo,  Uruguay,  Venezuela. 

^  Spain,  Colombia,  Honduras,  Mexico,  Nicaragua,  Panama,  Peru,  San 
Salvador. 

1"  Spain,  Honduras,  Mexico,  Peru. 

11  Spain,  Argentina,  Boli\da,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador, 
Guatemala,  Honduras,  Mexico,  Nicaragua,  Panama,  Peru,  San  Salvador, 
Uruguay,  Venezuela. 

12  Spain,  Bolivia,  Colombia,  Ecuador,  Haiti,  Honduras,  Mexico,  Nicaragua, 
Peru,  San  Salvador,  Santo  Domingo,  Venezuela. 

13  Haiti,  Santo  Domingo. 


CONTRACT    OF    TRANSPORTATION    OVERLAND  397 

Even  though  the  codes  of  the  other  countries  omit 

this  requisite,  this  silence  is  probably  due  to  the  fact 

that  the  signature  of  the  parties  in  any  contract  is 

considered  a  matter  of  course. 

In  transportation  by  railway  or  other  public  enterprise 

subject  to  regulated  schedule  and  tariff,  the  bill  of  lading 

may  refer  to  tariffs,  fees,  time  and  other  conditions  as  stated 

in  those  schedules  and  regulations,  without  further  detail.  ^^ 

Legal  effects  of  the  bill  of  lading. 

The  bill  of  lading  is  the  legal  instrument  embodying  the 
contract  between  the  consignor  and  the  carrier.  All  the 
disputes  which  may  arise  in  regard  to  the  fulfillment  of  their 
mutual  obligations  must  be  decided  under  that  instrument, 
without  extraneous  defenses  except  forgery  of  the  document 
itself  or  material  error  in  the  drafting  thereof.  ^^ 

"Spain,  351;  Honduras,  128;  Mexico,  587;  Peru,  346;  Panama,  720;  San 
Salvador,  93. 

Transportation  enterprises  enjoy  absolute  liberty  to  establish  and  reduce 
rates  and  cannot  be  compelled  to  apply  such  reduced  rates  to  transportation 
services  not  exactly  comprised  within  the  conditions  fixed.  Those  rates  cannot 
serve  as  a  basis  for  computing  the  charges  for  transportation  beyond  the  limit 
for  which  the  special  tariff  was  made,  or  to  reckon  the  fare  for  a  partial  trip. 
Spain,  Trib.  Sup.,  June  30,  1913;  Gaceta  of  Aug.  10,  1913,  p.  248. 

1=  Spain,  353;  Argentina,  167;  Bolivia,  177;  Brazil,  105;  Cliile,  173,  178,  185; 
Colombia,  272,  276,  277. 

The  contract  of  transportation  is  not  considered  performed  nor  the  carrier 
released  from  his  obligation  of  delivering  the  merchandise  transported,  by  the 
fact  that  the  bill  of  lading  was  surrendered  to  him  by  the  consignee  in  exchange 
for  an  order  on  the  warehouse  of  the  carrier  to  deliver  such  merchandise.  If 
in  the  meantime  a  fire  destroys  the  merchandise,  the  carrier  is  liable  unless  he 
proves  that  the  fire  was  not  due  to  his  own  negligence.  Spain,  Trib.  Sup., 
April  11,  1913;  Gacela  of  Jan.  1914,  p.  309. 

The  receipt  given  by  the  consignee  and  the  payment  of  the  transportation 
charges  extinguish  all  actions  against  the  carrier,  who  is  furthermore  released 
from  any  obligation  when  the  time  required  by  the  statute  of  limitations  in 
cases  of  transportation  has  elapsed.  Spain,  Trib.  Sup.,  Nov.  7,  1910;  Gaceta 
of  Jan.  25,  1911,  p.  78. 

When  the  bill  of  lading  stipulates  that  the  forwarding  company  obligates 
itself  to  convey  the  goods  by  railway  on  condition  that  the  railway  accepts 
them,  the  forwarder  is  not  liable  for  delay  when  the  goods  are  transported  in  a 
boat  because  the  railway  refused  to  accept  them.  Argentina,  Cam.  de  Ap.  en 
lo  Com.  de  la  Capital,  Aug.  12,  1913,  p.  305. 

The  sale  of  damaged  goods  by  a  railway  contrary  to  the  provi.sions  of  the 


398  LATIN-AMERICAN    COMMERCIAL    LAW 

Where  there  is  no  bill  of  lading,  disputes  are  decided 
according  to  the  legal  evidence  each  contracting  party  may 
submit  in  support  of  his  respective  claim,  in  accordance 
with  the  general  provisions  of  the  law  relating  to  coromercial 
contracts.  ^^ 

After  the  contract  has  been  performed,  the  bill  of  lading 
must  be  returned  to  the  carrier.  By  virtue  of  the  exchange 
of  this  docimient  for  the  goods  carried,  the  reciprocal  obli- 
gations and  actions  are  cancelled,  unless  in  the  act  of  ex- 
change the  power  of  making  a  claim  is  reserved  in  WTiting 
by  either  of  the  parties,  or  unless  there  is  a  hidden  damage 
in  the  goods  not  detectable  without  opening  the  wrappers 
or  packages  in  which  they  are  contained.     If,  because  of 

law  governing  railways  does  not  imply  an  obligation  to  pay  the  consignee  the 
value  of  the  goods  according  to  the  market  price  of  similar  commodities  in 
good  condition,  but  only  to  pay  the  difference  between  the  price  obtained  in 
the  sale  and  that  which  the  damaged  goods  would  have  produced,  damaged  as 
they  were,  if  the  bill  of  lading  stated  that  the  carrier  could  not  be  held  responsi- 
ble except  for  damages  caused  by  his  own  negligence,  properly  proved  by  the 
shipper.  This  stipulation  in  the  bill  of  lading  establishes  the  presumption  that 
any  damage  sustained  by  the  transported  goods  is  due  to  their  own  vices. 
Argentina,  Cam.  de  Apel.  Com.  de  la  Cap.,  June  21,  1913,  Antoniazzo  y  Brezza 
V.  Empresa  del  F.  C.  Oeste  de  Buenos  Aires,  Jurisp.  de  Los  Tribs.  Nacs.,  June, 
1913,  p.  305. 

Documents  which  represent  valuable  goods  are  transferable  by  endorse- 
ment notwithstanding  that  they  are  made  in  favor  of  a  certain  person.  Bills 
of  ladii  g  are  included  in  this  provision. 

The  contract  of  transportation  is  governed  by  the  stipulations  contained  in 
the  bill  of  lading,  and  not  by  other  statements  made  by  the  parties.  The  bill 
of  lading  is  the  legal  way  to  prove  the  delivery  of  the  goods  to  the  carrier  and 
the  delay  in  the  transportation.  Spain,  Trib.  Sup.,  Nov.  9,  1907;  Gaceta  of 
Dec.  4,  1908,  p.  818. 

The  responsibility  of  the  carrier  ceases  when  he  has  surrendered  the  trans- 
ported goods  at  the  place  nearest  to  their  destination  and  they  are  there 
received  by  the  consignee,  if  so  stipulated  in  the  bill  of  lading.  Cuba,  Trib. 
Sup.,  May  4,  1903;  Gaceta  of  Dec.  21,  1903. 

The  bill  of  lading  is  the  only  evidence  of  a  contract  of  transportation; 
therefore,  if  not  produced  by  the  plaintiff,  the  questions  arising  from  such  a 
contract  cannot  be  decided.  Mexico,  Juzgado  Sexto  Menor  de  la  Capital, 
April  7,  1890,  N.  de  Lugo  Vina  v.  F.  C.  Central  Mexicano,  Aniunia  de  Leg.  y 
Jut.  Seccidn  de  Jurisp.,  v.  7,  p.  489. 

"Spain,  354;  Argentina,  167;  Bolivia,  177;  Chile,  177,  179,  181;  Colombia, 
266,  278;  Ecuador,  211,  215;  Guatemala,  141;  Honduras,  131;  Mexico,  584, 
585;  Nicaragua,  110;  Panama,  672;  Peru,  349;  San  Salvador,  96;  Uruguay,  166; 
Venezuela,  159,  160. 


CONTRACT  OF  TRANSPORTATION  OVERLAND      399 

loss  or  for  any  other  reason,  the  consignee  cannot,  upon 
receiving  the  merchandise,  return  the  bill  of  lading  to  the 
carrier,  he  must  give  him  a  receipt  for  the  goods  delivered, 
this  having  the  same  effect  as  the  return  of  the  bill  of  lad- 
ing. ^^ 

In  Brazil,  the  issuing  of  a  bill  of  lading  is  not  optional 
but  imperative,  and  there  is  no  provision  expressly  author- 
izing the  use  of  other  evidence  in  the  absence  of  a  bill  of 
lading;  on  the  contrary,  it  is  established  that  the  carrier 
can  be  held  responsible  only  for  the  merchandise  enumerated 
in  the  bill  of  lading,  evidence  that  the  consignor  shipped 
a  greater  quantity  of  goods,  or  goods  of  greater  value  than 
that  declared,  being  inadmissible.^^ 

Legal  nature  of  the  contract  of  transportation. 

The  contract  of  transportation  of  merchandise  shares 
at  the  same  time  the  character  of  a  contract  of  hiring  of 
services  and  of  deposit."  It  is  a  contract  which  produces  an 
obligation  of  doing,  notwithstanding  the  fact  that  the  carrier 
may,  under  his  personal  responsibility,  entrust  the  transpor- 
tation to  a  third  party.  In  this  case  the  legal  relations  of 
the  three  or  more  parties  involved  are  described  variously 
in  the  sundry  Latin- American  codes,  as  follows: 

(a)  A  carrier  who  combines  his  services  with  other 
carriers  assumes  the  obligations  of  the  preceding  con- 
necting carriers  with  respect  to  the  consignee;  the  right 
of  such  carrier  to  recover  from  the  others  and  damages 
he  may  have  paid  to  the  consignor  or  consignee  being 
reserved,  if  such  damages  were  not  due  to  his  fault. 
The  last  carrier  who  makes  the  discovery  also  assumes 
the  rights  of  action  and  other  rights  of  his  predecessors 
in  the  transportation.  The  shipper  and  the  consignee 
have  a  right  of  action  against  the  carrier  who  executed 
the  original  contract  of  transportation,  or  against  the 
other  carriers  who  receive  without  reserve  the  goods 

"Spain,  353;  Honduras,  130;  Mexico,  583;  Nicaragua,  111;  Panama,  G71; 
Peru,  348;  San  Salvador,  95. 

"  Art.  105.  '»  Chile,  107;  Colombia,  204. 


400  LATIN-AMERICAN    COMMERCIAL   LAW 

transported.  This  reservation,  however,  does  not 
exempt  the  carriers  from  liabilities  they  may  have  in- 
curred by  their  own  acts.-° 

(6)  A  carrier  can  entrust  to  another  carrier  the  trans- 
portation he  undertook  himself  to  perform;  in  that  case, 
the  original  carrier  assumes  the  character  of  a  carrier 
with  respect  to  the  consignor,  and  that  of  a  consignor 
with  respect  to  the  delegated  carrier.  ^^ 

Special  cases  in  which  the  contract  can  be  rescinded. 

The  contract  of  transportation  can  be  rescinded  at  the 
will  of  the  consignor  before  or  after  the  beginning  of  the 
carriage.  In  the  first  case  he  must  pay  the  carrier  half  the 
stipulated  fees;  in  the  second,  the  entire  freight. ^^  Uru- 
guay ^^  mentions  the  first  case  only. 

In  case  the  transportation  is  prevented  or  inordinately 
delayed  by  reason  of  some  unforeseen  event  or  force  majeure, 
rules  according  to  the  following  systems  have  been  adopted: 

1.  The  carrier  must  advise  the  consignor  of  the 
obstacle,  and  the  latter  may  rescind  the  contract, 
paying  the  carrier  the  expenses  incurred  and  returning 
the  bill  of  lading.  If  the  obstacle  occurs  while  the  car- 
riage is  taking  place  the  carrier  is  furthermore  entitled 
to  a  part  of  the  freight  proportionate  to  the  mileage 
already  covered.  ^^ 

2.  The  contract  can  be  rescinded  without  any  of  the 
parties  having  to  pay  indemnity,  where  the  carriage  is 
not  undertaken  because  of  loss  of  the  merchandise,  a 
declaration  of  war,  prohibition  of  trade,  seizure  of  the 
goods  by  enemy  forces  or  other  like  circumstances.-^ 
If,  after  the  carriage  began,  force  majeure  interposes,  the 

20  Spain,  373,  379;  Argentina,  171;  Bolivia,  191;  Guatemala,  166;  Venezuela, 
172. 

21  Chile,  168;  Colombia,  265;  Ecuador,  205;  Nicaragua,  128. 

22  Chile,  169;  Colombia,  267;  Costa  Rica,  5,  6;  Ecuador,  206;  Mexico,  578; 
Panama,  664;  Venezuela,  163. 

23  Art.  182.  24  Argentina,  192;  Venezuela,  167. 

25  Chile,  170;  Colombia,  268;  Costa  Rica,  13;  Ecuador,  207;  Mexico,  579; 
Panama,  666;  Venezuela,  164. 


CONTRACT    OF    TRANSPORTATION    OVERLAND  401 

carrier  can  rescind  the  contract  or  continue  the  voyage 
as  soon  as  the  obstacle  is  removed;  should  he  elect  the 
rescission  of  the  contract  he  can  deposit  the  cargo  at  the 
place  nearest  to  destination  or  send  it  back  to  the  point 
of  origin,  charging  freight  in  proportion  to  the  mileage 
covered  in  both  directions,  except  that  the  total  cannot 
exceed  the  agreed  freight,-^  In  the  latter  case,  in 
Mexico,^"  the  carrier  is  entitled  to  pro  rata  freight 
according  to  the  distance  covered;  but  he  is  bound  to 
surrender  the  merchandise  to  the  judicial  authority  of 
the  place  beyond  which  the  trip  could  not  be  con- 
tinued, proving  the  fact  that  the  goods  are  handed  over 
in  the  same  state  in  which  they  were  received  by  the 
carrier.  The  consignor  must  be  advised  of  these  pro- 
ceedings. 

Different  kinds  of  carriers. 

Carriers  are  private  and  public.  The  former  are  private 
individuals  who  do  not  offer  their  services  to  the  public,  but 
undertake  the  conveyance  of  persons  or  merchandise  for  a 
price  agreed  upon  in  each  case.  Public  carriers  undertake  a 
public  service,  in  the  period,  at  the  prices  and  under  the 
conditions  previously  announced,  ^^  In  Venezuela  ^^  a  dis- 
tinction is  made  between  transportation  enterprises  author- 
ized and  not  authorized  by  the  Government,  the  distinction 
having  practically  the  same  consequences  as  that  between 
public  and  private  carriers. 

Obligations  of  the  consignor. 

The  consignor  is  bound  to  deliver  the  goods  to  the  carrier 
in  good  condition  at  the  agreed  time  and  place,  as  well  as  to 

'''Chile,  195;  Colombia,  294;  Ecuador,  231;  Guatemala,  104;  Veuezuola, 
171. 

"  Art.  580. 

**  Spain,  351;  Argentina,  204;  Chile,  172;  Colombia,  271;  Costa  Rica,  4; 
Ecuador,  209;  Honduras,  128;  Mexico,  587;  Panama,  709;  Peru,  346;  Han 
Salvador,  93. 

29  Art.  191. 


402  LATIN-AMERICAN    COMMERCIAL    LAW 

supply  him  with  all  necessary  documents  for  their  ready 
transportation. 

If  the  delivery  is  not  made  at  the  time  and  place  stipulated 
the  carrier  can  demand  the  rescission  of  the  contract  and  the 
payment  of  half  the  agreed  freight ;  if  he  prefers  to  carry  out 
the  contract,  the  consignor  must  pay  him  any  additional 
expense  due  to  the  delay. 

Confiscations,  fines  and  any  other  damages  suffered  by 
the  carrier  due  to  lack  of  the  documents  above  referred  to 
are  at  the  exclusive  account  of  the  shipper.  ^° 

When  the  value  of  the  transported  merchandise  is  not 
sufficient  for  the  payment  of  freight  and  the  expenses  of  its 
preservation,  and  for  that  reason  the  consignee  refuses  to 
pay  the  carrier,  the  consignor  must  pay  him  such  freight 
and  expenses. ^^ 

Privileges  of  the  consignor. 

The  consignor  can,  without  changing  the  place  where 
delivery  is  to  be  made,  change  the  consignee  of  the  goods, 
and  the  carrier  must  comply  with  his  orders,  provided  that 
at  the  time  of  change  of  consignee  the  original  bill  of  lading, 
if  one  was  issued,  be  returned  to  the  carrier  in  exchange  for 
another  containing  the  new  consignee;  the  expense  of  the 
change  being  charged  to  the  consignor.  ^^ 

Risks  of  transportation. 

Merchandise  is  transported  at  the  risk  of  the  consignor, 
unless  the  contrary  is  expressly  stipulated.  The  carrier  is 
not  an  insurer.  Therefore  all  damages  and  impairment 
sustained  by  the  goods  in  transportation  by  reason  of  acci- 
dent, force  majeure,  or  by  inherent  defects  of  the  goods,  are 
for  the  account  and  risk  of  the  consignor.     The  burden  of 

30  Chile,  180  to  183;  Colombia,  279  to  282;  Costa  Rica,  11;  Mexico,  588; 
Panama,  673;  Venezuela,  161. 

31  Chile,  189;  Colombia,  299;  Costa  Rica,  10;  Ecuador,  225. 

32  Spain,  360;  Argentina,  191;  Bolivia,  183;  Brazil,  113;  Chile,  187,  188; 
Colombia,  286,  287;  Costa  Rica,  16;  Ecuador,  223,  224;  Guatemala,  158,  159; 
Honduras,  137;  Mexico,  589;  Nicaragua,  122;  Panama,  667;  Peru,  355;  San 
Salvador,  102;  Uruguay,  180;  Venezuela,  169. 


CONTRACT  OF  TRANSPORTATION  OVERLAND      403 

proving  these  accidents  is  on  the  carrier.  ^^  Articles  97  of  the 
code  of  Haiti,  and  98  of  that  of  Santo  Domingo  provide, 
however,  that  the  carrier  insures  the  goods  for  damage  and 
losses,  unless  otherwise  stipulated  in  the  bill  of  lading,  and 
not  comprising /orce  majeure. 

In  no  case  is  the  consignor  entitled  to  demand  indemnity 
for  losses  or  average  sustained  by  merchandise  not  included 
in  the  bill  of  lading,  nor  can  he  claim  that  the  goods  were  of  a 
quality  superior  to  that  indicated  in  said  document,  unless 
the  loss  or  damage  is  due  to  fraud  of  the  carrier.  ^^ 

''  Spain,  361;  Argentina,  172;  Bolivia,  184;  Brazil,  102;  Chile,  184;  Colombia, 
283;  Costa  Rica,  14;  Ecuador,  220;  Guatemala,  143;  Haiti,  99;  Honduras,  138; 
Mexico,  588,  590;  Nicaragua^  112;  Panama,  688;  Peru,  356;  San  Salvador,  103; 
Santo  Domingo,  100;  Uruguay,  168;  Venezuela,  176. 

An  unlawful  order  given  by  the  collector  of  customs  to  detain  goods  the 
transportation  of  which  was  contracted  to  be  performed  in  a  certain  period 
of  time,  is  an  act  oi  force  majeure  which  the  carrier  can  allege  in  a  suit  brought 
against  him  by  the  consignee.  Spain,  Trib.  Sup.,  June  2,  1899;  Gacela  of 
August  25,  1899,  p.  57. 

The  carrier  who  alleges  in  his  favor,  in  the  case  of  damage  or  loss  of  goods 
entrusted  to  him  for  transportation,  that  the  damage  or  loss  was  due  to  un- 
foreseen event,  is  obliged  to  prove  it.  Spain,  Trib.  Sup.,  Oct.  7,  1899;  Gaceta 
of  Nov.  2,  1899,  p.  195. 

Actions  arising  out  of  the  contract  of  transportation  are  barred  by  limitation 
after  one  year  from  the  day  in  which  they  originated;  the  fact  that  the  plaintiff 
had  within  such  period  appointed  an  attorney  to  press  his  claim  in  the  courts, 
does  not  interrupt  the  running  of  the  period.  Spain,  Trib.  Sup.,  Jan.  20,  1898; 
Gacetas  of  Feb.  8  and  10,  1898,  p.  99. 

See  note  No.  15,  Decision  of  June  21,  1913,  Argentina,  Cam.  de  Apel.  Com. 
de  la  Capital. 

Even  though  the  freight  note  provides  that  damages  will  be  presumed  to 
have  originated  in  vices  of  the  things  transported  the  carrier  is  responsible  if 
the  consignor  proves  that  damage  was  due  to  the  carrier's  negligence.  Argen- 
tina, P.  Gorostiaga  v.  F.  C.  del  O.  de  Buenos  Aires,  Cam.  de  Apel.  en  lo  Com. 
de  la  Cap.,  Oct.  14,  1913.  Jurisp.  de  los  Tribs.  Nacs.,  Oct.  1913,  p.  305,  and 
Oct.  18,  1913,  L.  M.  Fernandez  v.  Expreso  Villalonga,  lb.,  p.  309. 

Articles  361  and  366  of  the  code  of  commerce  arc  not  applical^le  to  damages 
caused  by  unforeseen  events  expressly  excluded  from  the  general  rule  contained 
in  those  provisions.    Cuba,  Trib.  Sup.,  July  24,  1901;  Gaceta  of  Nov.  23,  1901. 

=*  Spain,  362;  Argentina,  173;  Bolivia,  185;  Brazil,  105;  Chile,  185,  186; 
Colombia,  284,  385;  Ecuador,  221;  Guatemala,  149;  Honduras,  139;  Nicaragua, 
115;  Panama,  689;  Peru,  357;  San  Salvador,  104;  Uruguay,  171;  Venezuela, 
177. 

The  carrier  is  liable  for  damages  due  to  his  carelessness.  If  he  is  transporting 
fruit  which  rots  because  it  was  not  protected  against  rain  during  the  voyage;, 


404  LATIN-AMERICAN   COMMERCIAL   LAW 

Duties  of  the  carrier. 

The  duties  of  the  carrier  are  as  follows: 

(a)  To  receive  the  merchandise  at  the  time  and  place 
agreed  upon.^^ 

Carriers  may  refuse  to  accept  packages  which  appear 
unfit  for  transportation;  if  such  transportation  is  to  be 
made  over  a  railroad,  and  the  shipment  is  insisted  on, 
the  company  must  accept  it,  but  it  is  exempt  from  all 
liability  if  so  stated  in  the  bill  of  lading.  ^^ 

even  though  the  damage  was  caused  by  the  fermentation  of  the  sawdust  used 
in  packing  such  fruit  moistened  by  the  rain,  the  carrier  is  liable.  The  con- 
signee is  not  bound  to  accept  the  goods.  He  can  leave  them  for  the  account 
of  the  carrier.  The  consignee  can  recover,  even  though  more  than  one  year 
fixed  by  the  statute  of  limitations  has  elapsed,  if  officers  of  the  carrier  have  in 
the  meantime  accepted  the  claim  and  made  some  proposition  for  payment. 
Spain,  Trib.  Sup.,  March  18,  1912;  Gacetas  of  May  16,  17,  1913,  p.  167. 

A  transportation  company  cannot  take  advantage  of  the  maximum  period 
provided  for  beginning  the  trip,  when  it  knows  that  by  the  nature  of  the 
goods  they  could  be  damaged  by  the  delay.  Spain,  Trib.  Sup.,  Feb.  16,  1906; 
Gaceta  of  Nov.  15,  1906,  p.  216. 

A  railway  company  is  liable  for  damages  suffered  in  a  wreck  due  to  negligence 
in  supervising  and  repairing  its  rolling  stock.  Those  damages  can  be  proved 
and  appraised  during  the  procedure  in  execution  of  the  judgment.  The 
company  in  that  case  is  responsible  even  for  damages  caused  to  merchandise 
which  it  intended  to  refuse  on  account  of  the  poor  packing  of  the  same  and 
finally  accepted,  waiving  all  responsibility.  Spain,  Trib.  Sup.,  Dec.  22,  1902; 
Gacetas  of  Jan.  18,  19,  1903,  p.  74. 

36  Spain,  355;  Chile,  191;  Colombia,  290;  Ecuador,  227;  Mexico,  590;  Peru, 
350. 

^  Spain,  356;  Argentina,  178;  Costa  Rica,  28;  Honduras,  133;  Panama,  679; 
Peru,  351;  San  Salvador,  98. 

The  inspection  of  the  transported  goods  by  experts  appointed  by  the  parties 
and  an  mnpire  in  case  of  disagreement  between  the  experts  is  not  proper  when 
the  goods  were  received  without  protest  by  the  consignee,  and  when,  further- 
more, the  carrier  refused  to  transport  the  articles  on  account  of  the  bad  state 
of  the  containers  at  the  time  of  the  contract,  and  the  consignor  insisted  on  the 
transportation.  Spain,  Trib.  Sup.,  Jan.  10,  1906;  Gaceta  of  Oct.  21,  1906, 
p.  218. 

At  the  insistence  of  the  consignor  the  carrier  can  be  compelled  to  receive 
goods  not  properly  packed,  without  being  subject  to  any  liability  for  damages 
due  to  the  bad  condition  in  which  the  goods  were  delivered,  but  he  is  not  free 
from  UabOity  due  to  carelessness  in  the  maintenance  of  the  way  or  rolling 
stock.  Argentina,  Camera  de  Apel.  en  lo  Com.  de  la  Capital,  Jime  10,  1913, 
C.  V.  Moll  V.  Compania  General  de  F.  C.  en  la  Provincia  de  Buenos  Aires. 
Jurisp.  de  los  Tribs.  Nacs.,  June,  1913,  p.  280. 


CONTRACT  OF  TRANSPORTATION  OVERLAND      405 

It  is  presumed  that  the  goods  were  deUvered  in  good 
condition  to  the  carrier  when  no  bill  of  lading  was 
issued.  ^^ 

If  the  carrier  because  of  a  well-grounded  suspicion  of 
the  false  declaration  of  the  contents  of  a  package  should 
determine  to  examine  it,  he  may  do  so  before  witnesses, 
in  the  presence  of  the  consignor  or  of  the  consignee. 
Should  the  consignor  or  the  consignee  not  appear,  the 
examination  must  be  made  before  a  notary,  who  must 
draft  a  certificate  of  the  result  of  the  examination,  for 
any  further  use.  If  the  declaration  of  the  consignor 
prove  to  be  correct,  the  expenses  of  the  examination 
must  be  defrayed  by  the  carrier;  otherwise,  by  the 
consignor.  ^^ 

(6)  To  make  the  trip  and  to  finish  it  by  the  precise 
route  fixed  in  the  contract,  unless  compelled  to  deviate 
by  force  majeure;  if  he  does  so  without  compulsion  he 
is  liable  for  any  damages  which  may  be  sustained  by  the 
goods  transported,  whatever  the  cause,  and  he  must  pay 
the  stipulated  penalty  besides.  When  on  account  of 
force  majeure  the  carrier  is  obliged  to  take  another  route, 
causing  an  increase  in  transportation  charges,  he  must 
be  reimbursed  for  such  addition  after  presenting  formal 
evidence  thereof.  ^^ 

(c)  To  transport  the  goods  at  once,  if  no  term  has 
been  fixed  therefor;  if  engaged  in  periodical  trips,  he 
must  forward  the  goods  on  the  first  trip  following  the 
contract. ''^ 

In  Nicaragua  *^  when  no  period  is  stipulated  the 
carrier  must  start  the  trip  within  two  days  after  the 

"  Argentina,  169;  Chile,  181;  Coloml)ia,  280;  Venezuela,  162,  173. 

'^  Spain,  357;  Costa  Rica,  29;  Honduras,  134;  Panama,  685;  Peru,  352;  San 
Salvador,  99. 

'9  Spain,  359;  Argentina,  186;  Bolivia,  182;  Brazil,  110;  Chile,  194;  Colom- 
bia, 293;  Costa  Rica,  36;  Ecuador,  230;  Guatemala,  163;  Honduras,  136; 
Mexico,  591;  Panama,  686;  Peru,  354;  San  Salvador,  101;  Uruguaj-^,  177; 
Venezuela,  168. 

^  See  note  34,  Decision  of  February  16,  1906. 

"  Art.  123. 


406  LATIN-AMERICAN    COMMERCIAL   LAW 

contract  and  continue  it  without  unnecessary  inter- 
ruption by  the  straightest  and  safest  route,  if  the  con- 
tract has  not  fixed  one. 

(d)  To  preserve  the  goods  carefully  and  diligently, 
after  receipt  thereof.  He  is  liable  for  loss  or  damage 
sustained  by  the  merchandise,  or  for  delay  in  their 
transportation,  unless  he  proves  that  the  loss  or  damage 
is  due  to  unforeseen  event,  to  force  majeure,  to  vices  of 
the  goods,  to  their  nature  or  to  acts  of  the  consignor  or 
consignee.  Even  in  those  cases  the  carrier  is  liable: 
1st,  if  an  act  of  his  was  among  the  causes  of  the  unfore- 
seen event;  2d,  if  he  has  not  used  all  due  care  and  skill 
to  avert  or  attenuate  the  damage;  3d,  if  in  the  preser^^a- 
tion  or  transportation  of  the  goods  he  has  not  exercised 
the  care  and  diligence  usual  to  intelligent  and  cautious 
carriers.  The  liability  of  the  carrier  ceases  when  the 
shipper  makes  a  fraudulent  declaration  in  the  bill  of 
lading,  describing  the  goods  as  of  a  class  or  quality 
different  from  their  actual  state.  ^^ 

In  Argentina, ^^  when  the  goods  are  fragile  or  subject  to 
easy  injury,  or  are  animals,  or  when  the  transportation 

«  Spain,  355,  362;  Argentina,  170,  176;  Bolivia,  178,  184,;  Brazil,  99,  101, 
104,  105;  Chile,  184,  185,  199,  200,  207;  Colombia,  283,  2M,  298,  299,  306; 
Costa  Rica,  15-24;  Ecuador,  220,  221,  235;  Guatemala,  147,  148,  149,  152; 
Haiti,  97,  102;  Honduras,  132, 139;  Mexico,  590;  Nicaragua,  112,  115;  Panama, 
675,  589;  Peru,  350,  357;  San  Salvador,  97,  104;  Santo  Domingo,  98,  103; 
Uruguay,  167,  170;  Venezuela,  175,  176. 

See  note  34,  Decisions  of  March  18,  1912,  and  December  22,  1902. 

A  railway  ^v^eck  due  to  a  fault  of  the  companj-  or  its  conductors  makes  it 
responsible  not  only  for  animals  dead  but  also  for  those  missing,  because  the 
liability  of  the  carrier  ceases  only  when  the  transported  things  are  delivered  to 
the  consignee.  Argentina,  Cam.  Fed.  de  Apel.  Parana,  Oct.  22,  1912,  M. 
Acebal  v.  Compania  de  los  Ferrocarriles  de  Entre  Rios,  Jurisp.  de  los  Tribs. 
Macs.,  Oct.  1912,  p.  109. 

The  carrier  who  is  responsible  for  the  safe  transportation  and  delivery  of  the 
goods  carried,  is  also  responsible  for  the  proceeds  of  their  sale,  when  they  were 
sold  in  transitu  by  mutual  agreement.  Colombia,  Sup.  Corte  de  Just.  Casaci6n, 
Sept.  19,  1907;  Gaceta  Judicial,  v.  XVIII,  p.  198. 

A  carrier  is  responsible  for  carelessness,  negligence  or  malice  of  his  em- 
ployees, when  he  did  not  exercise  proper  care  in  their  selection.  Colombia, 
Corte  Sup.  de  Just.,  Oct.  20,  1898;  Gaceta  Judicial,  v.  XIV,  p.  56. 

«  Art.  177. 


CONTRACT  OF  TRANSPORTATION  OVERLAND      407 

requires  special  conditions,  the  railroad  company  can 
stipulate  that  any  losses  or  injuries  to  the  goods  will  be 
presumed  to  have  arisen  from  their  own  defects  or  nature 
or  from  acts  of  the  consignor  or  consignee,  unless  the 
liability  of  the  carrier  is  proved. 

Spain,^-*  Honduras,'*^  Panama,**^  Peru  "^^  and  San 
Salvador  '^  establish  a  rule  which  seems  to  be  in  accord 
with  the  interest  of  the  consignor  and  the  consignee, 
and  at  the  same  time  is  a  natural  consequence  of  the 
obhgation  of  the  carrier  diligently  to  safeguard  that 
interest.  If,  notwithstanding  all  the  precautions  taken 
by  the  carrier,  the  goods  transported  run  the  risk  of 
being  lost,  by  reason  of  their  nature  or  by  unavoidable 
accident,  without  the  owner's  being  able  to  dispose 
thereof,  the  carrier  must  proceed  to  sell  them,  placing 
them  for  this  purpose  at  the  disposal  of  the  court  or  of 
the  officials  designated  by  special  provisions  of  the  law, 

{e)  To  deliver  the  goods  to  the  owner  of  the  bill  of 
lading  in  the  same  condition  as  when  received,  with- 
out detriment  or  impairment.  Should  he  not  do  so, 
he  is  obhged  to  pay  the  value  of  the  goods  not  de- 
livered at  the  place  where  and  at  the  time  when 
they  should  have   been  delivered   to   the   consignee.  ^^ 

«  Art.  362. 

See  note  34,  Decisions  of  March  18,  1912,  and  December  22,  1902. 

«  Art.  139.  «  Art.  689.  *'  Art.  357. 

«  Art.  104. 

«  Spain,  363;  Argentina,  175;  Brazil,  99;  Chile,  200;  Colombia,  298;  Costa 
Rica,  23;  Ecuador,  235;  Guatemala,  144;  Honduras,  140;  Haiti,  104;  Mexico, 
590;  Nicaragua,  124;  Panama,  690;  Peru,  358;  San  Salvador,  105;  Santo 
Domingo,  105;  Uruguay,  163,  169;  Venezuela,  166. 

When  the  transported  merchandise  arrives  in  proper  time  at  its  destination 
but  is  not  delivered  to  the  consignee,  due  to  a  mistake  in  the  numbering  of  the 
packages  imputable  to  the  carrier,  the  consignee  can  leave  the  merchandise 
for  the  account  of  the  carrier.  Spain,  Trib.  Sup.,  April  29,  1910;  Gaccia  of 
Sept.  14,  1910,  p.  225. 

In  cases  of  connecting  carriers  transporting  goods,  the  last  one,  who  must 
make  delivery  to  the  consignee,  must  comply  with  the  obligations  prescribed 
in  article  363  of  the  code  of  commerce,  and  the  judge  of  the  place  whc^re  the 
last  carrier  must  surrender  the  goods  has  proper  jurisdiction  of  differences 
arising  from  the  delivery.  Spain,  Trib.  Sup.,  May  26,  1905;  Gccela  of 
Aug.  10,  1905,  p.  44. 


408  LATIN-AMERICAN    COMMERCIAL    LAW 

In  Bolivia  '''°  and  Nicaragua  ^^  the  appraisal  must  be 
made  according  to  the  terms  embodied  in  the  bill  of 
lading.  In  Brazil  ^^  the  appraisal  must  be  made  by 
experts,  taking  into  consideration  the  statements  of  the 
bill  of  lading. 

In  Costa  Rica/^  when  no  previous  valuation  was  fixed, 
the  carrier  must  pay  the  commercial  value  of  the  loss  at 
the  date  the  failure  of  dehvery  occurred,  in  accordance 
with  the  market  price  at  that  time. 

If  the  effect  of  damage  is  depreciation  of  the  value 
of  the  goods,  the  obligation  of  the  carrier  is  reduced  to 
the  payment  of  the  difference  of  price,  fixed  by  experts.'"* 

If  the  damage  renders  the  goods  useless  for  their 
accustomed  use,  the  consignee  can  turn  them  over  to 
the  carrier  and  demand  from  him  the  value  thereof, 
according  to  the  preceding  rules.  ^^ 

The  carrier  has  no  right  to  investigate  the  title  of  the 
possessor  of  the  bill  of  lading  to  receive  the  consigned 
goods.  ^^ 

See  note  33,  Decision  of  October  19,  1913. 

The  delivery'  of  the  cargo  by  the  carrier  to  a  person  who  is  not  the  consignee, 
makes  the  former  liable  to  pay  the  latter  the  value  of  the  goods,  as  well  as 
damages.  Argentina,  Cam.  Fed.  de  Apel.  del  Parana,  Oct.  22,  1912,  A  Junes  v. 
Desimoni  y  Nicolini,  Jiirisp.  de  los  Tribs.  Nacs.,  Oct.  1912,  p.  106. 

See  note  42,  Decision  of  Sept.  10,  1907. 

«» Art.  179.  ^1  Art.  113.  «2  Art.  103. 

Railway  companies  are  responsible  for  damages  suffered  by  the  transported 
merchandise  due  to  their  fault.  BrazU,  Accordao  da  Rel.  de  Estado  de  Rio, 
Nov.  17,  1903,  0  Direito,  v.  102,  p.  569. 

"  Art.  27. 

"  Spain,  364;  Argentina,  180;  Bolivia,  187;  Brazil,  106;  Chile,  210;  Colombia, 
309;  Costa  Rica,  38;  Ecuador,  244;  Guatemala,  151;  Honduras,  141;  Mexico, 
590;  Nicaragua,  117;  Panama,  691;  Peru,  359;  San  Salvador,  106;  Uruguay, 
172;  Venezuela,  181. 

See  note  34,  Decision  of  March  18,  1912. 

55  Spain,  365;  Argentina,  181;  Bolivia,  186;  Chile,  210;  Colombia,  309; 
Costa  Rica,  27;  Ecuador,  244;  Guatemala,  150;  Haiti,  142;  Mexico,  590; 
Nicaragua,  116;  Panama,  690;  Peru,  360;  San  Salvador,  107;  Uruguay,  173; 
Venezuela,  181. 

58  Spain,  368;  Argentina,  195;  Bolivia,  178;  Chile,  201;  Colombia,  300; 
Ecuador,  236;  Guatemala,  156;  Honduras,  145;  Nicaragua,  121;  Panama,  695; 
Peru,  363;  San  Salvador,  110;  Uruguay,  184. 

The  carrier  must  deliver  the  transported  merchandise  to  the  consignee.    If 


CONTRACT  OF  TRANSPORTATION  OVERLAND     409 

(f)  To  pay  the  penalty  stipulated,  if  there  was  an 
agreement  on  that  point,  or  otherwise,  the  damages 
suffered  by  the  consignor  in  case  of  delay.  The  amount 
of  the  penalty  or  damages  can  be  deducted  from  the 
freight.  ^^ 

In  Argentina  the  carrier  loses  a  part  of  the  freight 
proportioned  to  the  delay,  and  the  whole  freight  if  the 
delay  is  double  the  time  stipulated;  and  he  must  fur- 
thermore make  good  any  excess  of  damage. 

In  Bolivia  ^^  and  Nicaragua,  ^^  when  the  carrier  fails 
to  deliver  the  goods  in  the  period  stipulated,  only  the 
indemnity  agreed  upon  can  be  demanded,  but  if  the 
delay  is  double  the  period  of  the  contract  he  must  pay 
in  addition  the  damages  suffered  by  the  consignor. 

Chile,^°  Colombia  ^^  and  Ecuador  ^-  provide  that 
in  case  of  delay  the  consignee  can  enforce  the  penalty 
stipulated  by  deducting  its  amount  from  the  freight, 
without  proving  any  damages;  the  payment  of  the 
penalty,  however,  does  not  except  the  carrier  from 
the  obUgation  of  paying  damages  arising  from  the 
delay. 

The  penalty  clause  stipulated  for  delay  in  delivering 
the  goods  produces  different  effects  in  different  coun- 
tries: 

1.  In  Spain,  Honduras,  Mexico,  Panama,  Peru  and 
San  Salvador,  the  consignee  can  demand  the  penalty 
stipulated  only,  whatever  the  amount  of  the  damages 
resulting  from  the  delay. 

2.  In  Argentina,  Bolivia,  Chile,  Colombia,  Costa 
Rica,    Ecuador     and    Nicaragua    the    consignee    can 

by  mistake  he  surrenders  the  same  to  another  person,  he  is  liable  for  its  value 
and  legal  interest  upon  it  from  the  time  of  a  formal  request  for  payment. 
Spain,  Trib.  Sup.,  June  24,  1904;  Gacetas  of  Aug.  3  and  5,  1904,  p.  87. 

"  Spain,  370;  Brazil,  111,  112;  Costa  Rica,  3G;  Honduras,  147;  Mexico,  590; 
Peru,  365;  Panama,  677;  San  Salvador,  112. 

In  case  of  delay  in  the  transportation  the  consignee  is  entitled  to  recover 
damages  which  cannot  be  of  an  amount  greater  than  the  price  of  the  goods. 
Spain,  Trib.  Sup.,  Nov.  25,  1902;  Gaceta  of  Dec.  30,  1902,  p.  306. 

6«  Art.  180.  59  Art.  124.  »» Art.  206. 

«i  Art.  305.  «2  Art.  241. 


410  LATIN-AMERICAN    COMMERCIAL    LAW 

demand  the  payment  of  the  penalty  stipulated,  and 
furthermore,  any  damage  he  may  have  suffered. 

(g)  To  answer  for  all  the  consequences  which  may 
arise  from  his  failure  to  comply  with  the  formalities 
prescribed  by  the  law  or  with  provisions  of  the  adminis- 
trative authorities  in  the  course  of  the  trip  and  on  his 
arrival  at  the  place  of  destination,  except  when  the 
fault  is  due  to  his  having  being  led  into  error  by  false 
statements  of  the  consignor. 

If  the  carrier  has  failed  to  comply  with  those  legal 
requisites  by  virtue  of  a  formal  order  of  the  consignor 
or  of  the  consignee,  the  consequences  vary  in  the  Latin- 
American  countries,  as  follows: 

1.  The  carrier  and  the  consignor  or  consignee  are 
both  liable.^^ 

2.  The  carrier  is  exempt  from  civil  liabiUty  but  he 
together  with  the  consignor  or  consignee  must  bear  any 
penalty  they  may  have  incurred.^"* 

3.  The  carrier  is  liable,  notwithstanding  the  fact  that 
he  was  ordered  by  the  consignor  or  consignee  to  disre- 
gard the  legal  requirements.®^ 

Period  within  which  a  claim  must  be  made  by  the  con- 
signee. 

There  is  great  variety  among  the  codes  with  respect  to  the 
period  in  which  a  claim  must  be  made  by  the  consignee: 

1st  System.  The  period  is  twenty-four  hours  if  the 
damage  cannot  be  ascertained  by  viewing  the  exterior 
of  the  packages;  otherwise  claim  must  be  made  at  the 
time  of  receiving  the  packages.^^ 

*' Spain,  377;  Honduras,  154;  Panama,  707;  Peru,  372;  San  Salvador,  119. 

84  Argentina,  199;  Chile,  197;  Colombia,  296;  Ecuador,  232;  Guatemala,  155. 

8^  Brazil,  115;  Costa  Rica,  30;  Nicaragua,  120;  Uruguay,  185. 

The  responsibility  of  a  railway  corporation  for  damages  in  transportation 
is  governed  by  the  provisions  of  the  corresponding  Ministry,  such  provision 
constituting  the  law  for  the  parties,  and  establishing  the  distinction  between 
imforeseen  event,  negligence  and  fraud.  According  to  these  provisions  a 
raUway  enterprise  is  liable  for  damages  due  to  fraud  of  its  employees.  Brazil, 
Accordao  do  Sup.  Trib.  Fed.  No.  294  of  June  4,  1898,  Direito,  v.  77,  p.  17. 

88  Spain,  366;  Honduras,  143;  Panama,  693;  Peru,  361;  San  Salvador,  108. 


CONTRACT  OF  TRANSPORTATION  OVERLAND      411 

2d  System.  The  period  is  in  any  case  twenty-four 
hours  after  deUvery  of  the  goods  to  the  consignee.^^ 

3rd  System.  No  claim  is  received  after  the  goods  are 
received  without  appropriate  reservation.®* 

4th  System.  Three  days  is  the  time  hmit  if  the  damage 
cannot  be  ascertained  on  the  receipt  of  the  goods.®^ 

5th  System.  The  receipt  of  the  goods  without  any 
reservation,  the  exchange  of  copies  of  the  bill  of  lading, 
and  the  payment  of  freight  and  expenses  extinguish  as 
a  rule  all  actions  against  the  carrier.^" 

6th  System.    The  receipt  of  the  goods,  and  the  pay- 
ment of  transportation  fees  and  charges  extinguish  the 
action  against  the  carrier.     If  it  is  proved  that  the 
damage  or  loss  occurred  while  the  goods  were  under  the 
care  of  the  carrier;  the  claim  can  be  brought  against 
him  even  after  the  payment  of  fees  and  transportation 
charges  within  five  days  after  the  goods  were  delivered.'^ 
Except  in  Mexico,  where  the  payment  of  transportation 
charges  by  itself  does  not  extinguish  the  action  against  the 
carrier,  because  such  payment  must  be  made  before  the 
goods  are  delivered  to  the  consignee,^  ^  and  in  Venezuela 

«' Argentina,  183;  Bolivia,  193;  Chile,  211;  Colombia,  310;  Ecuador,  245; 
Mexico,  595;  Nicaragua,  119;  Uruguay,  175. 

Even  though  conclusive  evidence  of  damage  suffered  by  the  goods  is  pro- 
duced, the  plaintiff  cannot  recover  any  indemnity  if  his  claim  has  not  been 
made  within  the  period  of  twenty-four  hours  after  arrival  of  the  goods. 
Argentina,  Camara  Fed.  de  Apel.  del  Parana,  May  6,  1914,  L.  Scappatura  v. 
Empresa  de  los  F.  C.  de  Entre-Rios,  Jurispr.  de  los  Trihs.  Nacs.,  May, 
1914,  p.  61. 

The  claim  for  damages  (accion  de  reclamaci6n)  referred  to  in  article  183 
of  the  code  of  commerce  is  not  one  of  the  judicial  actions,  but  merely  a  claim 
brought  against  the  carrier  or  his  representative.  Buenos  Aires.  Cam.  de 
Apel.  Com.  de  la  Capital,  June  14,  1913,  J.  M.  Yafliz  v.  Empresa  del  F.  C. 
Argentino,  lb.,  June,  1913,  p.  297. 

An  action  for  damages  to  transported  goods  does  not  lapse  after  twenty-four 
hours  from  the  time  of  surrendering  the  goods  to  the  custom-house  according 
to  a  fiscal  law,  but  from  the  moment  the  goods  were  actually  received  by  the 
consignee.  Argentina,  Cam.  de  Apel.  Com.  de  la  Capital.  Canevali  y  Marengo 
V.  F.  C.  de  Buenos  Aires,  June  5,  1913.    lb.,  July,  1913,  p.  220. 

«« Brazil,  109;  Haiti,  104;  Santo  Domingo,  105. 

«»  Guatemala,  154.  ™  Costa  Rica,  43  to  46. 

"  Venezuela,  188.  "  Mexico,  591. 


412  LATIN- AMEBIC  AN    COMMERCIAL    LAW 

where  such  extinction  is  not  produced  if  it  is  proved  that  the 
loss  or  damage  sustained  by  the  goods  took  place  while 
under  the  care  of  the  carrier,  the  receipt  of  the  goods  without 
proper  reservations  and  the  payment  of  transportation 
charges  creates  the  presumption  that  the  carrier  complied 
with  the  obligations  in  accordance  with  the  bill  of  lading, 
and  that  the  consignee  and  shipper  have  no  action  against 
the  same  carrier.  The  presumption,  however,  can  be  re- 
butted. 

Statute  of  limitations. 

In  all  other  cases  not  covered  by  the  aforesaid  limitations, 
actions  against  carriers  are  barred  after  six  months  for 
intranational,  and  one  year  for  international  transporta- 
tion."^ Haiti  ^^  makes  no  reference  to  international  trans- 
portation. 

Disputes  between  the  consignee  and  the  carrier. 

If  a  question  arises  between  the  consignee  and  the  carrier 
as  to  the  condition  in  which  the  goods  are  delivered,  the 
goods  must  be  inspected  bj^  experts  appointed  by  the  parties 
and  an  umpire  appointed  by  the  jurisdictional  judge  in  case 
of  disagreement  between  the  experts.  They  must  make  a 
■written  report.  If  the  parties  do  not  abide  by  the  report  or 
come  to  a  compromise,  the  judge  takes  the  goods  into 
judicial  custody,  and  the  parties  can  bring  their  actions.^^ 

In  Argentina,^^  Brazil "  and  Venezuela,^^  the  experts  are 
at  the  same  time  arbiters  and  their  decision  therefore  is 
binding.  In  Venezuela,  furthermore,  the  consignee  can  be 
authorized  by  the  court  to  receive  the  goods  if  he  needs  them 
urgently,  in  advance  of  the  decision  of  the  experts.  The 
coiu-t  decides  whether  he  should  give  bond  therefor. 

"  Mexico,  592;  Santo  Domingo,  105,  108;  Venezuela,  188. 

'*  Art.  106. 

"Spain,  367;  Bolivia,  188;  Chile,  208;  Colombia,  307;  Costa  Rica,  37; 
Guatemala,  153;  Honduras,  144;  Nicaragua,  118;  Panama,  694;  Peru,  362; 
San  Salvador,  109;  Uruguay,  174. 

See  note  No.  36,  decision  of  January  10,  1906. 

76  Art.  182.  "  Art.  107.  ''^  Art.  178. 


CONTRACT    OF    TRANSPORTATION    OVERLAND  413 

Lien  upon  the  transportation  equipment. 

Horses,  carriages,  vehicles,  equipment,  and  other  principal 
or  accessory  media  of  transportation  are  specially  destined 
for  the  payment  of  the  liabilities  of  the  carrier  in  favor 
the  consignor."^ 

Rights  and  privileges  of  the  carrier. 

The  carrier  has  the  following  rights  and  privileges: 

(a)  To  receive  half  the  freight  stipulated  when  by 
reason  of  negligence  or  fault  of  the  consignor,  the 
transportation  is  not  carried  out.^'^  In  the  other 
countries  the  consignor  is  liable  for  damages  to  the 
carrier,  whether  the  law  expressly  so  provides,  as  in 
Costa  Rica,^^  and  Panama,^^  or  leaves  the  matter  to  be 
decided  according  to  general  principles. 

(6)  To  receive  the  full  amount  of  the  stipulated 
freight  if  the  transportation  does  not  take  place  through 
the  fault  or  negligence  of  the  consignor,  provided  the 
carrier  has  sent  a  vacant  car  to  the  agreed  place  for 
such  transportation  in  accordance  with  the  contract, 
and  it  has  been  impossible  for  the  carrier  to  find  an- 
other shipment  for  the  car.*^ 

(c)  To  refuse  badly  packed  goods  offered  for  trans- 
portation; if  the  same  is  to  be  made  by  railway  and  the 
consignor  insists  on  sending  the  goods  in  that  condition 
the  carrier  must  take  them  without  responsibihty.^^ 

(d)  To  change  the  route  specially  stipulated  in  the 
contract  if  after  the  trip  began  its  continuation  is  pre- 
vented by  force  majeure;  if  the  route  was  not  designated 

"Spain,  372;  Argentina,  185;  Bolivia,  190;  Brazil,  108;  Chile,  190;  Colom- 
bia, 289;  Costa  Rica,  18;  Ecuador,  226;  Guatemala,  146,  165;  Honduras,  149; 
Nicaragua,  144;  Panama,  678;  Peru,  367;  Uruguay,  176. 

80  Chile,  182;  Colombia,  281;  Mexico,  591;  Uruguay,  182. 

81  Art.  11.  82  Art.  673. 

83  Argentina,  193;  Chile,  198;  Colomlna,  297;  Costa  Rica,  31;  Ecuador,  233; 
Mexico,  591;  Panama,  665;  Venezuela,  174. 

8^  Spain,  356;  Argentina,  178;  Costa  Rica,  28;  Honduras,  133;  Panama,  679; 
Peru,  351;  San  Salvador,  98. 

See  note  36,  Decision  of  October  21,  1906. 


414  LATIN- AMERICAN    COMMERCIAL    LAW 

in  the  contract  the  carrier  may  follow  that  which  is 
more  suitable  in  his  opinion,  provided  it  is  in  the 
direction  of  the  place  of  destination  of  the  goods.*^ 

(e)  To  examine  the  contents  of  the  packages  in  the 
presence  of  the  consignor,  if  any  suspicion  of  falsehood 
arises  on  their  receipt ;  if  the  consignor  refuses  to  assent 
to  this  request  the  carrier  will  be  released  from  any 
obligation  not  arising  from  his  own  fraud.^  ^ 

(/)  To  compel  the  consignee  to  receive;,  out  of  a 
damaged  shipment  those  goods  which  are  not  injured, 
whenever  their  separation  from  the  others  is  not 
detrimental.^^ 

(g)  To  retain  the  transported  goods  until  he  is  paid 
the  transportation  charges.  This  is  the  law  in  Mexico 
only.^* 

(h)  To  deposit  the  goods  in  court  at  the  disposal  of 
the  consignor  or  other  person  who  may  show  a  better 
title,  when  the  consignee  cannot  be  located,  or  re- 
fuses to  pay  the  freight  and  expenses  or  to  receive  the 
goods.^^ 

(i)  To  compel  the  consignee  to  open  the  packages 
or  bundles  on  their  receipt.  Should  the  consignee 
refuse  to  do  so,  the  carrier  is  by  that  mere  fact  freed 

85  Spain,  359;  Argentina,  186;  Bolivia,  182;  Brazil,  110;  Chile,  193,  194; 
Colombia,  292,  293;  Ecuador,  230;  Guatemala,  162,  163;  Honduras,  136; 
Mexico,  591;  Nicaragua,  122;  Panama,  687;  Peru,  354;  San  Salvador,  101; 
Uruguay,  177;  Venezuela,  168. 

*^  Spain,  357;  Costa  Rica,  29;  Honduras,  134;  Mexico,  591;  Panama,  685; 
Peru,  352;  San  Salvador,  99. 

87  Spain,  365;  Argentina,  181;  Bolivia,  187;  Chile,  210;  Colombia,  309; 
Costa  Rica,  27;  Ecuador,  244;  Guatemala,  150;  Mexico,  591;  Panama,  690; 
Peru,  360;  San  Salvador,  107;  Uruguay,  173;  Venezuela,  181. 

WTien  the  consignee  refuses  to  receive  the  transported  goods  because  of  their 
damaged  condition  and  the  carrier  sells  the  goods,  the  latter  is  assumed  to  have 
admitted  the  damage  and  the  abandonment  of  the  merchandise  for  his  account. 
Argentina,  Cam.  de  Apel.  en  lo  Com.  de  la  Capital,  A.  Cricelli  v.  F.  C.  B.  A.  al 
Pacifico,  May  23,  1914,  Jurisp.  de  los  Tribs.  Nacs.,  May,  1914,  p.  246. 

88  Art.  591. 

83  Spain,  369;  Argentina,  194,  197;  Bolivia,  189;  Brazil,  116;  Chile,  203,  311; 
Colombia,  .302,  310;  Costa  Rica,  34;  Ecuador,  238;  Guatemala,  157;  Haiti,  105; 
Honduras,  146;  Mexico,  591;  Nicaragua,  121;  Panama,  697;  Peru,  364;  San 
Salvador,  111;  Santo  Domingo,  106;  Uruguay,  183;  Venezuela,  184. 


CONTRACT  OF  TRANSPORTATION  OVERLAND      415 

from  all  responsibility  which  does  not  arise  from  his 
fraud.9" 

Obligations  and  rights  of  subsequent  carriers. 

The  legal  provisions  as  to  carriers  apply  to  the  inter- 
mediaries of  transportation,  such  as  freight  brokers  and 
agents,  as  well  as  to  connecting  carriers.^^ 

Transportation  agents  and  enterprises  must  keep  a 
registry  with  all  the  formalities  provided  by  law,  in  which 
they  must  enter  in  the  order  of  dates  all  goods  which  are 
entrusted  to  them  for  transportation,  including  all  the  de- 
tails required  for  the  bill  of  lading.^^ 

Lien  of  the  carrier. 

The  carried  goods  are  affected  by  the  privilege  of  the 
carrier  for  the  payment  of  the  transportation  charges  and 
freight.  This  privilege  expires  eight  days  after  delivery 
of  the  goods;  that  period  having  elapsed,  the  carrier  has 
only  the  same  rights  of  action  as  any  other  creditor. ^^ 

In  Argentina  ^"^  the  privilege  of  the  carrier  ceases  when 
the  transported  goods  are  surrendered  by  the  consignee  to 
a  third  party  or  after  one  month  from  their  delivery. 

80  Argentina,  198;  Chile,  204;  Colombia,  303;  Costa  Rica,  33;  Ecuador,  239; 
Mexico,  595. 

^1  Spain,  379;  Argentina,  171;  Bolivia,  191;  Honduras,  156;  Nicaragua,  128; 
Panama,  663;  Peru,  374;  San  Salvador,  121;  Uruguay,  185. 

When  the  carriage  is  made  by  connecting  carriers  and  the  consignee,  refusing 
to  receive  the  merchandise,  demands  its  amount  from  the  first  carrier  who 
signed  the  bill  of  lading,  the  proper  jurisdiction  is  the  court  at  the  place  where 
the  contract  was  signed  or  of  the  domicil  of  the  carrier,  but  not  of  the  place 
where  the  goods  were  destined.  Spain,  Trib.  Sup.,  July  29,  1912;  Gaceta  of 
Sept.  21,  1912,  p.  49. 

92  Spain,  378;  Argentina,  164;  Chile,  222;  Colombia,  322;  Costa  Rica,  52; 
Ecuador,  254;  Honduras,  155;  Nicaragua,  129;  Peru,  373;  San  Salvador,  120; 
Santo  Domingo,  102;  Uruguay,  164;  Venezuela,  158. 

9'  Spain,  375;  Honduras,  152;  Peru,  370;  San  Salvador,  117. 

The  privilege  granted  to  the  carrier  of  demanding  the  judicial  sale  of  the 
goods  and  being  paid  his  expenses  and  freight  out  of  the  proceeds  of  the  .sale 
is  not  a  hindrance  to  the  regular  action  he  may  bring  against  the  consignee  as  a 
non-privileged  creditor  for  the  payment  of  the  balance  not  covered  by  the 
proceeds.    Spain,  Trib.  Sup.,  Dec.  9,  1910;  Gacela  of  July  6,  1911,  p.  225. 

»^  Art.  200. 


416  LATIN-AMERICAN   COMMERCIAL   LAW 

In  Bolivia,95  Chile,»«  Colombia,^^  Costa  Rica,''^  Ecuador,^^ 
Guatemala  ^"^  and  Nicaragua/"^  the  carrier,  in  order  to 
enforce  his  privilege,  must  bring  his  action  within  a  month 
after  delivery  of  the  goods,  and  in  case  they  have  passed 
into  the  possession  of  a  third  person,  three  days  after  such 
transfer. 

In  Brazil  ^"^  the  lien  subsists  as  long  as  the  goods  are  in 
the  possession  of  the  consignee. 

In  Mexico  ^°^  the  Hen  exists  only  so  long  as  the  goods  are 
in  the  possession  of  the  carrier,  the  law  thus  resembling 
the  Anglo-American  rule. 

In  Panama  ^°^  and  Uruguay  ^^^  the  lien  lasts  one  month 
after  delivery  of  the  goods,  irrespective  of  the  person  w^ho 
possesses  them. 

In  Venezuela  ^"^  the  lien  ceases:  (a)  if  the  goods  are  legally 
conveyed  to  another  person  after  delivery;  (b)  if  the  carrier 
has  not  enforced  his  rights  within  three  days  after  dehvery, 
even  though  they  have  not  been  transferred  to  a  third 
party. 

Obligations  of  the  consignee. 

Besides  those  obligations  which  are  a  consequence  of  the 
rights  of  the  carrier  above  referred  to,  the  consignee  has 
the  following  obligations: 

(a)  To  return  to  the  carrier  the  bill  of  lading  issued 
by  him  at  the  time  he  received  the  goods  from  the 
consignor.  In  case  the  bill  of  lading  is  lost  or  was  not 
issued  or  for  any  other  reason  whatever  cannot  be 
surrendered  to  the  carrier,  the  consignee  must  give 
him  a  receipt  for  the  goods.  ^''^ 

(6)  To  pay  the  transportation  expenses  and  freight 
within  twenty-four  hours  at  the  most  after  delivery 

95  Arts.  190,  191,  192.  *>  Arts.  212,  213.  "^  Arts.  311,  312. 

98  Arts.  175,  176.  ^^  Art.  246.  ^^  Arts.  166,  167. 

1"  Arts.  125,  126.  '"^  Art.  117.  ^°^  Art.  591. 

1"  Art.  704.  106  Art.  186.  i^  Art.  186. 

i<"  Spain,  353;  Bolivia,  194;  Chile,  214,  216;  Colombia,  313,  315;  Ecuador, 
249;  Guatemala,  142;  Honduras,  130;  Mexico,  595;  Nicaragua,  111;  Panama, 
671;  Peru,  348;  San  Salvador,  95;  Venezuela,  183. 


CONTRACT   OF   TRANSPORTATION    OVERLAND  417 

of  the  goods,  otherwise  the  carrier  can  demand  the 
judicial  sale  of  the  goods.  ^"^^ 

Guatemala  ^"^  extends  the  period  within  which  the 
payment  of  expenses  and  freight  must  be  made  to  three 
days. 

In  Mexico  ^'^^  no  delay  is  granted  to  the  consignee;  he 
must  pay  when  he  receives  the  goods,  his  right  to  enter 
complaint  being  reserved  for  twenty-four  hours  from 
the  receipt  thereof. 

The  codes  of  Haiti  and  Santo  Domingo  are  silent; 
payment  therefore  must  be  made  at  the  time  the  goods 
are  received. 

Rights  of  the  consignee. 

Besides  the  rights  which  are  natural  consequences  of  the 
obhgations  of  the  carrier  already  stated,  the  consignee  is 
entitled  to  leave  the  goods  for  the  account  of  the  carrier, 
if  owing  to  the  fault  of  the  latter  the  transportation  was 
delayed  and  the  former  gave  him  notice  of  his  decision  to 
abandon  the  goods  before  their  arrival  at  destination. ^^^ 

In  such  case  Argentina, ^^-  Bolivia, ^^^  Brazil, ^^-^  Chile,^^^ 

I'*  Spain,  374;  Argentina,  202;  Bolivia,  193;  Brazil,  116;  Chile,  216;  Colom- 
bia, 315;  Costa  Rica,  35;  Ecuador,  249;  Honduras,  151;  Nicaragua,  127; 
Panama,  702;  Peru,  369;  Uruguay,  188;  Venezuela,  183. 

See  note  No.  95. 

109  Art.  168. 

"« Art.  595. 

1"  Spain,  371;  Honduras,  148;  Panama,  699;  Peru,  366;  San  Salvador,  113. 

The  fact  that  the  consignee  received  the  merchandise  transported  without 
noting  his  protest  for  further  claims  does  not  deprive  him  of  liis  right  to  de- 
mand an  indemnity  when  it  is  proved  that  the  carrier  admitted  the  claim, 
objecting  only  to  its  lack  of  precision.  The  consignee  who  has  demanded  the 
payment  of  damages  cannot  afterwards  change  his  claim  and  abandon  the 
goods  for  the  account  of  the  carrier.  Spain,  Trib.  Sup.,  Nov.  18,  1911;  Gacela 
of  March  12,  1912,  p.  23. 

The  abandonment  of  merchandise  by  the  consignee  to  the  carrier  is  not 
proper  when  it  is  based  on  the  ground  that  the  transportation  was  not  com- 
pleted in  proper  time  owing  to  a  delay  of  the  train  in  which  the  consignee 
supposed  the  goods  to  b(!  carried,  whereas  they  arrived  in  another  train  liefore 
the  time  stipulated.    Spain,  Trib.  Sup.,  Jan.  22,  1897;  Gaceta  of  Fob.  26,  p.  130. 

"2  Art.  188.  "3  Art.  180.  i"  Art.  111. 

"6  Art.  206. 


418  LATIN- AMERICAN    COMMERCIAL    LAW 

Colombia/ ^^  Costa  Rica,^^^  Ecuador,"^  Mexico  ^^^  and 
Uruguay  ^-°  provide  that  the  carrier  must  pay  the  consignee 
the  damages  caused  by  the  delay;  but  the  law  of  these 
countries  does  not  authorize  the  consignee  to  abandon  the 
goods  in  case  of  delay. 

On  the  other  hand,  in  Argentina,^-^  Chile/^^  Colombia,^^^ 
Ecuadorj^^"*  Guatemala,^-^  Mexico/-''  Nicaragua  ^-^  and 
Venezuela/-^  the  consignee  can  abandon  the  goods  to  the 
cai'rier  when  they  are  so  damaged  as  to  make  them  unfit 
for  their  accustomed  use  and  purpose. 

PUBLIC  CARRIERS 

Besides  the  rules  above  mentioned,  certain  others  spe- 
cially designed  for  public  enterprises  require  notice. 

Unlawful  waivers. 

Regulations  and  stipulations  made  by  public  carriers, 
exempting  themselves  or  limiting  their  liabilities  as  es- 
tablished by  law,  are  void.^-^ 

Transportation  enterprises  cannot  enter  into  agreements 
with  a  view  to  modifying  the  general  tariffs  in  favor  of  a 
certain  individual  or  corporation.  Differential  tariffs  alter- 
ing the  general  established  rates  for  special  classes  are  valid 
when  published  in  advance.  ^^°  Carriers  who  consent  to  any 
secret  reduction  in  their  tariffs  in  whole  or  in  part  are  bound 
to  make  the  same  reduction  for  the  general  public,  and 

"8  Art.  305.                               1"  Art.  36.  "» Art.  241. 

"9  Art.  590.                                120  Art.  178.  '"  Art.  181. 

122  Art.  210.                                123  Art.  309.  "*  Art.  244. 

125  Art.  150.                                i26.\rt.  596.  12^  Art.  116. 
"8  Art.  181. 

129  Argentina,  204;  Chile,  219,  229;  Colombia,  318,  329;  Costa  Rica,  60; 
Ecuador,  260;  Mexico,  597;  Panama,  710,  722. 

A  railway  enterprise  cannot  under  penalty  of  damages,  refuse  the  transporta- 
tion of  merchandise  offered  nor  can  it  disregard  applications  for  cars  made  wnth 
due  notice  and  in  reasonable  amount.  Argentina,  Cam.  de  Apel.  en  lo  Cam.  F. 
Olivera  v.  F.  C.  C.  C6rdoba,  Dec.  20,  1913,  Jurisp.  de  los  Tribs.  Nacs.,  Dec, 
1913,  p.  311. 

130  Costa  Rica,  50;  Panama,  713;  Venezuela,  193. 


CONTRACT  OF  TRANSPORTATION  OVERLAND     419 

furthermore,  must  refund  the  difference  in  freight  between 
the  rate  actually  charged  during  the  last  three  months  and 
that  established  in  the  secret  differential  tariff.  ^^^ 

Lawful  waivers  in  favor  of  carriers. 

Carriers  may  stipulate  in  the  bill  of  lading  that  they  are 
not  responsible  for  damages  sustained  during  the  trip  with- 
out fault  on  their  part,  in  the  transportation  of: 

(a)  live  animals; 

(b)  packages  which  at  the  request  of  the  shipper  are 
loaded  by  him  or  his  agents,  or  travel  under  the  care 
of  persons  independent  of  the  carrier; 

(c)  goods  which,  at  the  request  of  the  interested 
person,  are  carried  in  open  cars  or  ships,  when  accord- 
ing to  usage  and  prudence  they  should  be  sent  in  covered 
vehicles  or  vessels.  ^^^ 

Obligations  of  a  public  carrier. 

Public  carriers  are  obliged: 

(a)  To  exhibit  their  tariffs  and  regulations,  posting 
them  in  a  prominent  place  in  their  stations. ^^^  Mexico 
requires  the  carrier,  furthermore,  to  publish  the  regu- 
lations in  the  official  paper  of  the  State,  Federal  Dis- 
trict or  Territory,  to  post  them  in  every  vehicle,  and 
to  print  the  corresponding  articles  on  the  backs  of  the 
bills  of  lading. 

(6)  To  keep  a  registry  for  detailed  entry  of  every- 
thing received  for  transportation,  giving  the  name  of 
the  shipper  and  consignee,  freight  charges,  and  place 
of  destination.^^"* 

(c)  To  transport  between  the  stations  on  their  routes 
all  persons  and  goods  whenever  their  regulations  are 
complied  with.^^^ 

"1  Costa  Rica,  50;  Panama,  714,  193. 
"2  Costa  Rica,  .57,  59;  Panama,  717. 
>"  Costa  Rica,  .52;  Mexico,  600;  Panama,  716. 

1'*  Chile,  222,  223;  Colombia,  322,  323;  Costa  Rica,  52;  Ecuador,  2.54; 
Panama,  716;  Venezuela,  195. 

135  Argentina,  204;  Costa  Rica,  49;  Mexico,  598;  Panama,  711 ;  Venezuela,  191. 


420  LATIN-AMERICAN    COMMERCIAL   LAW 

(d)  To  deliver  a  ticket  to  passengers  and  a  bill  of 
lading  to  shippers. ^^^ 

(e)  To  keep  in  their  warehouses,  with  due  precautions, 
all  goods  entrusted  to  them  for  transportation.^^" 

(/)  To  start  and  finish  the  trip  at  the  day  and  hour 
stated  in  the  time-tables.  ^^^ 

(g)  To  indemnify  passengers  for  any  injuries  they 
or  their  baggage  may  suffer,  if  due  to  a  fault  of  the 
carrier  or  his  agents.  ^^^ 

Portable  packages. 

Passengers  are  not  obliged  to  register  their  valises  or  hand 
baggage  which,  according  to  custom  or  the  regulations,  are 
not  subject  to  the  payment  of  freight;  but  if  they  deliver  such 
packages  to  the  conductor  at  the  beginning  of  the  trip  the 
carrier  is  bound  to  restore  them."° 

Loss  of  goods  delivered  to  the  carrier. 

In  case  of  the  loss  of  goods  delivered  to  the  carrier,  his 
agents  or  factors,  the  passenger  or  consignor  must  prove  the 
delivery  and  value  thereof.  Should  proof  of  the  value  be 
impossible  or  insufficient,  in  case  the  claim  is  notvoluntarily 
paid,  the  judge  must  take  a  sworn  statement  from  the 
passenger  or  consignor  and  in  view  thereof  the  judge  must  in 
his  discretion  determine  the  damages  to  be  paid  by  the 
carrier,  taking  into  consideration  the  character  and  pecuniary 
position  of  the  passenger  and  the  circumstances  of  the  case.^"*^ 
In  Mexico  ^^^  and  Panama  ^^^  the  passenger  must  prove  the 

"«  Spain,  352;  Chile,  222;  Colombia,  322;  Costa  Rica,  52;  Ecuador,  254; 
Honduras,  129;  Mexico,  600;  Panama,  716;  Peru,  347;  San  Salvador,  94; 
Venezuela,  196. 

"^  Costa  Rica,  52;  Panama,  716. 

138  Chile,  222;  Colombia,  322;  Costa  Rica,  52;  Ecuador,  254;  Mexico,  600; 
Panama,  716;  Venezuela,  196. 

See  note  No.  34,  Decision  of  Feb.  16,  1906. 

139  Costa  Rica,  58;  Panama,  716. 

1*0  Chile,  225;  Colombia,  325;  Ecuador,  257;  Mexico,  601;  Panama,  721; 
Venezuela,  198. 

1"  Chile,  226,  227;  Colombia,  327,  328;  Ecuador,  259;  Venezuela,  199. 
1*2  Art.  602.  i«  Art.  1 18. 


CONTRACT  OF  TRANSPORTATION  OVERLAND      421 

delivery  of  the  article  and  its  value  according  to  the  general 
rules  of  evidence. 

Objects  of  great  value. 

The  carrier  is  not  responsible  for  money,  jewelry,  docu- 
ments or  articles  of  great  value  contained  in  packages  or 
cases,  when,  on  delivery  thereof  to  the  carrier,  the  passenger 
or  shipper  did  not  declare  the  contents.  ^^^ 

In  Colombia  ^^^  the  passenger  is  not  obliged  to  declare 
specifically  the  contents  of  the  packages  or  cases  delivered  to 
the  carrier,  and  such  passenger,  in  case  of  loss,  can  recover 
even  sums  of  money  contained  therein  intended  for  the 
necessities  of  the  voyage  or  trip. 

In  Costa  Rica,^^*^  on  the  contrary,  the  passenger  is  bound  to 
disclose  the  contents  of  his  packages  when  requested  by  the 
carrier,  except  in  case  of  valises,  packages  or  suit  cases  which 
are  kept  by  the  passenger  and  under  his  exclusive  custody. 

Packages  and  merchandise  not  called  for. 

When  a  certain  period  has  elapsed  after  the  end  of  a  trip 
or  voyage  and  the  passenger  or  shipper  has  failed  to  claim 
the  transported  things,  they  must  be  deposited  in  the  place 
designated  by  and  at  the  disposal  of  the  proper  court,  which 
must  order  their  sale  and  deposit  the  proceeds  to  the  credit 
of  the  person  who  may  show  title  thereto. 

The  time  for  making  the  judicial  deposit  of  the  things  is, 
in  Chile  ^^''  and  Colombia,  ^"^^  at  the  termination  of  the 
voyage  or  trip.  In  Costa  Rica  ^^^  and  Panama,  ^^°  it  is 
thirty  days.  In  Mexico  ^^^  the  period  is  established  by  the. 
regulations  of  the  carrier.  In  Venezuela,  ^'^  baggage  not 
claimed  by  a  passenger  is  deposited  in  the  warehouse  of  the 
carrier,  and  if  no  one  claims  it  after  twelve  months,  it  is  sold 
at  auction  by  the  manager  of  the  carrier  and  the  net  pro- 
ceeds applied  for  the  benefit  of  hospitals. 

1"  Chile,  228;  Ecuador,  256,  2,59;  Panama,  721. 

"6  Arts.  .326,  ,328.  ^*^  Art.  55.  '"  Arts.  203,  230. 

i«  Arts.  302,  330.  i«  Art.  ,56.  i*"  Art.  725. 

"1  Art.  603.  '"  Art.  202. 


CHAPTER  XXIV 

Contract  of  Insurance 
general  principles 

Argentina. — Cervini,  Francisco:  Caracteres  y  elementos  del  contrato  de 
seguros.    Buenos  Aires,  1903. 

Huergo,  Enrique  L.:  El  contrato  de  seguro.    Buenos  Aires,  1901. 

L6pez,  Vicente  F.:  Las  companias  extranjeras  de  seguros  ante  la  adminis- 
traci6n  nacional.    Buenos  Aires,  1898. 

Lamazares,  A.  G.:  El  segiu-o  contra  incendio  ante  la  jurisprudencia  argen- 
tina.    Buenos  Aires,  1914. 

Ruiz  Guinazu,  Enrique:  Seguros  agricolas.    Buenos  Aires,  1902. 

Brazil. — Almeida  Oliveira,  Antonio  de:  A  prescripgao  em  direito  commer- 
cial e  civil.    Lisboa,  1914. 

Cunha  Salas,  Jose  Roberto  da:  Formulario  das  ac^oes  commerciaes,  con- 
tendo  as  formulas  de  todos  os  processes  commerciaes,  e  annotadas.  Buenos 
Aires,  1909. 

Origin. 

A  person  who  runs  a  risk  likely  to  cause  him  serious 
pecuniary  loss  may,  by  associating  himself  with  others  in  the 
same  case,  arrange  to  have  any  eventual  loss  that  might 
happen,  divided  among  all  the  persons  concerned.  Thus  they 
guarantee  each  other  against  a  total  loss,  each  share  of  loss 
being  small  and  the  benefit  mutual.  The  parties,  how- 
ever, in  entering  into  this  contract  intend  not  to  make  any 
profit,  but  merely  to  avoid  serious  loss.  The  nature  of  the 
contract  is  therefore  not  ipso  jure  commercial. 

As  commerce  grew  and  experience  showed  that  out  of  a 
given  number  of  vessels,  but  few  were  lost  in  the  long  run, 
the  idea  developed  of  making  insurance  a  matter  of  profit, 
the  rate  being  measured  on  the  theory  of  indemnity  plus  a 
profit  for  the  service.  The  contract  in  such  case  is  a  com- 
mercial one. 

Insurance  can  and  is  actually  applied  to  all  kinds  of  risks — 
fire,  storm,  earthquake,  frost,  hail,  ship\vreck,  rain,  drought, 
burglary,  sickness,  death,  labor  and  other  accidents,  etc. 

422 


CONTRACT  OF  INSURANCE  423 

The  law  makes  two  great  divisions  of  insurance,  namely: 
maritime  and  overland  insm^ance.  We  confine  ourselves  to 
the  latter,  which  may  be  divided  into  fire,  life,  overland 
transportation,  etc. 

Persons  who  participate  in  the  contract. 

As  a  rule  two  persons  are  involved  in  the  contract:  the 
insurer  and  under\^Titer  (asegurador) ,  who  takes  the  risk, 
and  the  insured  (asegurado)  who  is  paid  the  loss  in  case  it 
occurs.  The  person  who  contracts  with  the  insurer  is  not 
necessarily  the  one  who  receives  the  indemnity;  this  may  be 
a  third  party  called  beneficiary  (beneficiario). 

Elements  of  the  contract. 

Three  elements  enter  into  the  contract  of  insurance,  a 
thing,  or  object,  a  risk  (riesgo)  which  is  to  be  guaranteed, 
and  a  premium  (prima)  paid  to  the  insurer. 

Object  of  the  contract. 

Every  thing,  corporeal  and  incorporeal,  existing  at  the 
time  the  risk  arises  for  the  account  of  the  insurer,  can  be  the 
subject-matter  of  the  contract  of  insurance,  provided  it  can 
be  evaluated  in  money,  is  a  lawful  object,  and  is  exposed  to  a 
danger  of  loss  which  the  insurer  binds  himself  to  pay.^ 

The  code  of  Panama  ^  provides  that  the  insurance  contract 
can  be  made  as  follows: 

1.  On  a  single  entire  object,  individually  considered; 

2.  On  a  group  of  things  as  a  whole; 

3.  On  a  certain  part  of  every  object,  jointly  or  indi- 
vidually considered; 

4.  On  the  life  of  or  physical  accident  to  an  individual 
or  group  of  persons; 

5.  On  expected  profits. 

1  Spain,  386,  416,  432;  Argentina,  493;  Chile,  522;  Colombia,  646;  Ecuador, 
538;  Guatemala,  411;  Honduras,  364,  393,  409;  Mexico,  398,  426,  442;  Panama, 
994;  Peru,  381,  411,  433;  San  Salvador,  341,  360,  376;  Uruguay,  635;  Venezuela, 
507. 

2  Art.  995. 


424  LATIN-AMERICAN    COMMERCIAL    LAW 

Risk. 

By  risk  is  understood  any  kind  of  eventual  loss  to  which 
things  and  persons  are  subject  when  not  the  result  of  an 
illegal  enterprise. 

Premium. 

Premium  is  the  amount  paid  or  the  service  rendered  to  the 
insurer  as  a  consideration  for  the  liability  he  assumes  of 
paying  the  damage. 

Nature  of  the  contract. 

There  are  five  systems  to  determine  when  the  contract  of 
insurance  is  commercial: 

1st.  The  contract  of  insurance  to  be  commercial 
involves  two  circumstances: 

(a)  that  the  insurer  is  a  merchant; 
(6)  that  the  premium  is  fixed,   that  is,  that  the 
insured  pays  a  certain  amount,  singly  or  in  instal- 
ments, as  a  consideration  for  the  insurance.     This 
applies  when  the  insurance  is  not  of  the  mutual  type.^ 
2d.  The  contract  is  ipso  facto  commercial  irrespec- 
tive of  the  character  of  the  parties  or  the  way  in  which 
the  premium  is  paid."* 

3d.  The  code  of  Mexico  provides  that  contracts  of 
insurance  of  any  kind  are  mercantile  when  they  are 
made  by  "enterprises;  "  but  as  the  word  ''enterprise  "  is 
not  defined  the  law  is  not  clear.  We  believe  that  it 
means  commercial  enterprise,  and  if  this  is  so  the 
Mexican  code  requires  only  one  of  the  circumstances 
required  by  the  Spanish  code.^ 

4th.  The  code  of  Venezuela,   without  any  general, 

3  Spain,  380;  Honduras,  358;  Peru,  375. 

■*  Argentina,  527;  Chile,  561;  Colombia,  685;  Ecuador,  534;  Guatemala,  449, 
450;  Panama,  997;  Uruguay,  671. 

The  contract  of  insurance  is  a  mercantile  one  and  is  governed  by  special 
provisions.  Colombia,  Corte  Suprema  de  Justicia,  Nov.  30,  1889;  Gaceta 
Judicial,  IV,  p.  148. 

6  Art.  392. 


CONTRACT  OF  INSURANCE  425 

classification  as  to  the  commerciality  of  the  contract, 
declares  that  the  provisions  relating  to  life  insurance 
are  not  applicable  to  mutual  Ufe  insurance  contracts 
and  to  those  requiring  the  payment  of  a  fixed  premium.^ 
5th.  The  Brazilian  code  of  commerce  does  not  refer 
to  insurance.  All  the  provisions  on  the  subject  are 
found  in  the  civil  code;  hence  the  general  principles  for 
the  classification  of  a  contract  as  civil  or  commercial 
must  be  applied. 

Requisites  of  the  contract. 

The  contract  of  insurance  must  be  in  writing  whether  in  a 
pubhc  or  in  a  private  instrument  and  subscribed  by  the  par- 
ties.^ 

In  Argentina  the  contract  of  insurance  is  perfected  by 
mere  consent,  and  the  rights  and  obligations  of  the  parties 
begin  when  the  agreement  has  been  arrived  at,  even  before 
the  policy  is  signed.  The  contract  involves  the  obligation 
of  the  insurer  to  sign  the  policy  at  the  time  agreed  upon  and 
to  deliver  it  to  the  insured.^  As  a  rule  the  contract  is  proved 
by  means  of  a  written  instrument,  but  other  means  of  evi- 
dence are  admitted  if  there  is  a  written  foundation  of  evi- 
dence. In  case  of  doubt  concerning  the  clauses  or  peculiar 
conditions  of  the  transaction  before  the  delivery  of  the 
policy,  they  can  be  proved  by  all  means  admissible  in  com- 

« Art.  545. 

'Spain,  382;  Bolivia,  198,  199,  200;  Brazil,  1433  c.  c;  Costa  Rica,  365; 
Ecuador,  535;  Honduras,  360;  Mexico,  394;  Nicaragua,  235;  Panama,  1013; 
Peru,  377;  San  Salvador,  338;  Uruguay,  644;  Venezuela,  505. 

A  contract  of  insurance  is  proved  by  means  of  the  corresponding  policy.  A 
certified  copy  of  the  decision  rendered  in  a  criminal  case  arising  out  of  a  fire 
proves  that  such  fire  took  place  and  the  destruction  caused  thereby.  The 
existence  of  the  things  or  merchandise  in  the  building  destroyed  by  the  fire  and 
the  value  thereof  are  presumed  in  accordance  with  the  statement  in  the  policy, 
provided  the  destruction  was  complete;  but  the  insured,  in  case  of  partial 
destruction,  must  prove,  by  other  means,  the  value  of  the  remaining  objects, 
and  the  amount  of  the  loss  is  the  difference  between  the  value  stipulated  in  the 
policy  and  that  assigned  to  those  objects.  Mexico,  Juzgado  Cuarto  de  lo  Civil 
de  la  Cap.,  March  28,  1907,  J.  Fern4ndez  v.  Phoenix  Assurance  Company, 
Limited,  of  London,  Diario  de  Jurisp.,  XIII,  p.  241. 

8  Art.  505. 


426  LATIN-AMERICAN   COMMERCIAL   LAW 

mercial  matters.  "\\Tiere,  however,  the  law  requires  specific 
mention  of  facts  in  the  poHcy,  under  pain  of  nullity,  they 
can  only  be  proved  by  means  of  a  written  instrument.^ 

In  Chile,  ^°  Colombia  ^^  and  Guatemala,  ^^  the  contract  of 
insurance  is  also  perfected  by  subscribing  a  public  or  private 
instrument,  but  a  contract  of  insurance  made  orally  is 
valid  as  a  promise  of  insurance,  provided  the  parties  had 
agreed  in  respect  to  the  thing,  the  risk  and  the  premium. 

This  promise  can  be  proved  by  all  means  of  evidence 
admissible  in  commercial  matters,  and  entitles  either  of 
the  parties  to  demand  of  the  other  the  execution  of  the 
policy.  ^^ 

In  Brazil  and  Ecuador  ^^  the  policy  can  be  made  payable 
to  a  certain  person,  to  his  order  or  to  bearer.  In  Venezuela  ^^ 
a  life  insurance  pohcy  cannot  be  made  to  order  or  to  bearer. 

Contents  of  a  policy. 
The  policy  must  state  the  following  facts.  ^® 
(a)  Names  of  the  insurer  and  insured. 
(6)  The  kind  of  risks  covered. 

In  Bolivia  when  the  risk  is  not  specified,  the  insurer 
is  bound  for  all  kinds.  ^^ 

9  Art.  506.  "  Arts.  514,  515.  "  Arts.  638,  639. 

12  Arts.  403,  404. 

1'  Whenever  the  contract  of  insurance,  in  case  of  overland  transportation, 
is  entered  into,  the  law  of  the  place  in  which  the  loss  took  place  governs  the 
rights  and  obligations  arising  therefrom.  Colombia,  Corte  Sup.  de  Just. 
Casaci6n,  Nov.  30,  1889;  Gaceta  Jud.,  IV,  p.  147. 

"  Brazil,  1447  c.  c;  Ecuador,  535. 

15  Art.  505. 

15  Spain,  383;  Argentina,  504,  551;  Bolivia,  201;  Brazil,  1447,  1448  c.  c; 
Chile,  516;  Colombia,  640;  Costa  Rica,  367;  Ecuador,  536;  Guatemala,  405; 
Honduras,  361;  Mexico,  395;  Nicaragua,  235;  Panama,  1016;  Peru,  378;  San 
Salvador,  339;  Uruguay,  645;  Venezuela,  506. 

WTien  the  insurance  was  against  all  risks,  the  insurer  is  obliged  to  pay  the 
indemnity  stipulated  in  case  of  a  loss,  even  though  it  was  not  caused  by  cir- 
cumstances previously  provided  for,  or  was  due  to  force  majeure.  Only  in  case 
of  fraud  of  the  insured  does  this  obligation  cease.  The  clauses  of  a  policy 
Avritten  by  hand  are  more  efficacious  as  a  means  of  interpretation  of  the  con- 
tract than  the  printed  ones.  Brazil,  Supremo  Trib.  Fed.,  May  26,  1917,  Apel. 
Civil,  n.  2969,  Remsta  do  Supremo  Trib.,  v.  XII,  p.  348. 

"  Art.  203. 


CONTRACT  OF  INSURANCE  427 

(c)  Accurate  description  and  location  of  the  things 
insured  to  determine  the  exact  nature  of  the  risk; 

(d)  The  value  assigned  to  each  insured  object,  and,  in 
Panama,  the  place  and  manner  of  paying  the  indemnity. 
In  this  respect  we  find  that  the  method  of  specifying 
this  valuation  is  not  the  same  everywhere. 

In  Spain,  Honduras  and  Peru  it  is  necessary  to  classify 
the  things  and  to  assign  a  value  to  each  class. 

Brazil  ^^  provides  in  this  respect  only  that  the  policy  can 
be  issued  in  the  name  of  a  certain  person  or  to  his  order  or 
to  bearer,  except  life  insurance  policies,  which  cannot  be 
issued  to  bearer;  and  it  must  indicate  the  beginning  and  the 
end  of  the  period  covered  by  the  insurance. 

In  Chile, ^3  Colombia, ^o  Ecuador, 21  Guatemalans  and 
Venezuela,-^  commercial  establishments,  such  as  stores, 
shops,  factories,  etc.,  merchandise  transported  by  sea  or 
overland,  can  be  insured  with  or  without  specification  of  the 
objects  contained  therein;  so  with  household  furniture,  ex- 
cept when  it  has  great  value  such  as  jewels,  paintings,  works 
of  art  and  similar  objects,  all  of  which  must  be  specified. 

Other  countries  do  not  require  any  specification  of  things 
and  their  value. 

In  case  the  value  of  the  insured  things  is  not  stated  in  the 
policy  it  is  presumed  that  the  contracting  parties  intend  the 
value  of  the  things  at  the  time  the  loss  occurs,  which  may  be 
proved  by  all  legal  means  of  evidence.  ^^ 

(e)  The  premium,  and  the  form  and  time  for  its  pay- 
ment, and,  in  Panama,  the  place  and  manner  in  which 
it  must  be  paid.^^ 

(/)  The  day  and  hour  at  which  the  insurance  begins 
to  run. 

"  Arts.  1447,  1448  c.  c.  i'  Art.  524,  20  Art.  648. 

21  Art.  541.  22  Art.  413.  2.3  Art.  510. 

2*  Argentina,  519;  Chile,  533,  535;  Colombia,  657;  Ecuador,  545,  546; 
Guatemala,  422,  424;  Panama,  1107;  Uruguay,  660;  Venezuela,  511. 

2*  The  contract  of  in.surance  is  valid  even  though  in  the  corresponding 
policy  the  amount  of  the  premium  stipulated  was  wrong.  Argentina,  Cam. 
de  Apel.  Com.  de  la  Cap.,  Feb.  13,  1913.  G.  Gonzdlez  v.  Banco  Vitalicio 
Argentino.,  Jur.  de  los  Tribs.  Nacs.,  Feb.,  1913,  p.  128. 


428  LATIN-AMERICAN    COMMERCIAL    LAW 

In  Chile, ^^  Colombia,"  Ecuador, ^^  Guatemala  ^^  and 
Venezuela,  ^°  failure  to  establish  the  time  when  the  con- 
tract is  to  be  in  force,  causes  the  risk  to  begin  to  run 
against  the  insurer  from  the  moment  the  parties  sub- 
scribe the  policy,  unless  otherwise  provided  by  law. 

{g)  In  Spain,  Honduras,  Mexico,  Panama  ^^  and  Peru 
all  policies  on  the  same  property,  if  any,  must  be  named. 
In  Chile,  ^^  Colombia,  ^^  Ecuador,  ^^  Guatemala  ^^  and 
Venezuela,  ^^  this  statement  must  be  made  by  the  in- 
sured at  the  time  of  the  loss. 

{h)  The  place  and  date  of  the  contract,  in  Argentina, 
Bolivia,  Chile,  Colombia,  Costa  Rica,  Ecuador,  Guate- 
mala, San  Salvador,  Uruguay  and  Venezuela.  Not^ 
withstanding  that  other  countries  fail  to  mention  this 
requisite  there  can  be  no  doubt  that  its  omission  is  due 
to  the  fact  that  it  is  considered  a  matter  of  course. 

{i)  Other  lawful  stipulations  which  the  parties  may 

have  agreed  upon. 

Every  alteration  or  addition  in  the  contract  of  insurance 

extending  the  insurance  to  new  risks  or  reducing  them,  or  the 

amount  of  the  insurance,  or  making  any  other  substantial 

change  must  be  stated  in  the  policy.  ^^ 

Nullity  of  the  insurance. 

The  nature  of  the  contract  of  insurance,  which  entitles 
the  insured  to  demand  payment  of  possibly  large  sums  of 
money  by  complying  with  relatively  trifling  obligations,  has 
induced  precautions  on  the  part  of  the  law  in  order  to  pre- 
vent an  institution  which  may  confer  such  great  advantages 
from  falling  into  discredit.  For  this  reason  the  law  requires 
the  greatest  good  faith  and  care  in  the  statements  which  are 
the  basis  for  the  valuation  and  assumption  of  the  risk. 

We  find,  consequently,  three  causes  for  which  a  contract 


2«  Art.  537. 

^  Art.  661. 

^  Art.  549. 

29  Art.  426. 

30  Art.  510. 

31  Art.  1011. 

32  Art.  556. 

33  Art.  680. 

"  Art.  560. 

35  Art.  445. 

36  Art.  524. 

37  Spain,  384;  Honduras,  362;  Mexico,  396;  Peru,  379;  San  Salvador,  340. 


CONTRACT  OF  INSURANCE  429 

of  insurance  may  be  void,  besides  those  which  are  common  to 
other  contracts.    These  are: 

1st.  Any  act  of  bad  faith  on  the  part  of  any  of  the 
contracting  parties  at  the  time  of  the  execution  of  the 
contract. 

2d.  An  untruthful  declaration,  although  made  in 
good  faith,  when  it  may  have  influenced  the  valuation 
of  the  risk. 

3d.  An  omission  or  concealment  on  the  part  of  the 
insured  of  facts  or  circumstances  which  may  have  had 
an  influence  in  closing  the  contract. ^^ 

In  Brazil  both  parties  are  bound  to  observe  the  ut- 
most good  faith  in  their  statements;  if  the  insured 
makes  untruthful  or  incomplete  declarations  he  loses  his 
right  to  the  insurance  money  and  is  obliged  to  pay  the 
premium  due.^^ 

Chile, ^°  Colombia  ^^  and  Guatemala  ^^  provide  that 
when  the  value  assigned  to  the  insured  things  has  been 
increased  by  mistake,  the  amount  of  the  insurance  and 
of  the  premium  must  be  reduced  proportionately,  and 
the  insurer  can  demand  indemnification  if  he  has  paid 
the  insurance. 
When  the  difference  between  the  real  value  of  the  things 
and  the  amount  of  the  insurance  is  due  to  fraud  of  the  in- 
sured, the  latter  cannot  demand  payment  of  the  policy,  in 
case  of  loss,  nor  excuse  himself  from  paying  the  full  premium, 
without  prejudice  to  any  criminal  actions  arising  therefrom. 
The  insurer,  however,  cannot  object  to  the  assigned  value 
when  it  has  been  fixed  by  experts  appointed  by  the  parties, 
unless  there  has  been  fraud. 

In  Nicaragua,  the  insurance  is  null  in  so  far  as  the  insured 
value  exceeds  the  sale  value  of  the  article.  "^^ 

Lack  of  interest  as  a  cause  of  nullity. 

Some  of  the  codes  provide,  among  the  rules  applicable  to 

'8  Spain,  381;  Argeitina,  498;  Ecuador,  563,  564;  Honduras,  359;  Mexico, 
393;  Panama,  1000;  Peru,  37G;  Uruguay,  640;  Venezuela,  527,  528. 
'9  Arts.  1443,  1444  e.  c.  "« Art.  534.  "  Art.  658. 

«  Art.  423.  «  Art.  237. 


430  LATIN-AMERICAN    COMMERCIAL   LAW 

all  contracts  of  insurance,  that  when  the  insured  has  no 
interest  in  the  thing  or  in  the  preservation  of  the  Ufe  of  the 
person,  subject-matter  of  the  insurance,  the  contract  is 
void.''^ 

Ecuador  requires  that  such  interest  shall  exist  at  the  time 
of  the  execution  of  the  contract;  while  Argentina,  Panama 
and  Uruguay  admit  the  validity  of  a  contract  even  though 
the  insured  had  no  interest  at  the  time  of  the  contract, 
provided  he  acquires  such  interest  afterwards. 

Nullity  of  a  second  policy  on  the  same  property. 

A  rule  which  is,  of  course,  without  application  to  life  or 
accident  insurance  policies  provides  that  things  which  are 
insured  for  their  entire  value  cannot  be  insured  a  second 
time  during  the  subsistence  of  the  first  policy,  except  when 
the  new  insurers  guarantee  the  fulfillment  of  the  contract 
entered  into  with  the  first  insurer.  "^^ 

Sale  or  conveyance  of  the  insured  property. 

Another  rule  not  applicable  to  insurance  of  persons  relates 
to  the  case  of  sale  or  conveyance  of  the  thing  insured. 

In  Spain, '*^  Honduras,*^  Mexico, *s  Peru  ""^  and  San  Sal- 
vador, ^"^  in  case  of  death,  liquidation  or  bankruptcy  of  the 
insured  and  sale  or  conveyance  of  the  things  covered  by 
insurance,  the  policy  is  not  nullified  when  the  insured  thing 
is  real  estate.  If  personal  property,  a  factory  or  a  store,  the 
insurer  can  rescind  the  contract  by  notifying  the  insured 
thereof  within  a  fixed  period  of  fifteen  days.^^ 

In  Argentina  -^^  and  Uruguay  ^^  the  insurance  passes  to 
the  new  owner  even  though  no  assignment  or  delivery  of 

"  Argentina,  495;  Bolivia,  197;  Chile,  518;  Colombia,  642;  Ecuador,  537; 
Guatemala,  407;  Nicaragua,  236;  Panama,  996;  Uruguay,  637;  Venezuela,  506. 

«  Spain,  399;  Argentina,  499;  Brazil,  1439,  c.  c;  Chile,  522,  528;  Colombia, 
646,  652;  Ecuador,  539,  540;  Guatemala,  411,  417;  Honduras,  377;  Mexico, 
411;  Panama,  1010;  Peru,  394;  San  Salvador,  352;  Uruguay,  641;  Venezuela, 
508. 

«  Art.  401.  «  Art.  379.  «  Art.  413. 

«  Art.  396.  «>  Art.  354. 

"  Chile,  530,  531;  Colombia,  654,  655;  Guatemala,  419,  420. 

"  Arts.  511,  539.  "  Arts.  648,  683. 


CONTRACT  OF   INSURANCE  431 

the  policy  has  been  made,  unless  otherwise  stipulated  be- 
tween the  insurer  and  the  insured.  Should  the  new  owner 
refuse  to  accept  the  insurance  at  the  time  the  property  was 
conveyed  the  insurance  continues  in  favor  of  the  former 
owner,  provided  he  retains  some  share  of  the  insured  thing 
or  in  so  far  as  he  may  have  an  interest  in  it,  in  case  of  failure 
to  pay  the  purchase  price.  This  rule  is  not  applicable  to 
fire  insurance  policies,  unless  otherwise  stipulated. 

In  Brazil  ^'^  the  right  to  be  indemnified  by  the  insurer  can 
be  assigned  to  a  third  party  as  an  accessory  of  the  insured 
thing.  This  conveyance  is  made  ipso  jure  in  regard  to  a 
thing  which  was  mortgaged  or  pledged,  or  when  the  policy 
has  no  contrary  stipulation. 

In  Panama,  article  1029,  referring  only  to  fire  insurance 
contracts,  provides  that  whenever  the  insured  property, 
whether  realty  or  personalty,  is  conveyed  to  another  person, 
the  underwriter  may  declare  the  contract  without  effect, 
unless  otherwise  stipulated.  The  insurer  can  exercise  this 
privilege  within  thirty  days  from  the  time  he  learns  of  the 
conveyance.  In  other  kinds  of  insurance  the  policy  passes 
to  the  new  owner  of  the  insured  property  without  special 
assignment.  Should  the  new  owner  refuse  to  accept  the 
policy,  the  contract  lapses,  unless  the  former  owner  retains 
some  interest  in  the  property,  in  which  case  the  insurance 
subsists  in  so  far  as  the  former  owner  is  concerned.''' 

In  Venezuela  ^^  the  rights  and  obligations  of  the  first 
owner  pass  to  the  new  one,  in  the  absence  of  any  contrary 
stipulation. 

Reinsurance. 

As  already  observed,  every  risk  can  be  covered  by  insur- 
ance; hence  the  risk  which  the  insurer  runs  can  become  the 
subject-matter  of  a  new  contract  of  insurance.  This  is  only 
an  application  of  a  general  rule,  but  the  codes  of  Argen- 
tina," Brazil, '^^  Chile, ^^  Colombia,'^''  Ecuador,"  Guatemala,^- 

"  Art.  1463  c.  c.  «  Art.  1006.  s"  Art.  523. 

"  Art.  517.  68  Art.  1437  c.  c.  ^9  Art.  523. 

80  Art.  647.  81  Art.  540.  92  Art.  412. 


432  LATIN-AMERICAN    COMMERCIAL    LAW 

Panama,®^  Uruguay  ^^  and  Venezuela  ^^  expressly  so  pro- 
vide. 

Loss  of  the  property  before  the  policy  becomes  effective. 

Another  simple  application  of  general  rules  is  that  which 
provides  that  a  policy  relating  to  things  which  at  the  time 
of  the  contract  were  already  free  from  the  risk,  subject- 
matter  of  the  agreement,  or  were  already  lost  or  damaged, 
is  void,  because  consent  was  based  upon  a  mistake  of  fact, 
namely,  the  assumption  of  a  certain  state  of  things  which 
was  unfounded  in  fact.  The  codes  of  Chile, ''^  Colombia,^^ 
Ecuador,^^  Guatemala  ^^  and  Venezuela  ^°  declare  the  con- 
tract void  in  such  cases. 

The  codes  of  Argentina,'''^  Panama  "^  and  Uruguay  "^^ 
provide,  however,  that  the  insurance  in  the  case  cited  is 
void  only  when  there  is  a  presumption  that  the  insurer  knew 
of  the  cessation  of  the  risk  or  the  insured  knew  of  the  loss  or 
damage  of  the  property. 

Brazil  prescribes  that  when  the  insurer  knew  that  the 
risk  had  ceased  and  nevertheless  issues  the  policy,  he  must 
pay  twice  the  stipulated  premium.^^ 

Obligations  of  the  insured. 

The  obligations  of  the  insured  in  every  contract  of  insur- 
ance are: 

(a)  To  make  a  faithful  statement  of  all  the  circum- 
stances necessary  to  identify  the  property,  subject- 
matter  of  the  insurance,  and  to  appreciate  the  risks.'^^ 

(b)  To  pay  the  premium  at  the  time  and  in  the  form 
stipulated. 


"  Art.  1008. 

0*  Art.  658. 

85  Art.  509. 

89  Art.  522. 

67  Art.  646. 

•8  Art.  539. 

"9  Art.  411. 

™  Art.  508. 

"  Art.  514. 

"  Art.  1007. 

"  Art.  654. 

7<  Art.  1446  c.  c. 

75  The  omission  on  the  part  of  the  insured  to  declare  at  the  time  of  the  con- 
tract that  he  suffered  from  a  previous  fire,  is  not  a  cause  of  nullity  when  that 
omission  does  not  deprive  the  insurer  of  a  source  of  information  which  would 
have  modified  his  opinion  respecting  the  risk.  Argentina,  Cam.  de  Apel. 
Com.,  Oct.  7,  1913,  Junsp.  de  los  Tnbs.  Noes.,  Oct.,  1913,  p.  289. 


CONTRACT    OF    INSURANCE  433 

(c)  To  notify  the  insurer  of  the  loss  or  damage  as 
soon  as  it  takes  place.  To  these  obligations  the  codes 
of  Argentina/^  Chile,'^  Colombia/^  Ecuador,"^  Guate- 
mala,^°  Panama,*^  Uruguay  ^-  and  Venezuela  ^^  add 
the  following: 

(d)  To  display  all  the  care  and  diligence  customary  in 
a  prudent  man  to  prevent  losses. 

(e)  To  take  the  necessary  steps  in  order  to  save  or 
rescue  the  insured  property  or  to  preserve  the  part  sal- 
vaged.^'* 

(J)  To  declare  at  the  time  payment  of  the  policy  is 
demanded,  any  other  insurance  there  may  be  on  the 
same  property.  We  have  already  observed  that  in 
Panama  these  circumstances  must  be  stated  in  the  new 
policy. 

(g)  To  prove  all  the  circumstances  necessary  to  deter- 
mine the  responsibility  of  the  insurer. 

We  will  see  presently  that  some  of  these  obligations 
have  not  obtained  general  acceptance  in  the  rest  of 
the  codes. 

Obligation  of  the  insurer. 

The  nature  of  all  contracts  of  insurance  is  to  bind  the 
insurer  to  pay  the  amount  stipulated  in  case  of  loss  unless 
the  loss  is  due  to  acts  of  the  insured,  his  employees  or  any 
person  for  whose  acts  he  is  responsible.^^ 

™  Art.  524.  "  Art.  556.  '»  Art.  680. 

7»  Art.  560.  «"  Art.  445.  ^i  Art.  1020. 

82  Art.  668.  »^  Art.  524. 

8*  When  the  insured  has  obtained  payment  of  the  damages  suffered,  he  can- 
not again  demand  said  damages  from  the  person  responsible  for  the  destruc- 
tion, because  he  has  no  interest,  Argentina,  Cam.  de  Apel.  Com.  de  la  Cap., 
Nov.  29,  1913,  Jurisp.  de  los  THbs.  Macs.,  Nov.,  1913,  p.  189. 

The  obligation  of  the  insured  to  take  all  necessary  steps  to  rescue  or  recover 
the  insured  thing  or  to  preserve  its  remains  ceases  after  he  abandons  the  thing 
to  the  insurer  or  receives  payment  of  the  policy;  since  from  that  moment  all 
rights  of  action  belong  to  the  insurer.  Colombia,  Corte  Sup.  de  Just.  Casaci6n, 
Nov.  30,  1889;  Gacela  Jwlicial,  IV,  p.  148. 

86  Argentina,  492,  497;  Bolivia,  196;  Chile,  550,  551;  Colombia,  674,  675; 
Costa  Rica,  370;  Ecuador,  556,  558;  Guatemala,  439,  441;  Nicaragua,  234; 
Uruguay,  634,  639;  Venezuela,  519,  521. 


434  LATIN-AMERICAN    COMMERCIAL    LAW 

Bankruptcy  of  any  of  the  parties. 

In  case  the  insurer  becomes  bankrupt  during  the  Hfe  of 
the  policy,  the  insured  may  ask  for  the  rescission  of  the 
contract  or  demand  that  the  receivers  guarantee  the  pay- 
ment of  the  insurance  if  the  loss  occurs.  The  insurer  enjoys 
the  same  privilege  in  case  of  failure  of  the  insured  before 
payment  of  the  premium.  Should  the  creditors  of  the 
banki'upt  or  the  receivers  fail  to  guarantee  the  contract, 
it  is  rescinded  .^^ 

Subrogation  of  the  insurer  to  the  rights  of  the  insured. 

The  insurer  who  pays  the  loss  covered  by  the  policy  is 
subrogated,  by  operation  of  law,  to  the  rights  of  the  insured 
against  third  parties  responsible  for  the  loss  and  the  insured 
is  liable  for  any  act  on  his  part  which  may  impair  these  rights 
of  the  insurer.^" 

In  Chile,^*  Colombia,^^  Ecuador  ^°  and  Guatemala,"  the 
provision  is  somewhat  different;  the  insurer  has  a  right  to 
compel  the  insured  to  assign  his  rights  to  the  insurer.  With- 
out such  assignment  the  insurer  may  demand  damages 
from  the  responsible  third  parties,  but  in  that  case  he  can- 
not avail  himself  of  the  personal  rights  and  privileges  which 
the  insured  may  have.^^ 

Non-paid  and  non-balanced  policies  must  be  included  among  the  liabilities 
of  a  bankrupt  underwriter  and  be  considered  as  balanced  policies.  Mexico, 
Juzgado,  Tercera  de  lo  Civil  del  Dist.  Fed.,  Oct.  9,  1912,  "La  Fraternal" 
Compania  de  Seguros  sobre  la  Vida,  Diano  de  Jurisp.,  v.  XXVII,  p.  553. 

88  Argentina,  526;  Chile,  559;  Colombia,  683;  Guatemala,  448;  Panama,  1022; 
Uruguay,  670;  Venezuela,  525. 

^  Argentina,  525;  Costa  Rica,  372;  Panama,  1021;  Uruguay,  669;  Venezuela, 
522. 

88  Art.  553.  83  Art.  677.  ^  Art.  559. 

"  Art.  442. 

^2  Actions  designed  to  recover  an  indemnity  for  the  loss  suffered  against  the 
person  responsible  for  it  does  not  belong  to  the  insured  but  to  the  insurer. 
Colombia,  Corte  Sup.  de  Just.,  Nov.  30,  1889,  Casaci6n,  Gaceta  Judicial,  v. 
IV,  p.  148,  and  Dec.  2,  1889,  lb.,  p.  156. 

In  case  of  loss  of  the  insured  property  the  insured  cannot  recover  at  the  same 
time  from  the  insurer  and  from  the  person  responsible  for  the  damage,  even 
though  the  reason  for  the  liability  of  each  is  different.  Colombia,  Corte  Sup. 
de  Just.,  Nov.  30,  1889;  Gaceta  Jud.,  v.  IV,  p.  148. 


CONTRACT  OF  INSURANCE  435 

Statute  of  limitations. 

Actions  arising  out  of  contracts  of  insurance  are  barred 
by  limitation  after  one  year  in  Brazil, ^^  if  the  cause  of  action 
arose  in  the  country^  and  two  years  otherwise,  after  five 
years  in  Chile,^^  Ecuador  ^'^  and  Guatemala,^^  after  ten  years^ 
in  Colombia,^'  and  after  three  years  in  Venezuela.^^ 

93  Art.  178  c.  c.  9<  Art.  568.  as  Art.  568. 

9«  Art.  457. 

^  Art.  692  of  the  commercial  code  and  25.36  of  the  civil  code. 

98  Art.  532. 

The  period  of  one  year  fixed  by  article  953  of  the  code  of  commerce  for  the 
limitation  of  actions  arising  from  a  contract  of  insurance,  can  be  shortened  in 
the  policy  by  mutual  agreement.  Argentina,  Cam.  de  Apel.  Com.  de  la  Cap., 
July  29,  1913,  Jurisp.  de  los  Tribs.  Nacs.,  July,  1913,  p.  249. 

The  period  established  by  the  law  for  the  prescription  of  actions  deriv'ed  from 
a  contract  of  insurance  can  be  reduced  in  the  policy.  Such  period  runs  from 
the  day  the  action  arose  and  not  from  the  day  the  insurer  refused  to  make  pay- 
ment of  the  indemnity.  The  appointment  of  an  appraiser  on  the  part  of  the 
under\vriter  to  determine  the  amount  of  the  loss  does  not  interrupt  the  running 
of  the  period  above  referred  to.  Argentina,  June  6,  1914,  Cam.  de  Apel.  Com. 
de  la  Cap.,  M.  Firpo  v.  La  Union  Mercantil,  Jurisp.  de  los  Tribs.  Noes.,  June, 
1914,  p.  322. 

When  the  underwriter,  in  a  letter  addressed  to  the  insured  recognizes  the 
right  of  the  latter  to  receive  an  indemnity  and  objects  only  to  the  amount  of 
the  same,  such  underwTiter  cannot  afterwards  allege  that  the  action  of  the 
insured  is  barred  by  limitation.  Argentina,  Cam.  de  Apel.  Com.  de  la  Cap., 
July  2,  1914,  E.  Perera  v.  "La  Positiva,"  Jurisp.  de  los  Tribs.  Noes.,  J1I3',  1914, 
p.  246. 


CHAPTER  XXV 

FIRE   INSURANCE 

Property  covered  by  a  fire  insurance  contract. 

All  kinds  of  real  estate  or  personal  property  which  can  be 
destroyed  or  injured  by  fire  can  be  the  subject-matter  of  a 
contract  of  fire  insurance. 

Negotiable  instruments,  securities,  bank-notes,  shares  and 
bonds  of  corporations  or  partnerships,  precious  stones  and 
metals,  whether  coined  or  in  bullion,  and  works  of  art  are  not 
included  in  a  fire  insurance  policy  unless  otherwise  stipulated, 
detailing  in  it  the  complete  description  and  value  of  these 
articles.^ 

Formalities  of  the  policy. 

Besides  the  matters  which  every  kind  of  insurance  policy 
must  enumerate,  the  fire  insurance  policy  must  state:  ^ 

(a)  location  and  boundaries  of  the  insured  buildings; 
(6)  their  use  and  purpose; 

(c)  the  purpose  and  use  of  the  neighboring  buildings 
in  so  far  as  they  can  affect  the  contract.^ 

(d)  the  place  where  the  goods,  subject-matter  of  the 
insurance,  are  stored. 

In  Panama  a  fire  insurance  policy  covering  realty  must  also 
contain  a  full  description  thereof,  taken  from  the  Public 
Registry  of  Property.    Should  the  property  not  be  registered, 

1  Spain,  387;  Chile,  524;  Colombia,  648;  Ecuador,  541;  Guatemala,  413; 
Honduras,  365;  Mexico,  399;  Peru,  382;  San  Salvador,  342;  Venezuela,  510. 

2  Argentina,  529;  Chile,  579;  Colombia,  703;  Ecuador,  579;  Guatemala,  466; 
Panama,  1023;  Uruguay,  673;  Venezuela,  546. 

'  A  fire  insurance  policy  is  valid  notwithstanding  the  omission  therein  of  a 
declaration  that  the  insured  buUding  was  in  direct  communication  with  another 
building  in  which  constant  use  of  fire  was  made,  when  it  is  proved  that  the  fire 
which  caused  the  destruction  of  the  insured  building  did  not  begin  in  the 
dangerous  building.  Peru,  Corte  Suprema  de  Justicia,  July  10,  1905,  J.  Solo- 
m6n  V.  Compania  a  Seguros  "La  Urbana,"  Anales  Jvdidales,  v.  1,  p.  134. 

436 


FIRE    INSURANCE  437 

a  complete  description  must  be  made,  and  in  every  case  it 
must  state  that  the  insured  is  in  undisturbed  possession  of 
the  insured  property. 

Damage  covered  by  the  insurance. 

The  fire  insurance  poUcy  covers  damage  and  losses  due  to 
•the  direct  effect  of  fire  or  to  the  inevitable  consequences 
thereof,  and  chiefly: 

(a)  expenses  incurred  by  the  insured  in  removing  the 
goods  in  order  to  prevent  their  loss; 

(6)  the  injury  suffered  by  the  articles  salvaged; 

(c)  damage  due  to  measures  taken  by  the  authorities 

with  respect  to  the  insured  property  in  order  to  confine 

or  check  the  fire.^ 

The  law  in  Argentina  ^  and  Uruguay  ^  is  more  minutely 

drawn :  all  damage  due  to  fire,  whatever  the  cause,  is  for  the 

account  of  the  insurer  unless  it  is  proved  that  it  was  due  to 

gross  negligence  of  the  insured  himself.    Loss  considered  as  a 

consequence  of  fire  is  assimilated  to  that  directly  caused  by 

the  fire,  even  though  it  arose  from  the  fire  of  neighboring 

buildings,  as  for  example,  injury  from  water  or  other  means 

used  in  extinguishing  the  fire,  loss  due  to  looting  or  other 

circumstances  while  the  fire  was  being  extinguished  or  during 

the  consequent  turmoil,  as  well  as  loss  resulting  from  the 

partial  or  total  demolition  of  the  insured  property  ordered  by 

the  authorities  to  check  the  fire.    Losses  due  to  gunpowder 

or  steam  boiler  explosion,  earthquake,  thunderbolt,  etc.,  even 

though  no  fire  resulted,  are  also  assimilated  to  losses  caused 

by   fire. 

Panama's  law  is  like  Argentina's,  the  only  difference  lying 
in  the  fact  that  the  policy  covers  cases  of  partial  or  total 
demoUtion  of  the  insured  property  whether  ordered  by  the 
authorities  or  not.^ 

*  Spain,  393;  Chile,  582;  Colombia,  708;  Ecuador,  582;  Honduras,  371; 
Mexico,  405;  Peru,  388;  San  Salvador,  347;  Venezuela,  549. 

'  Arts.  541,  542,  543.  "  Arts.  685,  686,  687. 

In  the  United  States,  on  the  other  hand,  loss  by  fire  is  strictly  construed  to 
cover  fire  only. 

'  Art.  1024. 


438  LATIN-AMERICAN    COMMERCIAL    LAW 

The  insurer  is  bound  to  pay  the  loss  even  when  it  is  due  to 
the  neghgence  of  the  insured.^ 

In  Argentina,^  Chile/"  Colombia/^  Ecuador/^  Guate- 
mala,^^ Panama,^"*  Uruguay  ^^  and  Venezuela,"  the  insurer 
is  bound  to  pay  in  case  the  loss  is  due  to  slight  negligence  of 
the  insured,  but  not  to  gross  negligence. 

Losses  not  comprised  in  the  policy. 

In  Spain,  ^^  Honduras,  ^^  Mexico,  ^^  Peru  ^°  and  San  Sal- 
vador, ^^  a  fire  insurance  pohcy  does  not  comprise,  unless 
otherwise  stipulated,  damage  caused  to  the  insured  by 
resulting  stoppage  of  factories,  loss  of  rentals  or  any  other 
similar  losses  or  damage.  In  Honduras,  no  exception  is 
made  of  the  suspension  of  house  rentals.  Nor  does  it  cover, 
in  certain  countries,  either  fire  caused  by  military  forces  in 
time  of  war,  or  fire  resulting  from  riots,  volcanic  eruptions 
or  earthquakes.  ^2 

In  Chile,  ^^  Colombia,  ^^  Ecuador,  ^^  Guatemala  ^^  and 
Venezuela,-''  the  insurance  taken  upon  a  building  does  not 
cover  losses  sustained  by  its  owner  in  paying  damages  to 
neighbors  of  the  insured  building. 

Acts  of  the  insured  which  release  the  insurer. 

The  insurer  is  also  released  from  the  obligation  of  paying 
the  loss  on  account  of  certain  acts  of  the  insured,  according  to 
the  following  systems : 

1st.    When  the  loss  is  due  to  a  crime  of  the  insured.-^ 
2d.  When    the  loss  is  due  to    gross   neghgence    or 
fraud  of  the  insured.-^ 

8  Spain,  396;  Honduras,  374;  Mexico,  408;  Peru,  391;  San  Salvador,  349. 
9  Art.  541.  10  Art.  552.  ii  Art.  676. 

"  Art.  582.  "  Art.  468.  "  Art.  1024. 

"  Art.  685.  "  Art.  549.  "  Art.  395. 

IS  Art.  373.  "  Art.  407.  «•  Art.  390. 

"  Art.  348. 

"Spain,  396;  Honduras,  374;  Mexico,  408;  Peru,  391;  San  Salvador,  349. 
23  Art.  580.  24  Art.  706.  ^^  Art.  580. 

M  Art.  467.  2'  Art.  547. 

28  Spain,  396;  Honduras,  374;  Mexico,  408;  Peru,  391;  San  Salvador,  349. 

29  Argentina,  541;  Panama,  1024;  Uruguay,  685. 


FIEE   INSURANCE  439 

Sd.  When  the  loss  is  due  to  an  act  of  the  insured  or 
of  a  person  for  whom  he  is  civilly  liable  or  to  a  violation 
of  the  law  or  police  regulations  on  the  part  of  the  in- 
sured.^" 

Other  cases  in  which  indemnity  is  not  due. 

The  benefit  of  the  insurance  covers  only  the  articles  which 
have  been  insured  and  while  they  are  in  the  place  declared  in 
the  policy.  The  liability  of  the  insurer  cannot  be  extended 
beyond  the  estimated  value  of  the  articles  insured. ^^ 

In  Venezuela  the  removal  of  an  insured  article  without 
the  consent  of  the  insurer  releases  him  from  liability  to  pay 
for  its  loss  if  the  court  considers  the  removal  to  have  in- 
creased the  risk,  and  provided  the  insurer  continued  to 
receive  the  premiums  after  he  knew  of  said  removal.  ^^ 

In  Argentina,  ^^  Chile/^  Colombia/^  Ecuador,  ^^  Guate- 
mala," Panama,  ^^  Uruguay  ^^  and  Venezuela,  ^°  the  liability 
of  the  insurer  ceases  when  the  insured  building  is,  after  the 
contract,  dedicated  to  a  use  which  increases  the  risk  of  fire, 
in  such  manner  that  it  is  probable  that  the  insurer  would  not 
have  made  the  contract  or  would  have  done  it  under  different 
conditions  had  he  been  aware  of  such  risk. 

Substitution  of  one  thing  for  another. 

The  substitution  or  exchange  of  one  thing  for  another  of  a 

30  Chile,  552,  584;  Colombia,  676,  710;  Ecuador,  558,  584;  Guatemala,  441, 
470;  Venezuela,  521,  551. 

31  Spain,  397;  Argentina,  538;  Chile,  538,  583;  Colombia,  662,  709;  Ecuador, 
583;  Guatemala,  427,  469;  Honduras,  375;  Mexico,  409;  Panama,  1009,  1028; 
Peru,  392;  San  Salvador,  350;  Uruguay,  682;  Venezuela,  515. 

32  The  insurer's  declaration  that  a  policy  has  lapsed  due  to  the  fact  that  the 
insured  removed  the  remains  of  the  house  destroyed  by  fire  as  well  as  the 
salvaged  merchandise,  without  notice  to  the  insurer,  is  not  proper  even  though 
the  policy  stipulated  for  such  notice,  when  the  insured  was  not  actuated  in 
doing  so  by  any  unlawful  design  to  conceal  the  facts.  Argentina,  Cam.  de 
Apel.  Com.  de  la  Cap.,  Nov.  26,  1912,  E.  Abente  v.  La  Franco  Argentina, 
Jurisp.  de  los  Tribs.  Nacs.,  Nov.,  1912,  p.  297. 

33  Art.  537.  3*  Art.  583.  36  Art.  709. 
3«  Art.  583.                                3^  Art.  469.                                38  Art.  1028. 
3'  Art.  681.                               "^  Art.  515. 


440  LATIN-AMERICAN    COMMERCIAL   LAW 

different  kind  or  species  not  comprised  in  the  contract  of 
insurance,  nullifies  it  from  the  moment  of  substitution.** 

When  an  alteration  or  change  is  made  by  an  unforeseen 
event  or  by  the  act  of  a  third  person,  any  of  the  parties  may 
demand  the  rescission  of  the  contract/^ 

Requisites  in  order  to  bind  the  insurer. 

In  a  fire  insurance  contract  it  is  necessary,  in  order  that 
the  insurer  be  bound,  to  have  paid  him  the  single  premium 
or  the  installments  agreed  upon  as  and  when  agreed  upon  in 
the  contract.  The  premium  must  be  paid  in  advance,  and 
once  it  is  paid  it  belongs  to  the  insurer,  whatever  the  duration 
of  the  insurance.*^ 

Duties  of  the  insured. 

The  duties  of  the  insured  or  of  the  persons  who  represent 
him  are: 

(a)  To  declare  in  good  faith  all  the  circumstances 
necessary  to  identify  the  insured  property  and  to 
appreciate  the  character  of  the  risk.** 
(6)  To  pay  the  premium  in  advance.*^ 
In  Panama,  when  the  insured  does  not  pay  the 
premium  within  the  period  stipulated  in  the  policy,  the 
contract  is  void,  provided  the  insurer  has  notified  the 
insured  of  the  purpose  to  rescind,  and  the  latter  fails 

"Spain,  391;  Chile,  583;  Colombia,  662;  Ecuador,  550;  Guatemala,  427; 
Honduras,  369;  Mexico,  403;  Peru,  386;  Venezuela,  515. 

«  Spain,  392;  Honduras,  370;  Mexico,  404;  Peru,  387;  San  Salvador,  346. 

Additions  contructed  by  the  insured  on  the  building,  subject-matter  of  the 
insurance,  after  the  contract  of  insurance  was  executed,  are  not  a  cause  of 
rescission,  if  by  the  nature  of  the  property  and  the  circumstances  of  the  in- 
sured business  house,  such  additions  do  not  increase  the  risk.  Argentina, 
Cam.  de  Ap.  Com.,  Oct.  7,  1913,  Jurisp.  de  los  Tribs.  Noes.,  Oct.,  1913,  p.  289. 

«  Spain,  388;  Argentina,  532;  Chile,  544;  Colombia,  668;  Guatemala,  433; 
Honduras,  366;  Mexico,  400;  Peru,  383;  Uruguay,  674. 

^^  Spain,  381;  Argentina,  498;  Chile,  556;  Colombia,  680;  Ecuador,  560; 
Guatemala,  445;  Honduras,  359;  Mexico,  393;  Panama,  1000;  Peru,  376; 
Uruguay,  640,  645;  Venezuela,  524. 

« Spain,  388;  Argentina,  530;  Bolivia,  196;  Chile,  543;  Colombia,  667; 
Ecuador,  560;  Guatemala,  445;  Honduras,  366;  Mexico,  400;  Peru,  383;  San 
Salvador,  343;  Uruguay,  674;  Venezuela,  524. 


FIRE    INSURANCE  441 

to  pay  within  fifteen  days.  If  the  insurer  does  not  give 
such  notice,  the  contract  is  in  force,  and  in  case  of  loss 
the  insured  must  receive  the  amount  stipulated,  less 
the  non-paid  premium  and  interest  thereon  at  the 
prevailing  market  rate.'*^ 

(c)  In  Argentina, ^^  Chile, "^  Colombia, ^^  Ecuador,^" 
Guatemala,  ^^  Panama,  ^^  Uruguay  ^^  and  Venezuela,  ^^ 
the  insured  is  bound  to  use  all  possible  care  in  the  pres- 
ervation of  the  insured  property;  he  is  responsible  even 
for  sUght  negligence.  In  case  he  fails  to  comply  with 
this  duty,  the  insurer  is  not  released  from  his  obligation 
of  paying  the  insurance,  as  we  have  seen,  but  he  is 
entitled  to  damages. 

In  the  above  mentioned  countries  the  insured  is  also 
bound  to  take  all  necessary  steps  in  order  to  save  or 
rescue  the  insured  property  or  to  preserve  the  salvaged 
portion.  ^^ 

(d)  To  notify  the  insurer: 

1.  Of  all  other  policies  taken  out  before,  simultane- 
ously or  after  the  contract.  ^^ 
In  Chile,"  Colombia, ^^  Ecuador, ^^  Guatemala  ^"  and 

«  Art.  998.  ^'  Art.  524.  ^^  Art.  556. 

«  Art.  680.  60  Art.  560.  "  Art.  445. 

62  Art.  1020.  "  Art.  668.  "  Art.  524. 

66  The  obligation  of  the  insured  stipulated  in  the  policy,  to  produce  a  final 
judicial  decision  in  the  proceedings  initiated  on  account  of  a  fire,  is  compUed 
with  by  the  presentation  of  a  provisional  judicial  decision,  because  the  courts 
in  such  cases  never  render  a  final  decision  when  no  one  is  found  guilty.  Argen- 
tina, Cam.  de  Apel.  Com.,  April  18,  1914,  Jurisp.  de  los  Tribs.  Nacs.,  April, 
1914,  p.  260,  and  May  14,  1914,  lb.,  May,  1914,  p.  240. 

In  a  fire  insurance  policy  in  which  it  has  been  stipulated:  (a)  that  the  in- 
sured must  notify  the  underwriter  immediately  after  the  fire  takes  place;  (b) 
that  he  must  present  a  statement  as  exact  as  possible  of  things  existing  in  the 
house  before  the  fire,  of  those  which  were  destroyed  or  injured  by  it,  and  of 
those  which  were  not  lost,  with  the  value  thereof;  (c)  that  he  must  prove  the 
existence  and  value  of  the  insured  things,  the  insured  has  to  comply  with  those 
requisites,  otherwise  the  policy  lapses.  Argentina,  Cam.  de  Apel.  Com.  de  la 
Cap.,  May  23,  1914,  JuHsp.  de  los  Tribs.  Nacs.,  May,  1914,  p.  143. 

6«  Spain,  398;  Honduras,  376;  Mexico,  410;  Panama,  1011;  Peru,  393;  San 
Salvador,  351. 

6'  Art.  556.  68  Art.  680.  6i  Art.  560. 

*>  Art.  445. 


442  LATIN-AMERICAN    COMMERCIAL    LAW 

Venezuela/^  this  obligation  must  be  complied  with  at 
the  time  payment  of  the  policy  is  demanded. 

In  Argentina  ^-  and  Uruguay  ^^  the  obligation  is 
limited  to  a  declaration  of  the  policies  taken  out  prior 
to  the  contract. 

2.  Of  alterations  made  in  the  contracts  of  insurance 
mentioned  in  the  policy. ^^ 

3.  Of  alterations  in  the  character  of  the  insured 
property  which  might  increase  the  risk.^^ 

4.  Of  the  death,  liquidation  or  bankruptcy  of  the 
insured  or  the  sale  or  conveyance  of  the  insured  property 
within  a  period  of  fifteen  days,  under  pain  of  the  nullity 
of  the  insurance  from  the  date  those  events  occurred.^^ 
In  Chile,*^^  Colombia  ^^  and  Guatemala, ^^  the  period  is 
three  days,  and  the  penalty  is  that  the  insurer  can 
demand  the  rescission  of  the  contract. 

In  Venezuela  ^°  the  facts  must  be  notified  as  soon  as 
possible. 

5.  Of  the  loss  of  the  insured  property  immediately 
after  it  occurs.^^ 

The  partial  or  total  loss  of  the  insured  property  must 
be  notified  to  the  insurer  within  eight  days  after  its 
occurrence,  under  penalty  of  damages.^^ 

(e)  To  prove  the  loss  in  the  forms  to  be  stated  pres- 
ently. 

Default  in  payment  of  the  premium. 

The  effects  of  default  in  payment  of  the  premium  present 

61  Art.  524.  82  Art.  521.  "^  Art.  665. 

"Spain,  398;  Chile,  556;  Colombia,  680;  Ecuador,  560;  Guatemala,  445; 
Honduras,  376;  Mexico,  410;  Peru,  393;  San  Salvador,  351;  Venezuela,  524. 

65  Spain,  398;  Chile,  556;  Colombia,  680;  Ecuador,  560;  Guatemala,  445; 
Honduras,  376;  Mexico,  410;  Peru,  393;  San  Salvador,  351;  Venezuela,  524. 

66  Spain,  402;  Hondiu-as,  380;  Mexico,  414;  Peru,  397;  San  Salvador,  355. 

67  Arts.  556,  557.  ««  Arts.  680,  681.  ^^  Arts.  445,  446. 
'« Arts.  524,  527. 

'1  Spain,  404;  Argentina,  524;  Chile,  556;  Colombia,  680;  Ecuador,  560; 
Honduras,  381;  Mexico,  416;  Peru,  399;  San  Salvador,  356;  Uruguay,  66S; 
Venezuela,  524. 

"  Panama,  1020. 


FIRE    INSURANCE  443 

some  differences,  and  we  may  note  the  following  systems 
in  this  respect : 

1.  When  the  insured  delays  the  payment  of  the  pre- 
mium the  insurer  can  rescind  the  contract  by  notifying 
the  insured  forty-eight  hours  after  the  premium  was 
due. 

Should  he  not  avail  himself  of  this  privilege  the  con- 
tract is  outstanding  and  the  insurer  can  at  any  time 
demand  payment  of  the  premium.^^ 

Chile,"'*  Colombia  ^^  and  Guatemala  ^^  have  the  same 
system  but  the  period  granted  to  the  insurer  for  notify- 
ing rescission  of  the  contract  is  three  days. 

2.  If  the  premium  is  not  paid  at  the  beginning  of 
every  year,  the  risk  ceases  to  rest  upon  the  insurer.  If 
the  insured  later  offers  the  overdue  payment,  the 
insurer  can  choose  between  the  continuation  of  the  in- 
surance or  its  annulment  from  the  day  the  premium 
became  due;  and  even  though  the  insurer  demands 
payment  of  the  premium  judicially  or  extrajudicially 
the  risks  are  not  for  his  account  so  long  as  the  premium 
remains  unpaid." 

Duties  of  the  insurer. 

The  main  obligation  of  the  insurer  arises  when  the  loss 
occurs,  and  consists  in  paying  indemnity  for  losses  caused 
by  the  fire,  the  losses  comprising  what  has  already  been  set 
forth.'S 

In  Spain,  Honduras,  Mexico  and  Guatemala  the  insurer 
enjoys  a  period  of  ten  days  in  which  to  pay  the  loss,  counting 

"  Spain,  389;  Honduras,  367;  Mexico,  401;  Peru,  384;  San  Salvador,  344. 

^*  Arts.  544,  545.  '*  Arts.  668,  669.  ^8  Arts.  433,  434. 

''  Argentina,  532,  533;  Uruguay,  676,  677. 

'8  Spain,  409;  Argentina,  541;  Chile,  550,  582;  Colombia,  674,  708;  Ecuador, 
556,  582;  Guatemala,  439,  408;  Honduras,  386;  Mexico,  419;  Peru,  404; 
Uruguay,  685;  Venezuela,  519,  549. 

A  fire  insurance  policy  gives  the  insured  the  right  to  initiate  an  "executive" 
proceeding  for  the  payment  of  the;  full  amount  stipulated  when  the  loss  is  total, 
covering  all  the  insured  property.  Peru,  Corte  Suprema  de  Justicia,  I>ima, 
April  23,  1909,  Clement  v.  Compania  Internacional  de  Seguros  del  Peru, 
Armies  Jud.  de  la  Sup.  Corte  de  Just.,  v.  5,  p.  60. 


444  LATIN-AMERICAN    COMMERCIAL    LAW 

from  the  day  following  the  agreement  of  the  parties  for  the 
valuation  of  the  loss  by  experts.  In  case  of  delay,  the  in- 
surer must  also  pay  the  legal  interest  on  the  amount  due, 
counting  from  the  day  mentioned. ^^ 

Different  ways  to  pay  the  loss. 

The  insurer,  as  a  rule,  must  pay  in  cash  as  provided  for 
in  the  policy,  but  he  can  also  indemnify  by  other  means. 

In  Spain,^°  Honduras  ^^  and  Mexico,^-  he  can  choose 
within  the  period  of  ten  days  above  referred  to,  between 
paying  the  indemnity  in  cash  or  repairing,  rebuilding  or 
replacing  according  to  their  kind  or  species,  the  insured  and 
destroyed  property,  provided  both  parties  agree. 

In  Peru  ^^  the  same  rule  prevails,  and  the  insurer  can  make 
the  election  without  the  consent  of  the  insured. 

In  Argentina,^"*  Panama  ^^  and  Uruguay,^^  if  it  is  stipulated 
that  the  insurer  is  bound  to  rebuild  or  repair  the  destroyed 
building  up  to  the  amount  of  the  insurance,  the  insurer  has  a 
right  to  compel  the  insured  to  use  the  money  paid  in  the 
reconstruction  or  repair  agreed  upon  within  a  period  deter- 
mined by  the  court,  which,  at  the  request  of  the  insurer,  can 
order  the  insured  to  give  a  bond  therefor,  if  deemed  necessary. 
In  Argentina  and  Uruguay,  when  the  reconstruction  of  the 
burnt  building  is  agreed  upon,  stipulation  must  be  made  to 
the  effect  that  the  expenses  are  for  the  account  of  the  in- 
surer. In  such  case  the  insurance  cannot  exceed  three- 
quarters  of  the  expenses;  otherwise  it  is  null  in  so  far  as  it 
exceeds  that  amount,  and  it  raises  a  presumption  of  fraud 
against  the  insured. 

Colombia  *^  provides  that  in  fire  insurance  policies  it  must 

^9  A  demurrer  based  on  the  ground  that  the  plaintiff  consciously  exaggerated 
the  amount  of  the  loss  is  not  proper  when  it  is  proved  by  the  books  of  the  in- 
sured and  other  circumstantial  evidence  that  the  loss  was  approximately  that 
stated  in  the  complaint.  Argentina,  Cam.  de  Apel.  Com.  de  la  Cap.,  Nov.  29, 
1912,  G.  Conde  v.  "La  Italiano"  and  La  Uni6n  Mercantil;  "  Jurisp.  de  los 
Tnbs.  Macs.,  Nov.,  1912,  p.  303. 

80  Art.  411.  81  Art.  388.  82  Art.  421. 

83  Art.  406.  84  Arts.  535,  536.  85  Art.  1027. 

89  Arts.  679,  680.  ^  Arts.  704,  705. 


FIRE    INSURANCE  445 

be  stated  whether  the  insurer  is  obHged  to  indemnify  the 
loss  by  reconstructing  the  buildings  and  replacing  the 
movables  or  merchandise,  or  by  delivering  a  certain  amount 
of  money.  Should  there  be  no  such  stipulation  the  obliga- 
tion of  pajdng  in  cash  is  understood;  if  the  insurer  prefers  to 
reconstruct  the  buildings  or  replace  the  movables  or  mer- 
chandise neither  the  insured  nor  his  creditors  can  compel 
him  to  pay  the  indemnity  in  cash.  In  these  cases  the  insurer 
is  bound  to  invest  in  the  reconstruction  or  replacement  the 
amount  the  buildings  or  merchandise  were  worth  at  the  time 
of  the  loss,  provided  this  amount  is  not  greater  than  the 
insured  sum.^ 

Obligation  of  the  insurer  in  case  of  two  or  more  policies. 

When  two  or  more  policies  have  been  taken  out  with 
respect  to  the  same  property  various  systems  are  followed, 
namely : 

1.  When  the  same  article  has  been  insured  for  an 
aUquot  part  of  its  value,  the  insurers  must  contribute 
pro  rata  to  pay  the  amount  of  the  insurance.^^ 

2.  If  there  are  several  policies  of  insurance  closed  in 
good  faith  and  the  first  covers  the  full  value  of  the 
property,  the  others  are  void.  If  the  first  policy  does 
not  cover  the  full  value  of  the  property,  the  following 
ones  guarantee  the  balance  only,  in  the  order  of  their 
dates.  Should  several  policies  be  made  for  the  same 
same  period  and  at  the  same  day  and  hour,  each  cover- 
ing the  full  value  of  the  property,  every  insurer  is  liable 
in  proportion.  Insurers  whose  policies  are  left  without 
effect  must  return  half  the  premium  received,  keeping 
the  other  half  thereof  by  way  of  damages.^" 

®  When  in  a  fire  insurance  policy  the  replacement  of  lost  articles  in  kind 
(species)  is  stipulated  and  at  the  same  time  a  certain  amount  is  fixed  to  cover 
the  destruction  of  the  building,  the  underwriter  cannot  discharge  his  duty  by 
rebuilding  the  house;  the  word  "species"  refers  to  personal  property  and  this 
is  the  only  kind  he  is  authorized  by  the  contract  to  replace.  Chile,  Cort(!  de 
Justicia  de  Concepci6n,  Aug.  5,  1896,  R.  de  La  Fuente  v.  Comp.  de  Seguros  La 
Concepci6n;  Gaceta  de  los  Tribs.,  1896,  v.  2,  p.  389. 

»9  Spain,  400;  Honduras,  378;  Mexico,  412;  Peru,  395;  San  Salvador,  353. 

9"  Argentina,  500;  Panama,  1011,  1012;  Uruguay,  663. 


446  LATIN-AMERICAN    COMMERCIAL    LAW 

3.  When  various  insurers  have  insured  jointly  or 
separately  on  the  same  date  for  an  amount  in  excess 
of  the  value  of  the  insured  property,  they  will  not  be 
liable  for  more  than  the  value  and  in  proportion  to  the 
amount  of  each  policy.^^ 

When  the  policy  does  not  cover  the  full  value  of  the  insured 
property. 
If  the  value  of  the  thing  lost  exceeds  the  amount  of 
the  policy,  the  insured  is  considered  his  own  insurer  for 
the  excess,  and  must  bear  an  aliquot  part  of  the  loss  and 
expenses.  ^^ 

When  the  policy  covers  more  than  the  value  of  the  insured 
property. 
When  the  amount  of  the  insurance  is  greater  than  the 
value  of  the  insured  property,  the  policy  is  only  enforceable 
up  to  such  value. ^^ 

Rights  of  the  insurer. 

The  insurer  has  the  following  rights  and  privileges : 

(a)  To  collect  the  premium  in  advance  according  to 
the  terms  of  the  contract.  He  has  a  preference  in  being 
paid  the  premium  on  the  value  of  the  insured  property 
before  any  other  creditor,  if  it  is  personal  property;  if 
it  is  real  estate,  it  stands  as  a  guaranty  for  the  payment 
of  the  premiums  due  the  preceding  two  years,  according 
to  the  principles  of  the  civil  law.^* 

The  clause  in  a  policy  that  the  obligations  of  the  insurer  cease  if  the  insured 
takes  out  another  policy  upon  the  same  property  is  valid.  Argentina,  Cam. 
de  Apel.  Com.  de  la  Cap.,  Dec.  6,  1913,  Jurisp.  de  los  Tribs.  Nacs.,  Dec,  1913, 
p.  285. 

^1  Chile,  526;  Colombia,  650;  Ecuador,  543;  Guatemala,  415;  Venezuela,  511. 

92  Spain,  408;  Argentina,  502;  Chile,  532;  Colombia,  656;  Ecuador,  544; 
Guatemala,  421;  Honduras,  385;  Panama,  1000;  Peru,  403;  Uruguay,  642; 
Venezuela,  511. 

93  Argentma,  502;  Bolivia,  202;  Chile,  532;  Colombia,  656;  Guatemala,  421; 
Nicaragua,  237;  Panama,  1009;  Uruguay,  642;  Venezuela,  511. 

^*  Spain,  403  and  219,  220,  221  of  the  Ley  hipoteraria;  Mexico,  415;  Peru, 
398. 


FIRE    INSURANCE  447 

In  Argentina,^^  Chile/®  Colombia,^^  Guatemala,^^ 
Panama  ^^  and  Uruguay,^™  in  case  of  bankruptcy  of  the 
insured,  the  underwriter  who  has  not  been  paid  the 
premium  may  demand  the  rescission  of  the  contract  or  a 
guaranty  that  the  premium  w411  be  paid.  If  the  re- 
ceivers or  assignees  do  not  guarantee  said  payment, 
the  underwriter  can  demand  the  full  assignment  of  any 
rights  accruing  from  other  policies  which  the  debtor 
may  have  contracted. 

(b)  To  be  subrogated  to  the  rights  of  the  insured 
against  persons  responsible  for  the  fire,  whatever  the 
basis  for  such  responsibility,  after  he  has  paid  the  in- 
surance.^"^ 

(c)  To  acquire  ownership  in  the  things  saved  from  the 
fire,  if  he  pays  the  insured  their  value  as  established  by 
experts.  ^°- 

(d)  To  assign  his  rights  partially  or  totally,  in  Spain,  ^°* 
Honduras,  ^"^  Mexico, ^"^  Peru  ^""^  and  San  Salvador, ^°"  or 
to  reinsure  the  property  for  his  benefit,  in  Argentina,  ^°* 
Chile,  109  Colombia,ii«  Ecuador,iii  Guatemala,^^-  Uru- 
guay 11^  and  Venezuela,  1 1'*  but  in  either  case  the  rights 
of  the  insured  are  not  affected. 

(e)  To  rescind  any  other  contract  or  contracts  he  may 
have  made  with  the  insured  after  a  loss  has  occurred, 
so  that  no  future  risks  will  be  for  his  account.  To  that 
end  he  must  advise  the  insured  fifteen  days  in  advance, 
returning  to  him  the  proportionate  part  of  the  un- 
earned premium.  11^ 

"^  Art.  526.  93  Art.  559.  9^  Art.  683. 

98  Art.  448.  99  Art.  1022.  i™  Art.  670. 

"1  Spain,  413;  Argentina,  525;  Bolivia,  205;  Honduras,  390;  Mexico,  423; 
Nicaragua,  239;  Panama,  1021;  Peru,  408;  San  Salvador,  358;  Uruguay,  069; 
Venezuela,  522. 

'"2  Spain,  412;  Honduras,  389;  Mexico,  422;  Peru,  417. 

">^  Art.  400.  104  Art.  378.  los  Art.  412. 

"»  Art.  395.  «"  Art.  353.  los  Art.  517. 

»■»  Art.  523.  "«  Art.  647.  i"  Art.  540. 

"2  Art.  412.  "3  Art.  658.  "*  Art.  509. 

1^6  Spain,  414;  Honduras,  391;  Mexico,  424;  Peru,  409;  San  Salvador, 
359. 


448  LATIN-AMERICAN   COMMERCIAL   LAW 

Proof  of  loss. 

Various  systems  are  followed  in  the  matter  of  proof  of 
loss,  namely: 

System  of  Spain.  The  insured  must  prove  the  loss 
sustained  by  proving  the  existence  of  the  property 
before  the  fire.^^^ 

System  of  Argentina.  The  courts  may  accept  the 
sworn  statement  of  the  insured  in  case  of  fire  of  furniture 
or  merchandise  in  a  house  or  store,  when  no  regular 
means  of  evidence  can  be  obtained.  ^^'' 

System  of  Chile.  The  insured  must  prove  the  exist- 
ence of  all  the  circumstances  necessary  to  estabhsh  the 
amount  of  indemnity.  ^^^ 

System  of  Mexico.  In  case  of  a  total  loss  by  fire,  the 
existence  of  the  insured  property  at  the  moment  and 
in  the  place  of  the  fire  is  proved  by  the  valuation  of 
the  property  insured,  as  noted  in  the  policy  and  by  the 
premiums  paid  by  the  insured,  unless  e\ddence  to  the 
contrary  is  produced.  In  case  of  partial  loss  the  in- 
sured, besides  the  evidence  afforded  by  the  policy 
itself,  must  supplement  it  with  other  evidence,  in  order 
to  fix  the  value  of  the  saved  property.  ^^^ 

System  of  Panama.  When  the  subject-matter  of  the 
insurance  is  merchandise  or  household  furniture,  the 
obligation  to  prove  the  loss  and  the  existence  of  the 
things  at  the  time  of  the  fire  rests  with  the  in- 
sured. ^2° 

Appraisal  of  the  property  lost. 

The  appraisal  of  the  loss  caused  by  fire  must  be  under- 
taken by  experts  in  the  form  estabUshed  in  the  pohcy  or 
by  agreement  of  the  parties,  or  in  default  thereof,  in  accord- 
ance with  the  law  of  procedure.    The  experts  must  pass  upon : 
(a)  the  causes  of  the  fire; 

"«  Spain,  405;  Honduras,  382;  Peru,  400;  Sau  Salvador,  357. 
1"  Argentina,  519,  540;  Uruguay,  661,  684. 

118  Chile,  556;  Colombia,  680;  Guatemala,  445;  Venezuela,  524. 

119  Art.  402.  120  Art.  1025. 


FIRE    INSURANCE  449 

(6)  the  value  of  the  insured  property  on  the  day  of 
the  fire,  before  its  occurrence; 

(c)  the  value  of  the  same  property  after  the  fire,  and, 

(d)  other  questions  submitted  to  them.^"^ 

In  Argentina,^"  Chile/ -^  Colombia,^--*  Ecuador, ^-^  Guate- 
mala ^-^  and  Panama, ^-^  when  by  reason  of  its  nature,  the 
value  of  the  insured  property  has  not  been  fixed  in  the  policy, 
it  is  understood  that  the  parties  intended  its  value  at  the 
time  of  the  fire,  which  can  be  proved  by  all  legal  means.  ^-* 

In  Uruguay  the  value  of  the  insured  property  must  be 
stated  in  the  policy,  otherwise  it  can  be  proved  by  all  means 
accepted  in  commercial  affairs.  ^-^ 

In  Argentina, ^^"  Panama  ^^^  and  Uruguay, ^^^  the  valuation 
of  real  estate,  in  case  of  fire,  must  be  made  by  comparing 
the  value  of  the  property  before  and  immediately  after  the 
fire. 

According  to  article  661  of  the  code  of  Uruguay  the  valu- 
ation noted  in  the  policy  is  not  evidence,  in  case  of  disagree- 
ment, unless  it  was  fixed  by  experts,  and  article  662  adds 
that  the  clause  ' 'whether  less  or  more  valuable"  does  not 

121  Spain,  406,  407;  Honduras,  383,  384;  Mexico,  417,  418;  Peru,  401,  402. 

1"  Art.  519.  123  Art.  533.  12*  Art.  557. 

1"  Art.  546.  128  Art.  422.  12^  Art.  1017. 

i2«  In  case  the  valuation  of  the  insured  things  cannot  be  made,  due  to  the 
total  destruction  by  fire  of  the  house  in  which  they  were,  or  other  similar  cir- 
cumstance, the  judge  may  accept  the  sworn  statement  of  the  insured.  Argen- 
tina, Cam.  de  Ap.  Com.,  April  18,  1914,  Jurisp.  de  los  Tribs.  Nacs.,  April, 
1914,  p.  260. 

In  order  to  fix  the  amount  of  the  indemnity  due  by  the  underwriter  in  case 
of  fire  it  is  necessary  to  take  into  consideration  the  maximum  stipulated,  the 
price  paid  by  the  insured  for  the  things  destroyed  and  the  valuation  made  by 
the  insured.  Argentina,  Cam.  de  Apel,  Com.  de  la  Cap.,  July  29,  1913,  Jurisp. 
de  los  Tnbs.  Macs.,  July,  1913,  p.  254. 

When  the  iasured  demands  a  greater  indemnity  than  the  loss  warrants  he 
must  pay  the  underwriter  an  amount  equal  to  double  the  premium  stipulated, 
but  he  does  not  forfeit  the  correct  indemnity  therefor.  When  the  policy  was 
not  produced  by  either  of  the  parties,  the  case  will  be  decided  according  to  the 
general  principles  of  law.  Argentina,  Cam.  de  Apel.  Com.  de  la  Cap.,  April  29, 
1913,  G.  Menthe  v.  La  Uni6n  Mercantil,  Jurisp.  de  los  Tribs.  Noes.,  April, 
1913,  p.  243. 

129  Art.  660.  i»«  Art.  534.  "i  Art.  1026. 

"2  Art.  678. 


450  LATIN-AMERICAN   COMMERCIAL   LAW 

prevent  a  finding  of  fraud  on  the  part  of  the  insured  if  he 
has  participated  in  it  in  the  declarations  of  the  poHcy,  nor 
has  it  any  value  if  it  is  proved  that  the  insured  property  was 
worth  25%  less  than  the  amount  fixed  in  the  poUcy. 

Appraisal  expenses. 

In  Spain/ ^^  Honduras,  ^^^  Mexico  ^^^  and  Peru/^®  the 
expenses  incidental  to  the  appraisal  of  the  property  lost 
and  the  liquidation  of  the  indemnity  are  for  the  account 
of  both  parties,  each  paying  half,  unless  the  insured  has 
made  a  manifest  exaggeration  in  his  estimate,  in  which 
case  he  alone  must  bear  the  expenses. 

In  Chile, ^^^  Colombia,"^  Ecuador, ^^^  Guatemala  ^"^^  and 
Venezuela,  ^"^^  the  expenses  are  for  the  account  of  the  insurer. 

Conflict   of  laws. 

According  to  article  703  of  the  code  of  Colombia,  when 
the  insurers  are  not  residents  of  the  country  but  have  only 
agents  in  it,  the  fire  insurance  contract  is  governed  by  the 
laws  of  the  country  where  said  insurers  have  their  domicil. 

133  Art.  415.  134  Art.  392.  i'*  Art.  425. 

138  Art.  410.  137  Art.  556.  "s  ^rt.  680. 

139  Art.  560.  !«•  Art.  445.  "i  Art.  524. 


CHAPTER  XXVI 

LIFE  INSURANCE  AND  OVERLAND  TRANSPORTATION  INSURANCE 

Object  of  a  life  insurance  contract. 

Life  insurance  contracts  may  comprise  every  combination 
by  which  a  premium  or  a  certain  amount  of  money  is  paid 
as  a  consideration  for  an  annuity  for  life  or  up  to  a  certain 
age,  or  for  a  sum  of  money  payable  at  the  death  of  a  certain 
person,  whether  in  favor  of  the  insured  himself  or  of  his 
successor  in  interest,  or  of  a  third  party.  This  contract  may 
also  comprise  any  other  like  combination.^ 

Data  in  a  life  insurance  policy. 

Besides  the  general  requisites  of  an  insurance  policy  a 
life  insurance  policy  must  state  the  following : 

(a)   the  amount  of  capital  or  income,  subject-matter 
of  the  insurance;  ^ 

(6)  the  increase  or  decrease  of  the  capital  or  income, 
in  case  the  contract  so  requires,  with  the  date  on  which 
those  changes  are  to  take  place;  ^ 

(c)  the  age  and  condition  of  health  of  the  insured;  ^ 

(d)  the  date  of  the  insured's  birth;  '" 

(e)  the  date  after  which   the  risks  begin  to  run  for 
the  account  of  the  insurer;® 

(/)    The  beneficiary.^ 

1  Spain,  416;  Brazil,  1471,  1476  c.  c;  Chile,  569,  571,  572;  Colombia,  693, 
695,  696;  Guatemala,  458,  459,  460;  Honduras,  393;  Mexico,  426;  Panama, 
1046,  1048;  Peru,  411;  San  Salvador,  360;  Uruguay,  695;  Venezuela,  535,  536. 

^  Spain,  Argentina,  Honduras,  Mexico,  Peru,  San  Salvador  and  Uruguay. 

'  Spain,  Honduras,  Mexico,  Peru,  San  Salvador. 

*  Chile,  Colombia,  Ecuador,  Venezuela. 

*  Panama.  "  Panama. 
^  Panama. 

The  respective  articles  of  the  codes  above  mentioned  are  as  follows: 
Spain,   417;  Argentina,   551;   Chile,   573;  Colombia,   697;  Ecuador,   573; 

451 


452  LATIN-AMERICAN   COMMERCIAL   LAW 

The  insured. 

The  contract  of  insurance  may  be  entered  into  either  for 
the  life  of  an  individual  or  of  a  group  of  persons  irrespective 
of  age,  sex  or  health.^ 

A  life  insurance  contract  may  be  made  in  favor  of  a  third 
party,  described  in  the  pohcy  by  name  and  personal  status 
or  other  identifying  data.  This  contract  in  favor  of  a  third 
person  may  be  made  without  his  knowledge.^ 

In  Spain,  ^"^  Brazil,  ^^  Honduras,  ^^  Mexico, ^^  Peru  ^^  and 
San  Salvador,  ^'^  the  code  does  not  state  whether  the  knowl- 
edge of  the  third  person  is  necessary.  In  Venezuela  ^^ 
the  contract  of  life  insurance  cannot  be  made  in  favor  of  a 
third  person  without  his  consent. 

Interest  in  the  preservation  of  the  life  of  the  insured. 

The  codes  of  Argentina,^"  Brazil, ^^  Chile, ^^  Colombia,^" 
Ecuador, 2^  Guatemala,-  Panama,-^  Uruguay  -^  and  Vene- 
zuela -^  require  that  the  person  who  takes  out  a  pohcy  on 
the  life  of  another  shall  have  an  interest  in  the  preservation 
of  such  life.  Panama  requires  that  interest  at  least  at  the 
time  the  contract  is  entered  into. 

Venezuela  provides  in  addition,  that  the  insured  must 
be  a  relative  of  the  person  who  takes  out  the  pohcy,  whether 
in  a  direct  hne  of  ascent  or  descent,  or  collaterally,  within 
the  fourth  degree  of  consanguinity  or  affinity.  The  pohcy 
cannot  be  assigned  except  as  a  guaranty,  and  to  a  person 
who  is  related  to  the  insured  in  the  degree  above  mentioned, 
and  with  the  consent  of  the  insured.     In  case  of  death  of 

Honduras,  394;  Mexico,  427;  Panama,  1049;  Peru,  412;  San  Salvador,  361; 
Venezuela,  537. 

8  Spain,  418;  Honduras,  395;  Mexico,  428;  Panama,  995;  Peru,  413;  San 
Salvador,  362. 

9  Argentina,  550;  Chile,  570;  Colombia,  694;  Ecuador,  570;  Guatemala,  458; 
Panama,  1047;  Uruguay,  694. 

">  Art.  419.  "  Art.  1472  c.  c.  "  Art.  396. 

13  Art.  429.  1^  Art.  414.  ^^  Art.  363. 

18  Art.  534.  "  Art.  550.  i*  Art.  1472  c.  c. 

"  Art.  569.  20  Art.  693.  "  Art.  569. 

«  Art.  458.  23  Art.  1046.  "  Art.  693. 
28  Art.  533. 


LIFE    AND    OVERLAND    TRANSPORTATION    INSURANCE     453 

the  insured  the  benefit  of  the  pohcy  cannot  be  received 
directly  or  through  an  intermediary  {interposita  persona) 
by  the  person  who  took  out  the  pohcy,  unless  the  latter  is 
a  legal  heir  of  the  insured.-^ 

Panama  also  prescribes  that  a  policy  cannot  be  given  as 
security  for  an  obligation  without  the  consent  of  the  in- 
sured. ^^ 

Party  bound  by  the  contract. 

Only  the  person  who  takes  out  a  policy  on  the  life  of  a 
third  person  is  bound  to  comply  with  the  stipulations  of 
the  contract ;  the  pohcy,  however,  entitles  the  insured  person 
to  demand  from  the  insurance  company  the  performance 
of  the  contract.  2* 

Risks  not  covered  by  a  life  insurance  contract. 

In  certain  countries  insurance  can  never  cover  death  if 
the  insured  dies: 

(a)  in  a  duel  or  as  a  consequence  thereof; 
(6)  by  committing  suicide,  or, 

(c)  by  suffering  capital  punishment  as  a  penalty 
for  non-political  crimes.-^ 
In  Argentina  ^**  and  Uruguay, ^^  the  insurance  is  void  if 
the  person  who  insured  his  hfe  commits  suicide,  suffers 
capital  punishment  or  loses  his  life  in  a  duel  or  in  any  other 
criminal  enterprise.  The  insurance  is  also  void  in  case  the 
person  who  claims  its  amount  is  the  author  or  the  accom- 
plice of  the  author  of  the  death  insured  against. 

In  Chile,  ^2  Colombia, ^^  Ecuador  ^"^  and  Guatemala, ^^  the 
insurance  is  rescinded: 

(a)  if  the  person  who  insured  his  life  commits  suicide 

2«  Art.  538. 

"  Art.  1054.    In  the  United  States  there  is  no  such  requirement. 

2«  Spain,  420,  421;  Chile,  569;  Colombia,  693;  Ecuador,  569;  Guatemala, 
458;  Honduras,  397,  398;  Mexico,  430,  431;  Peru,  415,  416;  San  Salvador,  364, 
365. 

29  Spain,  423;  Honduras,  400;  Mexico,  433;  San  Salvador,  367. 

'» Arts.  554,  555.  "  Arts.  698,  699.  »2  Art.  575. 

"  Art.  699.  '>*  Art.  575.  "  Art.  463. 


454  LATIN-AMERICAN    COMMERCIAL    LAW 

or  dies  because  of  capital  punishment,  or  in  a  duel  or 

any  other  criminal  enterprise,  or  is  killed  by  his  heirs. 

This  provision  is  not  applicable  in  case  the  insurance 

was  taken  out  by  a  third  person; 

(6)  when  the  person  who   claims  the  amount  of  the 

insurance  is  the  author  or  the  accomphce  of  the  author 

of  the  insured's  death. 
In  Venezuela,  ^^  the  contract  is  not  rescinded,  but  the 
insurer    is    released    from    his    obligation    of  paying  the 
policy : 

(a)  when  the  person  who  insured  his  life  commits 
suicide  or  dies  in  a  criminal  enterprise,  or  is  killed  by 
any  of  his  heirs,  unless  otherwise  stipulated,  this  pro- 
vision being  inapplicable  if  the  insurance  was  con- 
tracted by  a  third  party; 

(b)  when  the  person  who  claims  the  amount  of  the 
insurance  is  the  author  or  the  accomphce  of  the  author 
of  the  insured's  death. 

In  Spain,  ^"  Honduras,  ^^  Mexico  ^^  and  San  Salvador,  ■*" 
the  life  insurance  policy  does  not  cover,  unless  otherwise 
stipulated  under  payment  of  an  extra  premium: 

(a)  death  occurring  in  voyages  out  of  the  country;  *^ 
(6)  death   occurring  in  military  service  in  time   of 
war,  whether  in  the  army  or  navy; 

(c)  death  occurring  in  any  extraordinary  undertaking 
of  a  reckless  character. 

In  Argentina,"*-  Panama"*^  and  Venezuela,^'*  a  change  of 
residence,  occupation,  status  or  manner  of  living  on  the  part 

'«  Art.  540.  "  Art.  424.  '«  Art.  402. 

39  Art.  434.  ^0  Art.  368. 

*i  With  reference  to  this  article  of  the  Spanish  code,  which  is  in  force  in 
Cuba,  Dr.  Angel  C.  Betancourt  in  his  book,  Codigo  de  Comerdo,  page  175,  says: 
"The  existence  of  this  provision  in  the  code  in  force  in  Cuba  is  evidently  due 
to  carelessness.  In  the  Royal  Decree  which  directed  the  enforcement  of  the 
code  in  this  island  there  was  a  purpose  to  modify  all  provisions  which  could 
not  be  naturally  applied  in  the  form  they  were  drawn,  and  to  amend  them 
according  to  the  circumstances  of  the  place;  tliis  provision,  however,  was 
overlooked.  It  is  absurd  to  require  an  extra  premium  for  a  resident  in  America 
when  he  travels  there,  and  not  require  it  when  he  travels  in  Europe. 

«  Art.  556.  «  Art.  1053.  "  Art.  541. 


LIFE    AND    OVERLAND    TRANSPORTATION    INSURANCE     455 

of  the  insured  does  not  interfere  with  the  insurance,  unless 
it  is  of  such  character  that  the  insurer  would  not  have  en- 
tered into  the  contract  or  would  have  made  it  under  different 
conditions  had  those  circumstances  existed  at  the  time  of 
the  contract. 

Failure  to  pay  the  premium. 

There  is  a  peculiarity  in  the  law  of  life  insurance  in  the 
codes  of  Spain, ■^^  Mexico,'*'^  Peru  ^^  and  San  Salvador,  '^ 
These  codes  provide  that  the  insured  who  delays  payment 
of  the  premium  agreed  upon,  cannot  demand  the  amount 
of  the  insurance  if  the  death  happens  or  the  condition  occurs 
during  such  default,  even  though  the  insurer  has  not  de- 
manded the  rescission  of  the  contract.  ^^ 

Failure  to  mention  other  policies. 

As  was  stated  in  discussing  the  general  principles  of  the 
insurance  contract,  the  law  in  some  countries  requires  the 
mention,  at  the  time  of  entering  into  a  contract  of  insurance, 
of  other  policies  previously  or  simultaneously  taken  out; 
and  in  other  countries  such  mention  must  be  made  at  the 
time  of  demanding  the  indemnity.  In  Spain,  ^°  Honduras,  ^^ 
Mexico  ^^  and  San  Salvador,  ^^  this  requisite  must  be  satisfied 
in  the  policy  itself,  and  failure  to  do  so  makes  the  insured 
unable  to  obtain  the  benefits  of  the  insurance;  he  can  recover 
only  the  amount  paid  on  account  of  the  policy. 

«  Art.  425.  «  Art.  435.  ^^  Art.  418. 

«  Art.  369. 

^*  When  an  insurance  policy  lapses  by  failure  to  pay  premiums  it  can  be 
revalidated  by  paying  such  premiums  and  complying  with  the  other  requisites 
established  by  the  policy  itself.  Mexico,  Trib.  Sup.  del  Dist.  Fed.,  Segunda 
Sala,  Nov.  23,  1912,  R.  S.  Vda,  de  Perez  v.  "La  Nacional,"  Diario  de  Jurisp., 
vol.  XXIX,  p.  217. 

When  in  a  life  insurance  policy  a  declaration  is  made  that  the  premium  was 
paid,  the  underwriter  cannot  afterwards  claim  that  he  received  instead  of  the 
premium  a  promissory  note  wliich  was  not  paid  at  maturity.  Argentina,  Cam. 
de  Apel.  Com.  de  la  Cap.,  Dec.  6,  1913,  Juria-p.  de  los  Tribs.  Nacs.,  Dec,  1913, 
p.  293. 

^  Art.  427.  "  Art.  404.  "^  Art.  437. 

"  Art.  371. 


456  LATIN-AMERICAN    COMMERCIAL    LAW 

Right  of  the  insured  to  ask  for  a  liquidation  of  the  policy. 

The  codes  of  Spain,  ^^  Honduras, ^^  Mexico  ^^  and  San 
Salvador  "  provide  that  when  the  insured  has  paid  several 
premiums  and  cannot  continue,  he  must  so  advise  the 
insurer,  and  the  amount  of  the  insurance  must  be  reduced  in 
proportion  to  the  premiums  paid,  according  to  the  insurance 
tables  and  taking  into  consideration  the  risks  already  run. 
It  may  be  otherwise  stipulated  in  Mexico.  In  Venezuela  ^^ 
the  insured  has  also  the  privilege  of  liquidating  his  policy 
when  he  cannot  pay  premiums  any  longer;  in  that  case  he  is 
entitled  to  recover  two-thirds  of  the  premiums  paid. 

The  benefit  of  the  policy  is  superior  to  the  rights  of  credi- 
tors. 

The  amount  which  the  insurer  must  pay  the  beneficiary  in 
compliance  with  the  policy  is  a  special  fund,  which  is  not 
subject  to  any  claim  on  the  part  of  the  creditors  or  legal  heirs 
of  the  insured. ^^ 

When  a  life  insurance  policy  can  be  endorsed. 

After  all  the  stipulated  premiums  have  been  paid,  a  life 
insurance  policy  may  be  assigned,  by  endorsement  on  the 
policy  itself  and  notice  to  the  company  in  authentic  form.®" 

Brazil  provides  that  the  beneficiary  of  a  policy  can  be 
changed  at  any  time,  and  if  the  insurance  is  payable  to  order 
the  beneficiary  can  be  designated  even  at  the  time  the 
insured  makes  his  will.  The  only  limitation  on  the  power  to 
change  beneficiaries  is  established  in  case  the  insurance  was 
contracted  with  a  view  to  guaranteeing  an  obligation,  in 
which  case  the  beneficiary  cannot  be  changed. ^^ 

"  Art.  426.  "  Art.  403.  ^  Art.  436. 

"  Art.  370.  58  Art.  543. 

B9  Spain,  428;  Argentina,  law  No.  3942  of  1900;  Brazil,  1475  c.  c;  Costa  Rica, 
decree  of  July  7,  1905;  Honduras,  405;  Mexico,  438;  Peru,  419;  San  Salvador, 
372;  Uruguay,  !aw  of  July  1,  1896,  art.  1;  Venezuela,  544. 

A  policy  in  favor  of  a  third  person  is  not  subject  to  the  liabilities  of  the 
insured.    Argentina,  Dec.  6,  1913.  ib. 

8"  Spain,  430;  Honduras,  407;  Mexico,  440;  Peru,  421;  San  Salvador,  374. 

"  Art.  1473  c.  c. 


LIFE    AND    OVERLAND    TRANSPORTATION    INSURANCE     457 

Presumptive  death  of  the  insured. 

In  case  of  absence  creating  a  presumption  of  death  of  the 
insured,  the  insurance  cannot  be  demanded  unless  othersvise 
stipulated;  but  if  the  presumptive  heirs  of  the  person  whose 
death  is  presumed  have  obtained  definitive  possession  of  his 
estate  they  can  demand  payment  of  the  insurance,  by  giving 
a  bond  guaranteeing  restitution  of  the  amount  received  if 
the  insured  reappears.  The  judicial  declaration  of  presump- 
tive death,  giving  the  heirs  definitive  possession  of  the 
insured's  estate,  must  in  this  case  be  made  after  hearing  the 
insurer,  in  Argentina,''^  Chile,^^  Colombia,^^  Ecuador,^^ 
Panama  ^^  and  Venezuela.^''  In  other  countries  this  rule  is 
an  application  of  the  general  principles  governing  the  decla- 
ration of  presumptive  death. 

OVERLAND   TRANSPORTATION   INSURANCE 

Subject-matter  of  this  contract. 

All  things  which  can  be  moved  by  means  used  in  overland 
locomotion  may  be  the  subject-matter  of  the  contract  of 
overland  transportation  insurance. ^^ 

Panama  ^^  provides  that  the  insurance  of  goods  transported 
overland  or  by  river  or  canal  may  cover  the  actual  value  of 
such  goods  on  their  arrival  at  destination  or  the  profit  which 
is  expected  to  be  derived  therefrom.  If  said  profit  is  not 
valued  in  the  policy,  it  is  understood  that  the  policy  does 
not  cover  it. 

Data  which  the  policy  must  contain. 

Not  all  the  countries  require  the  same  data,  to  be  stated 
presently.     The  items  required  include: 
(a)  the  name  of  the  carrier;  ^° 

"2  Art.  557.  83  Art.  576.  <^*  Art.  700. 

85  Art.  576.  86  Art.  1055.  "'  Art.  541. 

88  Spain,  4.32;  Costa  Rica,  364;  Honduras,  409;  Mexico,  442;  Peru,  433;  San 
Salvador,  376. 

89  Art.  1041. 

™  Spain,  Bolivia,  Chile,  Coloml)ia,  Costa  Rica,  Ecuador,  Guatemala,  Hon- 
duras, Mexico,  Nicaragua,  Panama,  Peru,  San  Salvador,  Venezuela. 


458  LATIN-AMERICAN    COMMERCIAL    LAW 

(6)  the  specific  character  of  the  insured  goods,  with 
the  number  of  packages  and  marks  thereof;  ^^ 

(c)  the  places  at  which  the  insured  goods  must  be 
received  and  deUvered  by  the  carrier;  "- 

(d)  the  journey  for  which  the  insurance  is  taken  out 
and  the  route  to  be  followed;  '^^ 

(e)  the  method  of  carriage;  ^'^ 

(f)  the  bill  of  ladmg.75 

Risks  covered  by  the  transportation  insurance. 

The  transportation  insurance  covers  every  kind  of  risk 
except  risks  arising  from  inherent  vices  of  the  insured  article 
itself  or  from  mere  lapse  of  time,  unless  otherwise  agreed.^^ 

In  Costa  Rica  "  when  the  policy  does  not  except  any  risks, 
the  insurer  is  liable  for  all  risks  without  limitation. 

Losses  and  place  of  proof. 

When  a  total  or  partial  loss  occurs  during  the  transporta- 
tion and  it  is  due  to  causes  not  covered  by  the  policy,  this 
circumstance  must  be  proved  by  the  insurer  before  the 
courts;  but  the  codes  do  not  agree  in  designating  the  place 
where  such  proof  must  be  made.  The  provisions  in  question 
may  be  divided  into  the  following  systems: 

(a)  the  loss  must  be  proved  at  the  place  where  the 
goods  are  to  be  delivered;  ^^ 

^1  Spain,  Bolivia,  Costa  Rica,  Honduras,  Mexico,  Nicaragua,  Panama, 
Peru,  San  Salvador. 

^2  Spain,  Bolivia,  ChOe,  Colombia,  Costa  Rica,  Ecuador,  Guatemala, 
Honduras,  Mexico,  Nicaragua,  Panama,  Peru,  San  Salvador,  Venezuela. 

'^  Chile,  Colombia,  Ecuador,  Guatemala,  Panama,  Venezuela. 

'■*  Chile,  Colombia,  Costa  Rica,  Ecuador,  Guatemala,  Nicaragua,  Venezuela. 

'^  Panama. 

The  respective  articles  of  the  codes  above  mentioned  are  as  follows: 

Spain,  433;  Bolivia,  201;  Chile,  591;  Colombia,  719;  Costa  Rica,  367; 
Ecuador,  591;  Guatemala,  477;  Hondm-as,  410;  Mexico,  443;  Nicaragua,  235; 
Peru,  424;  Panama,  1042;  San  Salvador,  377;  Venezuela,  558. 

'« Spain,  435;  Argentina,  497;  Bolivia,  203;  Chile,  552;  Colombia,  676; 
Ecuador,  558;  Guatemala,  441;  Honduras,  412;  Mexico,  445;  Panama,  1044; 
Peru,  426;  San  Salvador,  379;  Venezuela,  521. 

"  Art.  370. 

^8  Spain,  436;  Honduras,  413;  Mexico,  446;  Panama,  1045;  Peru,  427. 


LIFE    AND    OVERLAND    TRANSPORTATION    INSURANCE     459 

(6)  it  must  be  proved  before  the  court  of  the  place 
nearest  to  the  situs  of  the  loss;  ^^ 

(c)  the  obligation  of  proof  of  loss  is  fixed,   but  no 
indication  is  made  of  the  place  where  it  must  be  per- 
formed. ^° 
If  such  proof  is  not  made,  the  insurer  is  not  released  from 
the  obligation  of  paying  the  loss. 

Privilege  of  surrendering  the  insured  goods  to  the  insurer. 

The  insured  has  the  privilege  of  surrendering  the  insured 
and  damaged  goods  to  the  insurer,  provided  he  avails  him- 
self of  this  privilege  within  one  month  of  the  date  he  ob- 
tained knowledge  of  the  damage.^ ^ 

^9  Bolivia,  204;  Costa  Rica,  371;  Nicaragua,  238. 

8"  Chile,  598;  Colombia,  726;  Guatemala,  484;  Venezuela,  565. 

81  Chile,  600;  Colombia,  728;  Ecuador,  600;  Guatemala,  486;  Venezuela,  566. 


CHAPTER  XXVII 

SURETYSHIP 

Definition. 

Suretyship  is  a  contract  by  which  one  person  binds  him- 
self to  pay  or  to  comply  with  some  obligation  on  behalf  of  a 
third  party  in  case  the  latter  fails  to  do  so.  In  most  of  the 
cases,  the  surety  is  bound  in  the  original  contract,  but  a 
guaranty  can  be  given  in  a  separate  instrument.^ 

We  shall  first  study  the  principles  of  suretyship  in  general, 
as  embodied  in  the  civil  code  of  Spain  and  of  certain  Latin 
American  countries,  and  shall  then  pass  on  to  a  special 
consideration  of  commercial  suretyship.  We  shall  first 
examine : 

1.  The  nature  and  extent  of  suretyship. 

2.  The   effects   of   suretyship    between   surety   and 
creditor. 

3.  Its  effects  between  the  debtor  and  the  surety. 

4.  Its  effects  among  the  co-sureties. 

5.  The  extinguishment  of  suretyship. 

When  the  surety  binds  himself  jointly  and  severally  with 
the  principal  debtor,  the  former  is  not  a  surety  properly  so 

1  Spain,  1822  c.  c;  Argentina,  2020  c.  c;  Brazil,  1418  c.  c;  Bolivia,  1358  c.  c; 
Chile,  2335  c.  c;  Colombia,  2361  c.  c;  Costa  Rica,  1301  c.  c;  Mexico,  1700 
c.  c;  Panama,  1512  c.  c;  Peru,  2079  c.  c;  Uruguay,  2102  c.  c;  Venezuela, 
1791  c.  c.  There  is  not  in  the  Spanish  language  any  such  distinction  as  there  is 
in  English  between  suretyship  and  guaranty;  the  Spanish  vford  fianza  covers 
both  meanings,  and  the  words  suretyship  and  guaranty  are  used  interchangeably 
in  this  chapter. 

A  surety  who  binds  himself  jointly  with  the  principal  debtor  must  pay  the 
amount  of  the  debt  when  it  becomes  due,  w-ithout  the  creditor  having  pre- 
viously to  exhaust  the  property  of  such  debtor.  Spain,  Trib.  Sup.,  June  25, 
1912;  Gacetas  of  June  22  and  23,  1913,  p.  530. 

Even  though  a  guarantor  binds  himself  jointly  and  severallj^  with  the 
principal  debtor,  the  creditor  must  carefully  take  such  steps  as  are  customary 
in  order  to  secure  collection  from  the  principal  debtor.  Buenos  Aires,  Cam. 
de  Ap.  Civil,  Dec.  18,  1913,  Jurisp.  de  los  Tribs.,  Dec,  1913,  p.  182. 

460 


SURETYSHIP  461 

called;  his  liabilities  are  then  governed  by  the  provisions 
relating  to  joint  and  several  debtors  and  to  obligations. ^ 

In  Argentina  ^  the  surety  can  bind  himself  jointly  with  the 
principal  debtor  and  he  does  so  whenever  he  waives  the 
"benefit  of  a  le\'y,"  as  will  presently  be  explained.  Even 
though  he  makes  such  waiver,  his  obligation  is  always  a  sub- 
sidiary one,  except  that  he  may  be  sued  without  previously 
exhausting  the  property  of  the  principal,  or  without  dividing 
his  liability  with  his  co-sureties. 

Validity  of  guaranty. 

The  guaranty  is  valid  whether  made  for  consideration  or 
not.  It  may  be  constituted  in  behalf  of  the  principal  debtor 
or  in  behalf  of  another  surety,  either  with  the  consent  of  the 
principal  or  with  or  without  his  knowledge  or  even  against 
his  will.^ 

Guaranty  cannot  exist  without  a  valid  obligation.  Never- 
theless, an  obligation  which  is  void  merely  on  personal 
grounds  on  the  part  of  the  debtor,  as,  e.  g.,  because  of  his 
minority,  may  be  the  subject  of  guaranty,  except  in  the 
case  of  loans  made  to  minors  not  emancipated.  This  ex- 
ception is  not  made  in  Argentina  and  certain  other  countries.'' 
In  Mexico  ^  the  principle  that  guaranty  cannot  be  based  on 
a  void  obligation  is  absolute  and  bears  no  exception. 

Future  debts,  the  amount  of  which  is  not  yet  known,  may 
be  guaranteed,  but  no  claim  can  be  instituted  against  the 
surety  until  the  debt  is  liquid.^ 

2  Spain,  1822;  Costa  Rica,  1316;  Panama,  1512;  Uruguay,  2102. 

3  Art.  2037  c.  c;  2038  c.  c. 

*  Spain,  1823  c.  c;  Colombia,  2366,  2367,  2371  c.  c;  Mexico,  1701,  1702  c.  c; 
Panama,  1513  c.  c;  Uruguay,  2103,  2104,  2110  c.  c. 

In  Anglo-American  law,  suretyship  or  guaranty  requires  a  consideration. 

A  husband  must  have  special  power  from  his  wife  in  order  to  bind  h(!r  as  a 
guarantor.  Buenos  Aires,  Cam.  de  Ap.  Com.,  Oct.  3,  1912,  Jur.  de  los  Trib. 
Noes.,  Oct.,  1912,  p.  364. 

«  Spain,  1824  c.  c;  Argentina,  2028  c.  c;  Bolivia,  1.359  c.  c;  Brazil,  1488  c.  c; 
Chile,  2338  c.  c;  Colombia,  2364  c.  c;  Costa  Rica,  1302  c.  c;  Panama,  1514 
c.  c;  Uruguay,  2105  c.  c;  Venezuela,  1792  c.  c. 

8  Art.  1705  c.  c. 

^  Spain,  1825  c.  c;  Argentina,  2022  c.  c;  Brazil,  1485  c.  c;  Chile,  2339  c.  c; 
Colombia,  2365  c.  c;  Mexico,  1706  c.  c;  Panama,  1515  c.  c;  Uruguay,  2106  c.  c. 


462  LATIN-AMERICAN    COMMERCIAL    LAW 

Contents  of  suretyship. 

A  surety  may  bind  himself  for  less,  but  not  for  more  than 
the  principal  debtor,  either  as  to  quantity,  quality,  or  other 
condition.  If  he  binds  himself  for  more,  his  obligation  must 
be  reduced  to  the  same  limits  as  the  debtor's.^ 

Guaranty  is  not  to  be  presumed,  but  must  be  expressed 
and  cannot  be  extended  farther  than  is  specified  in  the  con- 
tract. When  it  is  simple  and  unqualified,  it  comprises  not 
only  the  principal  obligation,  but  all  its  accessories,  including 
the  expenses  of  a  suit,  after  demand  on  the  surety  for  pay- 
ment.^ 

8  Spain,  1826  c.  c;  Argentina,  2029  c.  c;  Bolivia,  1360  c.  c;  1361  c.  c;. 
Brazil,  1487  c.  c;  Chile,  2343  c.  c;  Colombia,  2369  c.  c;  Costa  Rica,  1303  c.  c; 
Mexico,  1707  c.  c;  Panama,  1516  c.  c;  Peru,  2084,  2085  c.  c;  Uruguay,  2108 
c.  c;  Venezuela,  1793  c.  c. 

The  obligations  of  a  surety  cannot  be  greater  than  those  of  the  principal 
debtor;  if  the  principal  contract  is  rescinded  the  guaranty  is  also  rescinded. 
If  the  surety  afterwards  pays  any  money  on  the  contract  he  is  entitled  to 
recover  what  he  paid.  Brazil,  Cam.  Reun.  da  Corte  de  Apel.,  July  3,  1900, 
Rev.  de  Direito,  vol.  2,  p.  215. 

A  surety  can  be  bound  to  pay  the  judicial  costs  of  the  action  instituted 
against  the  principal  debtor,  from  the  day  he  was  notified  thereof.  Brazil, 
Trib.  de  Just,  de  S.  Paulo,  July  23,  1894,  Revista  Mensal,  vol.  1,  p.  167. 

9  Spain,  1827  c.  c;  Bolivia,  1363,  1364  c.  c;  Brazil,  1483,  1486  c.  c;  Chile, 
2347  c.  c;  Colombia,  2373  c.  c;  Costa  Rica,  1304  c.  c;  Mexico,  1711,  1712  c.  c; 
Panama,  1517  c.  c;  Peru,  2083  c.  c;  Uruguay,  2107  c.  c;  Venezuela,  1795, 
1796  c.  c. 

A  guaranty  for  the  payment  of  a  bill  of  exchange  does  not  cover  interest 
stipulated  between  the  bearer  and  the  acceptor  without  the  surety's  knowl- 
edge. Buenos  Aires,  Cam  de  Ap.  Com.,  Oct.  3,  1912,  Jur.  de  los  Trib.  Noes., 
Oct.,  1912,  p.  364. 

The  testimony  of  witnesses  is  not  admissible  to  prove  a  commercial  guaranty; 
and  in  order  that  an  agent  may  bind  his  principal  as  a  surety  the  latter  must 
give  the  former  special  power.  Brazil,  Trib.  de  Just,  de  S.  Paulo,  Sept.  22, 
1897,  Gaceta  Jur.,  vol.  15,  p.  303. 

If  a  person  binds  himself  as  a  surety  for  the  sums  due  by  a  commercial  house 
up  to  a  certain  date  comprising  the  value  of  goods  already  ordered  and  pending 
shipment  at  that  time,  he  cannot  be  held  responsible  for  the  pajTnent  of  the 
balance  of  an  account  current  closed  at  a  later  date,  even  though  the  copy  of 
that  account  was  acknowledged  by  the  principal  debtor.  Colombia,  Casaci6n, 
Aug.  3,  1911,  Gaceta  Judicial,  v.  10,  p.  165. 

A  suretyship  in  a  private  instrument  which  is  not  made  and  signed  by  the 
surety  before  two  witnesses  whose  signatures  have  been  acknowledged,  does 
not  produce  any  legal  effect  unless  the  obligor  has  recognized  his  obligation  in 
court.    Brazil,  Trib.  da  Rel.  do  E.  Rio,  May  5,  1905,  Rev.  de  Direito,  v.  2,  p.  215. 


SURETYSHIP  463 

Requisites  of  a  surety. 

The  surety,  when  the  debtor  is  obHged  to  furnish  one,  must 
be  a  person  having  capacity  to  bind  himself  and  with  suffi- 
cient property  to  answer  for  the  obligation  which  he  guaran- 
tees. It  is  understood  that  the  surety  submits  himself  to  the 
jurisdiction  of  the  court  where  the  obligation  is  to  be  ful- 
filled. ^^ 

When  the  surety  becomes  insolvent,  the  creditor  may 
ask  for  another  with  all  the  qualifications  above  mentioned, 
unless  the  creditor  required  and  stipulated  that  a  specified 
person  be  the  surety.  ^^ 

Effects  of  a  guaranty  as  between  the  surety  and  the 
creditor. 
With  regard  to  the  effects  of  guaranty  as  between  the 
surety  and  the  creditor,  the  obligation  of  the  former  to  pay 
or  comply  with  the  obligation  of  the  principal  debtor  is 
limited  by  two  rights  which  the  law  establishes  in  his  behalf, 
namely,  the  benefit  of  levy  {beneficio  de  excusion)  and  the 
remedy  or  benefit  of  contribution  (beneficio  de  division)  the 
general  character  of  which  must  be  considered.^- 

w  Spain,  1828  c.  c;  Bolivia,  1366  c.  c;  Brazil,  1489  c.  c;  Chile,  2350  c.  c; 
Colombia,  2376,  c.  c;  Costa  Rica,  1305  c.  c;  Mexico,  1717,  1722  c.  c;  Panama, 
1518  c.  c;  Peru,  2106  c.  c;  Uruguay,  2112  c.  c;  Venezuela,  1797  c.  c. 

The  surety  that  a  party  to  a  suit  is  bound  to  furnish  must  possess  unbur- 
dened real  estate  in  the  place  where  the  suit  is  carried  on.  A  person  who 
possesses  such  real  estate  in  another  place  cannot  be  accepted  by  the  judge. 
Mexico,  Trib.  Sup.  del  Dist.  Fed.,  Dec.  16,  1910,  Diar.  de  Jur.,  v.  23,  p.  25. 

In  Anglo-American  law,  the  usual  rules  applicable  to  other  contracts  in 
respect  to  the  capacity  of  corporations,  infants,  intoxicated  persons,  lunatics, 
and  persons  under  duress  to  bind  themselves  by  contract,  apply  to  the  con- 
tract of  suretyship  and  guaranty,  except  as  occasionally  varied  by  statute. 
The  same  principle  applies  to  married  women,  except  that  general  statutes 
conferring  on  married  women  the  right  to  contract  have  sometimes  been  con- 
strued not  to  cover  suretyship;  in  some  states,  like  New  Jersey,  married 
women  are  prohibited  from  binding  themselves  as  sureties. 

"Spain,  1829  c.  c;  Argentina,  2035  c.  c;  Bolivia,  1368  c.  c;  Brazil,  1490 
c.  c;  Chile,  2.349  c.  c;  Venezuela,  1798  c.  c. 

12  Spain,  1830,  1831  c.  c;  Argentina,  2046,  2047  c.  c;  Bolivia,  1369  c.  c; 
Brazil,  1491  c.  c;  Chile,  23.57,  23.58  c.  c;  Colombia,  2.383,  2.384  c.  c;  Costa 
Rica,  1312,  1313  c.  c;  Mexico,  1725  to  1727  c  c;  Panama,  1520,  1.521  c.  c; 
Peru,  2088  c.  c;  Uruguay,  2117,  2118  c.  c;  Venezuela,  1799,  1800  c.  c. 


464  LATIN-AMERICAN   COMMERCIAL   LAW 

Benefit  of  levy  of  execution  against  the  principal  debtor 
(beneficio    de    excusidn.) 

A  surety  cannot  be  compelled  to  pay  a  creditor  until  an 
action  has  been  brought  against  the  principal  debtor  and  a 
levy  made  on  all  his  property,  and  such  property  has  been 
found  insufficient  to  cover  the  debt. 

The  surety  cannot  avail  himself  of  the  benefit  of  such 
levy: 

(a)  if  he  has  expressly  waived  it; 

(6)  if  he  has  jointly  bound  himself  with  the  debtor; 

(c)  if  the  principal  debtor  is  a  bankrupt; 

(d)  if  the  principal  debtor  cannot  be  judicially  sued 
within  the  territory  of  the  country.  ^^ 

Prerequisites  of  the  benefit  of  levy. 

In  order  that  the  surety  may  avail  himself  of  the  benefit  of 
levy  against  the  principal,  he  must  demand  it  as  soon  as  the 
creditor  sues  him  for  payment,  but  the  surety  must  indicate 

Notwithstanding  that  the  surety  waived  the  benefit  of  levy,  binding  him- 
self jointly  with  the  debtor,  previous  demand  on  the  latter  is  indispensable. 
In  case  the  debtor  becomes  a  bankrupt  demand  must  be  made  on  the  receiver. 
Argentina,  Cam  1^  de  Apel.  Civ.  Buenos  Aires,  July  18,  1914,  Jur.  de  los 
Tnbs.  Macs.,  July,  1914,  p.  149,  and  July  21,  1914,  ib.,  p.  156. 

Notwithstanding  that  the  surety  renounced  the  right  of  compelling  the 
creditor  to  exhaust  the  principal  debtor's  property,  before  the  surety  can  be 
asked  for  payment,  the  creditor  is  obliged  to  demand  payment  first  of  the 
debtor,  even  though  he  is  a  bankrupt.    Ib. 

A  surety  who  does  not  bind  himself  jointly  with  the  principal  debtor  enjoys 
the  benefit  of  levy,  by  virtue  of  which  he  is  entitled  to  demand  that  the  debtor 
be  first  sued  and  his  property  exhausted.  Colombia,  Corte  Sup.,  Feb.  27,  1896, 
Gacela  Judicial,  v.  11,  p.  271. 

If  a  surety  did  not  waive  the  benefit  of  levy,  he  is  not  subject  to  "executive" 
proceedings.  The  waiver  of  that  benefit  is  void  if  no  mention  is  made  in  the 
contract  of  suretyship  of  the  provisions  of  the  law  which  grants  it.  Mexico, 
3a  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  Jan.  22,  1892,  An.  de  Leg.  y  Jur.,  Sec.  de 
Jur.,  V.  9,  p.  9. 

13  Spain,  1831  c.  c;  Argentina,  2047  c.  c;  Bolivia,  1370,  1371  c.  c;  Brazil, 
1491  c.  c;  Chile,  2358  c.  c;  Colombia,  2384c.  c;  Costa  Rica,  1313  c.  c;  Mexico, 
1727  c.  c;  Panama,  1521  c.  c;  Uruguay,  2118  c.  c;  Venezuela,  1800  c.  c. 

In  Anglo-American  law,  as  a  general  proposition,  it  is  no  defense  to  an  action 
against  a  surety  or  guarantor  that  the  creditor  has  other  security,  and  the 
defendant  has  no  right  to  ask  an  assignment  thereof  to  himself  prior  to  his 
payment  of  the  creditor's  demand.    Grave  doubts  were  for  a,  time  entertained 


SURETYSHIP  465 

the  property  of  the  debtor  which  can  be  sold  within  the  terri- 
tory of  the  country  and  which  may  be  sufficient  to  cover  the 
debt.  After  the  surety  has  fulfilled  these  conditions  he  is 
released  to  the  extent  of  the  value  of  the  property  designated, 
if  the  creditor  is  negligent  in  levying  on  it  and  the  debtor 
afterwards  becomes  insolvent.  ^^ 

A  creditor  may  summon  the  surety  for  payment  at  the 
time  he  begins  suit  against  the  principal,  the  benefit  of 
levy  being  reserved  in  favor  of  the  surety,  notwithstanding 
that  a  judgment  is  rendered  against  him  and  the  principal. ^^ 

In  Mexico  ^^  the  creditor  may  compel  the  surety  to  attach 
and  sell  property  of  the  debtor  for  the  payment  of  the  debt, 
the  court  fixing  a  period  for  the  surety  to  do  so. 

A  compromise  made  by  a  surety  with  a  creditor  has  no 
effect  in  regard  to  the  principal  debtor.  Nor  has  a  com- 
promise by  the  latter  any  effect  in  regard  to  a  surety  against 
his  will.^^ 

In  Mexico  ^^  a  compromise  effected  between  the  creditor 
and  the  principal  debtor  operates  to  the  benefit  of  the  surety 
but  not  to  his  prejudice;  and  a  compromise  between  the 
surety  and  the  creditor  benefits  but  cannot  prejudice  the 
principal  debtor. 

Benefit  of  contribution. 

Should  there  be  several  sureties  but  only  one  principal 

as  to  the  right  of  a  surety,  by  suit  in  equity,  to  require  the  creditor  to  prosecute 
his  demand  against  the  principal.  Such  right  is  now  generally  recognized. 
There  are  cases  where,  ajjart  from  this  power  in  equity,  the  surety,  in  case  of 
the  principal's  default,  is  entitled  to  notify  the  creditor  to  proceed  against  the 
principal,  at  the  peril  of  otherwise  releasing  the  surety  to  the  extent  of  any 
injury  he  may  sustain  by  failure  to  comply.  But  not  all  state  jurisdictions  are 
in  accord  in  this  matter. 

^*  Spain,  1832,  1833  c.  c. ;  Argentina,  2048,  2052  c.  c;  Chile,  2359,  2305  c.  c; 
Colombia,  2384,  2390  c.  c;  Costa  Rica,  1313,  1314  c.  c;  Mexico,  1729,  1734 
c.  c;  Panama,  1522,  1524  c.  c;  Uruguay,  2120,  2123,  2124  c.  c;  Venezuela, 
1802,  1803  c.  c. 

1*  Spain,  1834  c.  c;  Panama,  1525  c.  c. 

i«  Art.  1731,  1732  c.  c. 

"Spain,  1835  c.  c;  Costa  Rica,  1315  c.  c;  Panama,  1526  c.  c;  Uruguay, 
2126  c.  c. 

18  Art.  1738  c.  c. 


466  LATIN-AMERICAN    COMMERCIAL    LAW 

debtor  for  the  same  debt,  the  liability  must  be  divided 
among  all  the  sureties.  The  creditor  can  only  claim  from 
each  surety  the  proportionate  amount  he  may  have  to  pay, 
unless  joint  liability  has  been  expressly  stipulated.  The 
benefit  of  contribution  among  the  co-sureties  ceases  in  the 
same  cases  and  for  the  same  reasons  that  the  benefit  of  levy 
against  the  principal  debtor  does.^^ 

Costa  Rica  ^°  does  not  establish  the  remedy  of  contribution 
as  a  privilege  which  can  be  invoked  by  one  of  the  sureties 
against  the  creditor,  but  only  against  the  co-sureties;  and  in 
Bolivia,-^  Brazil  -^  and  Mexico  ^^  the  law  expressly  provides 
that  each  of  the  co-sureties  is  responsible  for  the  total  amount 
of  the  obligation,  unless  otherwise  stipulated.  But  if  one  of 
the  sureties  is  sued,  he  can  demand  that  a  summons  be 
served  upon  his  co-sureties  in  order  that  they  defend  the 
action  jointly  or  else  pay  in  due  proportion  the  judgment 
debt. 

Effects  of  a  guaranty  as  between  principal  and  surety. 

The  following  are  the  effects  of  a  guaranty  as  between  the 
debtor  and  the  surety: 

1.  A  surety  who  pays  on  behalf  of  a  debtor  must  be 
indemnified  by  the  latter.    The  indemnity  covers: 

(a)  the  total  amount  of  the  debt; 

(6)  legal  interest  on  the  same  from  the  day  the 
payment  was  notified  to  the  debtor,  even  though  it 
carried  no  interest  for  the  creditor; 

(c)  losses  and  damages,  when  proper.  These  pro- 
visions may  be  enforced  even  if  the  guaranty  was 
undertaken  without  knowledge  of  the  debtor; 

2.  By  virtue  of  the  pa;yTnent,  the  surety  is  subrogated 
to  all  the  rights  of  the  creditor  against  the  debtor. 
Should  the  surety  have  compromised  with  the  creditor, 

"  Spain,  1837  c.  c;  Argentina,  2058  c.  c;  Chile,  2367  c.  c;  Colombia,  2392 
c.  c;  Panama,  1528  c.  c;  Peru,  2088  c.  c;  Uruguay,  2127  c.  c;  Venezuela, 
1804  c.  c. 

2»  Art.  1325  c.  c.  "  ^j-t.  1373  c.  c.  22  Art.  1493  c.  c. 

23  Art.  1741  c.  c. 


SURETYSHIP  467 

he  cannot  demand   of  the  debtor  more  than  he  has 
actually  paid.^^ 

If  the  surety  pays  without  informing  the  debtor,  the 
latter  may  set  up  against  him  all  the  defenses  he  might 
have  set  up  against  the  creditor  at  the  time  of  payment. 
If  the  debt  ran  for  a  term  and  the  surety  paid  it  before  it 
became  due,  he  cannot  require  the  debtor  to  reimburse 
him  until  the  period  has  expired.  If  the  surety  has  paid 
without  notifying  the  debtor,  and  the  latter,  having  no 
knowledge  of  the  payment,  also  pays,  the  former  has  no 
right  of  action  against  the  debtor,  but  only  against  the 
creditor.  2^ 

When  surety,  before  paying,  may  proceed  against  the  prin- 
cipal. 

The  surety,  even  before  paying,  may  proceed  against  the 
principal  debtor: 

(a)  when  the  surety  is  sued  for  payment; 

(6)  when  the  principal  is  a  bankrupt  or  insolvent; 

(c)  when  the  debtor  bound  himself  to  relieve  the 
surety  from  the  guaranty  within  a  specified  term,  and 
this  term  has  expired; 

(d)  when  the  debt  is  due; 

(e)  if  the  principal  obligation  has  no  fixed  term,  at 
the  end  of  ten  years,  unless  it  is  of  such  nature  that  it  can- 
not be  extinguished  except  in  a  period  greater  than 
ten  years.  2^ 

2^  Spain,  1838,  1839  c.  c;  Argentina,  2063,  2064  c.  c;  Bolivia,  1375,  1376  c.  c; 
Brazil,  1495  to  1497  c.  c;  Chile,  2370  c.  c;  Colombia,  2395  c.  c.  ;  Costa  Rica, 
1318  c.  c;  Mexico,  1746  c.  c;  Panama,  1529,  1530  c.  c;  Uruguay,  2131,  2132 
c.  c;  Venezuela,  1806,  1807  c.  c. 

26  Spain,  1840  c.  c;  Argentina,  2067  to  2070  c.  c;  Bolivia,  1378  c.  c;  Chile, 
2376  c.  c;  2377  c.  c;  Colombia,  2401,  2402  c.  c;  Costa  Rica,  1321,  1322  c.  c; 
Mexico,  1750,  1751  c.  c;  Panama,  1531  to  1533  c.  c;  Uruguay,2134  to  2137  c.  c; 
Venezuela,  1809  c.  c. 

^  Spain,  1843  c.  c. ;  Argentina,  2060  c.  c;  Bolivia,  1379  c.  c;  Brazil,  1499  c.  c; 
Chile,  2369  c.  c;  Colombia,  2394  c.  c;  Costa  Rica,  1324  c.  c;  Mexico,  1754  c.  c; 
Panama,  1534  c.  c;  Peru,  2096,  2097  c.  c;  Uruguay,  2128  c.  c;  Venezuela, 
1810  c.  c. 

A  surety  who  guarantees  payment  of  a  definite  amount  of  money  for  a 


468  LATIN-AMERICAN    COMMERCIAL    LAW 

In  Brazil  "  a  surety  can  relieve  himself  from  the 
suretyship  at  any  time  he  may  see  fit,  if  the  guaranty 
was  given  without  limitation  of  time,  but  he  remains 
bound  on  such  guaranty  prior  to  his  notification  of 
withdrawal  or  to  a  judgment  or  release. 

Effects  of  guaranty  among  co-sureties. 

As  for  the  effects  of  the  guaranty  among  the  co-sureties, 
the  one  who  has  paid  the  debt  is  entitled  to  contribution 
from  the  others.  If  any  one  of  them  is  insolvent,  his  part 
must  be  paid  by  all  the  others  in  equal  proportion.  In  order 
that  these  provisions  be  applicable,  the  payment  must  have 
been  made  by  virtue  of  a  judicial  decree,  or  when  the 
principal  debtor  has  made  an  assignment  of  his  property  or 
is  a  bankrupt.  ^^ 

In  Peru,^^  when  one  of  the  co-sureties  is  insolvent,  the 
liability  of  the  others  increases  proportionately,  provided 
they  are  joint;  otherwise  their  obligation  is  unchanged  and 
the  disadvantage  falls  on  the  creditor. 

The  co-sureties  may  set  up  against  the  one  who  paid  the 
same  defenses  which  the  principal  debtor  might  have  set  up 

certain  consideration,  without  limiting  the  period  of  such  guaranty,  is  released 
from  his  obligation  after  the  debtor  has  paid  an  amount  equal  to  that  stipu- 
lated, unless  the  guaranty  was  renewed  by  paying  a  new  consideration.  Argen- 
tina, Cam.  de  Ap.  Com.  Buenos  Aires,  March  4,  1913,  Jur.  de  los  Trib.  Nacs., 
March,  1913,  p.  175. 

A  surety  is  entitled  to  demand  of  the  principal  debtor  his  release  or  the 
deposit  of  a  sufficient  amount  of  money  to  pay  the  debt,  when  the  debtor 
dissipates  or  recklessly  ventures  his  property  in  hazardous  business.  Chile, 
Corte  de  Apel.  Santiago,  Chile,  June  2,  1896;  Gaceta  de  los  Tribs.,  1896,  v.  1, 
p.  878. 

In  Anglo-American  law,  inasmuch  as  the  surety  has  no  interest  in  the  con- 
tract of  his  principal,  he  may,  in  a  proper  case,  proceed  in  a  court  of  equity 
against  the  principal  to  compel  him  to  pay  the  debt.  If,  after  the  debt  has 
become  due,  the  surety  has  any  apprehension  of  loss  or  injury  from  the  delay 
of  the  debtor,  he  may  proceed  in  equity  to  compel  the  debtor  to  discharge  the 
debt  guaranteed. 

"  Art.  1500  c.  c. 

28  Spain,  1844  c.  c;  Argentina,  2071  c.  c;  Bolivia,  1380  c.  c;  Chile,  2378  c.  c; 
Colombia,  2403  c.  c;  Costa  Rica,  1325,  1326  c.  c;  Mexico,  1757  c.  c;  Panama, 
1535  c.  c;  Peru,  2101  c.  c;  Uruguay,  2139  c.  c;  Venezuela,  1811  c.  c. 

29  Art.  2102,  2095  c.  c. 


SURETYSHIP  469 

against  the  creditor,  provided  they  are  not  purely  personal 
to  the  debtor.^" 

A  sub-surety,  in  case  of  insolvency  of  the  surety  for  whom 
he  bound  himself,  is  liable  to  the  co-sureties  in  the  same 
terms  as  the  surety  was.^^ 

Discharge  of  a  surety. 

The  obligations  of  a  surety  expire  at  the  same  time  as 
those  of  the  debtor,  and  for  the  same  causes  as  terminate 
obligations  in  general.  ^^ 

A  merger  in  the  person  of  the  debtor  and  of  the  surety 
when  one  of  them  inherits  from  the  other,  does  not  extinguish 
the  obligation  of  the  sub-sureties.^^ 

A  surety  is  released  when  the  creditor  voluntarily  accepts, 
in  payment  of  the  debt,  real  estate  or  any  other  goods  differ- 
ent from  what  was  owed  to  him,  even  though  he  afterwards 
loses  them  by  eviction  or  replevin. ^^ 

Release  by  a  creditor  of  one  of  the  sureties  without  the 
consent  of  the  others,  releases  the  others  from  liability  for 
the  share  of  the  released  surety.  ^^ 

The  extension  of  the  period  of  the  debt  granted  by  the 
creditor  without  the  consent  of  the  surety  discharges  the 
latter.  ^^     In  Venezuela,  however,  such  extension  does  not 

30  Spain,  1845  c.  c;  Argentina,  2073  c.  c;  Chile,  2379  c.  c;  Colombia, 
2404  c.  c;  Costa  Rica,  1327  c.  c;  Mexico,  1760  c.  c;  Panama,  1536  c.  c; 
Uruguay,  2140  c.  c. 

"Spain,  1846  c.  c;  Argentina,  2075  c.  c;  Chile,  2380  c.  c;  Colombia, 
3405  c.  c;  Mexico,  1761  c.  c;  Panama,  1537  c.  c;  Uruguay,  2141  c.  c. 

32  Spain,  1847  c.  c;  Argentina,  2076  c.  c;  Chile,  2381  c.  c;  Colombia, 
2406  c.  c;  Costa  Rica,  1330  c.  c;  Mexico,  1762  c.  c;  Panama,  1538  c.  c; 
Peru,  2103  c.  c;  Uruguay,  2142  c.  c;  Venezuela,  1815  c.  c. 

•"  Spain,  1848  c.  c;  Argentina,  2082  c.  c;  Chile,  2383  c.  c;  Colombia,  2408 
c.  c;  Mexico,  1763  cc;  Panama,  1539  c.  c;  Uruguay,  2143  c.  c;  Venezuela, 
1816  CO. 

'*  Spain,  1849  c.  c;  Argentina,  2084  c.  c;  Brazil,  1503  c.  c;  Chile,  2382  c.  c; 
Colombia,  2407  c.  c;  Costa  Rica,  1331;  Mexico,  1764  c.  c;  Panama,  1540  c.  c; 
Uruguay,  2145  c.  c;  Venezuela,  1819  c.  c. 

•^5  Spam,  1850  c.  c. 

^•i  Spain,  1851  c.  c;  Argentina,  2080  c.  c;  Brazil,  1503  c.  c;  Panama, 
1542  c,  c;  Uruguay,  2146  c.  c;  Venezuela,  1820  c.  c. 


470  LATIN-AMERICAN    COMMERCIAL    LAW 

discharge  the  surety  but  entitles  him  to  proceed  at  once 
against  the  debtor,  compeUing  him  to  pay. 

The  sureties,  even  when  joint,  are  released  from  their 
obligation  whenever,  by  act  of  the  creditor,  they  cannot  be 
subrogated  to  the  rights,  securities  and  privileges  of  the 
creditor.  ^^ 

The  surety  may  set  up  against  the  creditor  aU  the  defenses 
which  the  principal  debtor  could,  provided  they  are  inherent 
in  the  debt;  but  not  those  which  are  purely  personal  to  the 
debtor.  ^^ 

When  a  guaranty  is  commercial. 

A  guaranty  is  commercial  in  character  when  it  is  made  in 
order  to  guarantee  a  mercantile  transaction,  independently 
of  the  character  of  the  parties,  in  Spain, ^^  .Argentina,^" 
Ecuador,^^  Peru,^^  Uruguay''^  and  Venezuela.^^ 

In  Bolivia,'*^  Costa  Rica  ^^  and  Guatemala, ^^  the  transac- 
tion must  be  mercantile  and  the  parties  to  it  merchants. 

In  Brazil  ^^  a  guaranty  is  commercial  if  the  contract  to  be 
guaranteed  is  commercial  and  at  least  the  principal  debtor  is 
a  merchant. 

In  Panama  ''^  a  guaranty  is  commercial  when  it  guarantees 
a  commercial  obhgation,  or  when  it  constitutes  of  itself  a 
commercial  transaction. 

Guaranty  must  be  effected  in  writing,  whatever  the 
amount  of  the  debt,  in  Spain, ^°  Bolivia, ^^  Brazil,^-  Chile, ^^ 
Colombia, '^^  Costa  Rica,^^  Ecuador,  ^^  Guatemala,  ^^  Hondu- 
ras, ^^  Nicaragua,  ^^  Panama  ^^  and  Peru." 

»' Spain,  1852  c.  c;  Argentina,  2077,  2078  c.  c;  Brazil,  1503  c.  c;  Costa 
Rica,  1332  c.  c;  Mexico,  1766  c.  c;  Peru,  1543  c.  c;  Uruguay,  2144  c.  c; 
Venezuela,  1818  c.  c. 

38  Spain,  1853  c.  c;  Brazil,  1502  c.  c. 

39  Art.  439.  ^°  Art.  470.  "  Art.  530. 
«  Art.  430.  «  Art.  603.  "  Art.  500. 
«  Art.  346.  *«  Art.  359.  «  Art.  396. 
«  Art.  256.  «9  Art.  3.  ">  Art.  440. 
51  Art.  347.  62  Art.  257.  "  Art.  820. 
84  Art.  953.  "  Art.  36.  »  Art.  531. 
"  Art.  397.  ^  Art.  560.  "  Art.  232. 
«>  Art.  807.                                «i  Art.  431. 


SURETYSHIP  471 

In  Argentina  ^^  guaranty  may  be  contracted  orally  or  in 
writing,  but  if  the  surety  denies  having  guaranteed  the 
obligation  it  must  be  proved  by  means  of  a  written  instru- 
ment. 

The  surety,  in  commercial  matters,  is  jointly  liable  with 
the  principal  debtor,  in  Argentina,*'^  Brazil,*^^  Colombia,''^ 
Ecuador, ^^  Uruguay  ^^  and  Venezuela,*'^  although  a  previous 
demand  on  the  latter  is  necessary  to  enable  the  creditor  to 
sue  the  surety. 

In  Panama  ^^  if  the  surety  is  sued  and  payment  is  re- 
quested of  him,  he  may  designate  property  of  the  principal 
debtor  for  attachment,  provided  such  property  is  unbur- 
dened; in  case  it  is  insufficient,  the  attachment  may  be 
extended  to  the  surety's  property. 

Notwithstanding  that  the  surety  bound  himself  jointly 
with  the  principal,  the  surety  is  entitled  to  a  demand  for 
payment  immediately  after  the  principal  is  in  default;  the 
creditor  cannot  ask  interest  from  the  surety  until  he  makes 
such  demand. 

The  surety  can  demand  of  the  principal  debtor  a  release 
from  his  guaranty,  not  limited  by  time,  if  five  years  have 
elapsed  since  it  was  given.  If,  however,  the  smrety  was 
compensated  for  his  guaranty  he  is  not  entitled  to  such 
release. 

The  codes  of  Haiti,  Mexico,  San  Salvador  and  Santo 
Domingo  make  no  provision  for  commercial  suretyship. 


9«  Art.  2040  c.  c. 

83  Art.  605. 

6^  Art.  258. 

«5  Art.  956. 

69  Art.  553. 

«'  Art.  611. 

«8  Art.  503. 

69  Arts.  809,  810,  812,  813. 

CHAPTER  XXVIII 

BILLS  OF  EXCHANGE 

General. — Meyer,  Felix:  Weltwechselrecht.    Leipzig,  1909.    2  v. 

Meyer,  Felix:  Weltscheckrecht.    Berlin,  1913.    2  v. 

Argentina. — Rebora,  Juan  Carlos:  Letras  de  cambio.  Estudio  premiado 
por  el  colegio  de  escribanos  de  la  provincia  de  Buenos  Aires.  Buenos  Aires, 
1905. 

Roth,  Juan  Alberto:  Cheques.     Buenos  Aires,  1907. 

Bolivia. — Gallardo,  Benjamin  H. :  Cartilla  de  las  letras  de  cambio.  La  Paz, 
1911. 

Brazil. — Arruda,  Joao:  Decreto  N.  2044  de  31  de  dezembro  de  1908  anno- 
tado.     Sao  Paulo,  1914-1915.    2  v. 

Inglez  de  Souza  H.:  Titulos  ao  portador  no  direito  brazileiro.  Rio  de 
Janeiro,  1898. 

Lacerda,  Paulo  de:  A  cambial  no  direito  brasileiro,  2d  ed.  Rio  de  Janeiro, 
1913. 

Octavio,  Rodrigo:  Do  cheque;  Su  origem,  func^ao  conomica  e  regulamen- 
tagao.    Rio  de  Janeiro,  1913. 

Same:  Letra  de  cambio  e  nota  promissoria.  Relatorio  apresentado  ao 
Ministro  das  relagoes  exteriores.    Rio  de  Janeiro,  1911. 

Saravai,  Jose  A.:  A  cambial.    Rio  de  Janeiro,  1912. 

Same:  Direito  cambial  brasileiro;  estudo  theorico-practico.  .  .  ,  Belle  Hori- 
zonte,  1905-1908.    2  v. 

Cuba. — Mora,  Federico:  Del  cheque.    Habana,  1885. 

Mexico. — Castro,  Juan  S.:  La  libranza  como  titulo  ejecutivo  mercantil. 
El  Derecho,  1894,  p.  723. 

Elguero,  Francisco :  Formalidades  esenciales  de  la  aceptaci6n  de  las  letras  de 
cambio.    Rev.  de  Leg.  y  Jursp.    Mexico,  1899,  2d  sems.,  p.  251. 

Martinez,  Victor  J.:  Tratado  filos6fico  legal  sobre  las  letras  de  cambio. 
Mexico,  1869.    3  v. 

O'Reilly,  Francisco:  Forma  en  que  debe  anunciarse  la  separaci6n  de  un  socio 
para  que  quede  libre  de  toda  responsabilidad  con  relacion  a  terceros.  Legisla- 
cion  comparada.    El  Derecho,  1897,  p.  273. 

Same:  iLa  clausula  adicional  de  pagar  las  costas  perjudica  la  negociabilidad 
de  un  pagare?    El  Derecho,  1897,  p.  264. 

Pallares,  Jacinto:  Naturaleza  del  cheque  mexicano.  Rev.  de  Leg.  y  Jurisp., 
1901,  2d  sems.,  p.  156. 

Pimentel,  Victoriano:  La  libranza  como  titulo  ejecutivo  mercantil.  Mexico. 
Diario  de  Jurisprudenda,  3d  v.,  p.  351. 

Verdugo,  Agustin:  iEl  tenedor  de  una  libranza  en  que  no  se  expresa  la  opera- 
ci6n  mercantil  de  que  ella  se  deriva,  ni  ha  sido  otorgada  por  un  comerciante  a  la 
orden  de  otro?    El  Derecho.    Mexico,  1894,  p.  438. 

472 


BILLS    OF    EXCHANGE  473 

San  Domingo. — Kuck,  R.:  Das  Dominikanische  Wechselrecht.  Leipzig, 
1905. 

Spain. — Estasen,  Pedro:  El  aval.    Ensayo  juridico.    Barcelona,  1902. 

Gil  y  Pablos,  F.:  Estudio  sobre  la  moneda  y  lo.s  cambios.     Madrid,  1906. 

Huguet  y  Comana,  Pedro :  La  letra  de  cambio  y  demds  documentos  mercan- 
tiles.    2d  ed.    Barcelona,  1910. 

Maluquer  y  Viladot,  Juan:  Irreivindicaci6n  de  efectos  al  portador  en  los 
casos  de  robo,  hurto  o  extra  via.    Barcelona,  1901. 

Zapatero  y  Garcia,  Manuel:  El  derecho  maritimo  y  la  letra  de  cambio. 
Madrid,  1886. 

The  contract  of  exchange. 

Next  in  commercial  importance  to  the  contract  of  pur- 
chase and  sale  is  that  of  exchange  of  money,  the  mechanism 
of  which  is  very  simple:  ''C"  of  Rio  de  Janeiro  owes  money 
to  ''A"  in  New  York  and  wishes  to  send  it  to  the  latter  city; 
at  the  same  time  ''B"  of  New  York  wishes  to  take  money 
with  him  to  Rio  de  Janeiro  to  make  purchases  therein. 
Instead  of  this  double  transportation  of  money,  ''A"  sells 
to  ''B,"  an  order  for  ''C"  to  pay  the  money  to  ''B,"  who 
delivers  to  ''A"  the  amount  agreed  upon  as  the  price  of  the 
order. 

This  contract  of  exchange  renders  to  commerce  a  great 
service,  saving  time,  transportation  expenses,  abraisement 
of  the  money  and  the  risks  of  the  voyage. 

Usual  terms. 

In  the  example  above,  the  order  given  by  ''A"  to  ''C" 
to  pay  money  to  ''B  "  is  the  bill  of  exchange  {Letra  de  cambio). 
''A"  is  the  drawer  {girador),  '^C"  is  the  drawee  (girado)  and 
'*B"  the  payee  (tomador). 

The  price  paid  by  '^B"  for  the  order  depends  upon  the 
law  of  supply  and  demand;  when  the  demand  for  orders 
on  Rio  de  Janeiro  is  greater  than  the  demand  for  orders 
from  Rio  de  Janeiro  on  New  York,  ''B"  pays  for  his 
order  on  Rio  de  Janeiro  a  certain  premium  over  the  par 
value  of  the  money;  this  means  that  the  New  York  mer- 
chants owe  to  the  merchants  of  Rio  de  Janeiro  more 
money  than  the  latter  owe  to  the  former.  When  the  supply 
of  orders  is  greater  than  the  demand,  the  balance  of  accounts 


474  LATIN-AMERICAN    COMMERCIAL    LAW 

is  against  Rio  de  Janeiro,  and  the  price  of  the  order  is  less 
than  its  par  value.  This  variation  in  the  price  of  an 
order  of  payment  on  another  place  is  also  called  exchange 
(cambio) . 

Evolution  of  the  bill  of  exchange. 

In  its  original  character,  therefore,  a  bill  of  exchange  was 
merely  a  means  of  transferring  money  from  place  to  place 
without  a  physical  transportation  of  coins.  The  addition 
of  the  clause  "to  order"  (a  la  or  den)  was  the  first  step  in  a 
far-reaching  evolution ;  it  indicated  that  the  bill  was  payable 
not  only  to  the  payee  himself,  but  to  any  other  person  ap- 
pointed by  him  thereto.  By  that  addition  the  document 
was  no  longer  confined  to  the  function  of  exchange,  but  be- 
came an  instrument  of  credit.  The  payee  wTites  on  the 
back  {dorsum)  of  the  bill  of  exchange  an  order  of  payment 
to  a  third  person,  and  this  fact,  called  endorsement  (endoso) 
makes  the  payee-endorser  jointly  and  severally  hable  with 
the  drawer  for  the  amount  of  the  draft,  and  the  endorsee, 
who  may  not  know  the  drawer,  can  rely  upon  the  credit 
of  the  endorser  (endosante)  himself.  Thus,  the  more  a  bill 
of  exchange  passes  from  hand  to  hand  the  more  confidence 
or  credit  it  deserves  from  the  holder  (tenedor)  and  the  public 
in  general,  inasmuch  as  every  endorser  is  a  joint  and  several 
obligor  for  its  payment.  The  bill  of  exchange  thus  serves 
as  a  circulating  medium  to  pay  several  obligations  during 
the  period  of  its  life,  and  is  a  substitute  for  money  among 
merchants. 

In  England,  the  law  merchant  developed  independently 
of  the  common  law.  In  its  origin,  the  law  of  commercial 
paper  was  merely  the  practice  of  merchants  in  dealing  with 
bills  of  exchange  and  promissory  notes,  and  it  was  from 
mercantile  laAv,  not  the  common  law,  that  they  obtained 
their  distinguishing  characteristics,  transferability  by  en- 
dorsement and  by  mere  deh\'ery  or  change  of  posesssion. 
After  iMansfield  became  Chief  Justice  in  1756,  he  began  to 
build  up  a  mercantile  law  administered  in  the  King's  Courts. 
The  law  of  commercial  paper  was  one  of  the  first  to  which 


BILLS    OF    EXCHANGE  475 

codification  in  England  (1883)  and  in  America  (1896)  was 
applied. 

In  1848  the  German  general  law  of  exchange  adopted  the 
theory  of  the  German  jurist  Einert,  who,  in  a  book  published 
in  1839,  considered  the  bill  of  exchange,  contrary  to  the 
theories  of  such  prominent  jurists  as  Casaregis,  Domat  and 
Savary,  from  the  point  of  view  of  its  economic  functions,  as 
a  document  of  social  utility,  a  kind  of  paper  money. 

As  a  consequence  of  this  new  theory  the  bill  of  exchange 
becomes  an  instrument  implying  a  unilateral  obligation, 
independent  of  the  transaction  or  act  from  which  it  eman- 
ates. It  is  a  promise  to  pay  placed  in  circulation  and  based 
upon  personal  credit.  Endorsement  or  any  other  negotiation 
of  a  bill  of  exchange  made  by  virtue  of  a  former  obligation 
does  not,  therefore,  constitute  the  substitution  of  a  new 
obligation  for  an  old  one  because  the  animus  novandi  is  not 
present;  the  presumptive  will  of  the  parties,  according  to 
the  nature  of  the  bill  of  exchange,  is  not  to  substitute  {novar) 
a  new  obligation  for  an  old  one  but  to  place  in  circulation 
the  value  arising  therefrom.^ 

What  makes  the  bill  of  exchange  a  substitute  for  money, 
is  the  obligation  of  paying  a  certain  sum  of  money.    This 
obligation  may  assume  two  forms:  one  an  order  to  pay;  the 
other  a  promise  to  pay.    The  first  is  a  bill  of  exchange  prop- 
erly so  called;  the  second  is  a  promissory  note  (pagare), 
largely  now  identified   in   many  respects  with  the  former. 
As  a  substitute  for  money,  the  bill  of  exchange  must  be: 
(a)  Formal.     That  is,  made  in  writing  and  in  com- 
plete accordance  with  the  forms  prescribed  by  the  law. 
(6)  Complete.     That  is,  all  rights  and  obligations  de- 
rived from  it  must  be  stated  therein,  or  be  the  legal  con- 
sequence of  the  statements  contained  in  it,  without  being 
altered  or  supplemented  in  any  way  by  extraneous  act.^ 

'  Lacerda,  Paulo.  A  cambial  no  direito  Brasileiro,  2d  ed.,  Rio  dc  Janeiro, 
1913. 

*  Conditions  not  expressed  in  the  hill  of  exehange  or  at  the  tinu^  of  making 
an  endorsement  have  no  effect  af?ainst  the  endors(>e.  Colombia,  Trib.  Sup.  del 
Dist.  de  Boyaca,  La  Ley,  v.  XII,  p.  85. 

The  fact  that  the  endorsee  has  not  an  account  in  the  books  of  the  endorser, 


476  LATIN-AMERICAN    COMMERCIAL    LAW 

(c)  Autonomous  and  independent.     That  is,  without 
any  dependency  upon  the  legal  relations  from  which 
it  originated,  or  upon  those  of  the  persons  among  whom 
it  has  circulated.^ 
"With  the  more  frequent  commercial  intercourse  among 
nations  the  bill  of  exchange  drawn  from  one  country  upon 
another,  is  now  an  instrument  of  international  importance, 
and  the  necessity  has  been  felt  everyw^here  for  the  accept- 
ance of  common  principles  concerning  the  capacity  of  the 
parties  to  a  bill  of  exchange,  the  form  of  the  document,  the 
rights  and  obhgations  of    the  persons  concerned  and  the 
proceedings  to  collect  the  money  in  case  it  is  necessary  to 
have  recourse  to  the  courts. 

To  satisfy  these  necessities  an  international  conference 
was  held  at  The  Hague  during  the  years  1910  and  1912,  in 
which,  taking  as  a  model  the  German  law  of  bills  of  exchange, 
a  Uniform  Regulation  was  drawn  as  well  as  articles  of  a 
Convention,  in  which  important  suggestions  were  made 
as  to  the  method  by  which  the  Regulations  could  be  adopted 
in  e\'ery  country. 

During  the  spring  of  1916,  an  international  conference 
of  the  republics  of  America  was  held  at  Buenos  Aires,  in 

does  not  prove  the  nullity  of  the  endorsement  if  in  the  minute  book  of  the 
latter  there  is  evidence  that  an  order  was  given  to  make  the  endorsement. 
Mexico,  Tercera  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  July  31,  1912,  F.  Puga  v. 
G.  Alcorta,  Diario  de  Jurisp.,  v.  XXVII,  p.  113. 

^  An  action  based  on  an  instrument  payable  to  order  is  absolutely  independ- 
ent of  the  legal  relation  by  virtue  of  which  the  document  was  issued,  and  the 
person  who  binds  himself  in  such  fonn  accepts  beforehand  as  creditors  not 
only  the  original  payee  of  the  instrument,  but  every  one  of  those  who  become 
owners^  thereof  as  endorsees.  Buenos  Aires,  Corte  Suprema,  September  30, 
1913,  Province  of  Cordoba  v.  Griet,  Jurisprvdencia  de  los  Trib.  Nacs.,  1913, 
September,  1913. 

The  liability  of  the  drawer  and  endorsers  of  a  bd  of  exchange  is  not  altered 
because  the  origin  of  the  bill  of  exchange  was  the  result  of  an  agreement  to  pay 
the  debts  of  a  third  party,  who  does  not  appear  involved  in  the  obligations 
derived  from  the  instnunent.  Spain,  Trib.  Sup.,  March  4,  1910,  Credito 
Ibero  Americano  v.  P.  Barbe;  Gaceta  of  July  18  and  19,  1910,  p.  121. 

In  Anglo-American  law,  the  negotiability'  of  a  bill  of  exchange  depends  on 
this  circumstance  of  independence.  See  the  important  case  of  Guaranty  Trust 
Co.  V.  Hannay  (1918),  1  K.  B.  43,  discussed  at  length  in  27  Yale  Law  Journal, 
1046  (June,  1918). 


BILLS    OF    EXCHANGE  477 

which  the  adoption  of  the  Uniform  Regulation  of  The  Hague 
was  discussed.  The  greatest  objections  were  made  to 
articles  74  of  the  Regulation  and  18  and  20  of  the  Conven- 
tion in  which  the  principle  of  nationality  was  established  to 
govern  the  capacity  of  the  parties  concerned  in  a  bill  of 
exchange,  while  the  countries  which  entered  into  the  Monte- 
video treaties  of  1889  ^  had  recognized  the  principle  of 
domicil.  Finally,  the  conference  drafted  a  recommendation 
to  the  governments  represented  therein,  to  adopt  the  Hague 
Uniform  Regulation,  with  certain  suggested  changes  as 
provided  by  the  terms  of  the  Hague  Convention  and  post- 
poning the  discussion  of  articles  74  of  the  Regulation  and  18 
and  20  of  the  Convention. 

The  Uniform  Regulation  was  adopted  by  Panama  in  its 
commercial  code  of  August,  22,  1916,  without  the  amend- 
ments suggested  in  Buenos  Aires. 

Guatemala  adopted  the  Uniform  Regulation  on  May  30, 
1913,  and  Nicaragua,  at  the  end  of  1916. 

In  citing  the  articles  of  the  Uniform  Regulation  it  must 
be  understood  that  impUcit  reference  is  also  made  to  the 
law  of  those  three  countries  as  well. 

Brazil  in  its  law  No.  2,044  of  December  31,  1908,  accepted 
the  principles  of  the  German  law  of  bills  of  exchange. 
Numbered  references  to  articles  of  the  law  of  Brazil  refer  to 
that  law,  as  in  Costa  Rica  they  refer  to  the  articles  of  the  law 
on  bills  of  exchange  of  November  25,  1902. 

Systems  followed  with  respect  to  the  nature  of  bills  of 
exchange. 
Not  all  the  codes  of  Latin-America  have  acknowledged 
the  modern  ideas  concerning  the  nature  of  a  bill  of  exchange; 
they  include  the  following  systems: 

(a)  Codes  which  consider  bills  of  exchange  as  a  result 
and  as  evidence  of  a  previous  contract  of  exchange  of 
money  from  one  place  to  another.^ 

*  Infra,  chapter  on  Conflict  of  Laws. 

»  Bolivia,  394;  Chile,  020,  6:37;  Colombia,  746,  763;  Ecuador,  388;  Haiti,  108; 
Mexico,  449;  Santo  Domingo,  110. 


478  LATIN- AMERICAN   COMMERCIAL   LAW 

(6)  Codes  which  give  bills  of  exchange  the  full 
character  of  instruments  of  credit  irrespective  of  the 
nature  of  the  transaction  in  which  they  originated.^ 

Commercial  character  of  bills  of  exchange. 

There  are  in  Latin-America  various  systems  in  regard  to 
the  character  of  bills  of  exchange,  namely: 

(a)  That  of  the  codes  which  consider  bills  of  exchange 
as  commercial  instruments,  whatever  the  character  of 
the  persons  concerned  and  the  nature  of  the  transaction 
from  which  they  derive." 

(b)  That  of  the  code  of  Bolivia  which  provides  that 
the  rights  and  obligations  of  the  drawer,  holder,  endors- 
ers and  drawee  are  governed  by  the  commercial  or  ci\il 
law,  according  to  the  character  of  each  of  those  persons; 
so  that  a  bill  of  exchange  may  produce  one  effect  with 
respect  to  one  of  the  endorsers  and  a  different  one  with 
respect  to  another.  The  bill  of  exchange  cannot  serve 
as  an  instrument  of  credit  with  clear  and  precise  obhga- 
tions  for  all  persons  concerned. 

(c)  That  of  Brazil,  Costa  Rica  and  the  countries 
which  have  adopted  the  Uniform  Regulation,  which 
makes  no  declaration  of  the  commercial  or  civil  charac- 

A  bill  of  exchange  presupposes  a  contract  of  exchange  of  money  from  one 
place  to  another.  This  requisite  is  fulfilled  when  the  instrument  is  drawTi  in 
one  place  upon  another  no  matter  how  close  they  are  and  even  though  it  is 
accepted  in  the  place  where  the  draft  was  issued.  Mexico,  Tercera  Sala  del 
Trib.  Sup.  del  Dist.  Fed.,  June  25,  1913,  A  Bonzanelli  v.  A.  Diaz  Sanchez, 
Diar.  de  Jurisp.,  v.  XXX,  p.  419. 

Bills  of  exchange  always  presuppose  the  previous  existence  of  a  contract  of 
exchange,  by  which  the  drawer  binds  himself  to  deliver  to  the  drawee  a  cer- 
tain amount  of  money  in  a  certain  place  in  consideration  of  money  or  valuables 
received  in  another  place.  Consequently  when  it  is  proved  that  no  contract 
of  exchange  was  made,  the  document  though  having  all  the  appearances  of  a 
bill  of  exchange  has  not  such  a  character.  Mexico,  Tercera  Sala  del  Trib.  Sup. 
del  Dist.  Fed.,  July  6,  1912,  F.  Rueda  v.  F.  Colsa,  LHar.  de  Jur.,  XXVIII, 
p.  129. 

^  Spain,  446;  Argentina,  598;  Brazil,  1;  Costa  Rica,  1;  Honduras,  437;  Peru, 
437;  San  Salvador,  392;  Uruguay,  788,  802;  Uniform  Regulation,  I;  Venezuela, 
361. 

^  Spain,  443;  Argentina,  8;  Chile,  3;  Colombia,  20;  Ecuador,  3;  Honduras, 
434;  Mexico,  450;  Peru,  435;  San  Salvador,  3;  Uruguay,  7;  Venezuela,  2. 


BILLS   OF   EXCHANGE  479 

ter  of  bills  of  exchange^  inasmuch  as  a  special  law  covers 
the  entire  matter;  and  whenever  a  classification  is 
needed  for  purposes  different  than  the  direct  effects  of 
bills  of  exchange,  the  general  rules  are  applied.  (See 
Chapter  II) 

(d)  That  of  the  codes  of  Haiti  and  Santo  Domingo, 
which,  lacking  a  special  pro\'ision,  leaves  the  rights 
and  obligations  derived  from  bills  of  exchange  to  be 
governed  by  the  commercial  or  civil  code  as  the  general 
principles  may  require. 

Capacity  of  persons  to  bind  themselves  by  a  bill  of  ex- 
change. 

Some  few  codes  refer  to  the  matter  of  the  capacity  of  the 
parties  to  draw  a  bill  of  exchange,  and  even  among  these, 
most  require  only  a  general  capacity,  that  is,  a  capacity 
governed  by  the  general  principles  referred  to  in  the  chapter 
on  Merchants  in  General.  Such  is  the  case  in  Chile  ^  and 
Colombia.^ 

Argentina  ^°  provides  that  non-merchant  women  can 
only  guarantee  a  bill  of  exchange  in  the  form  provided  for  by 
the  civil  law. 

Costa  Rica  has  a  provision  which  may,  in  the  same  way, 
affect  the  capacity  of  the  parties  in  the  matter  of  bills  of 
exchange.  It  states  that  all  persons,  whether  merchants  or 
not,  who  enjoy  civil  capacity,  can  issue  negotiable  instru- 
ments to  bearer.  ^^ 

In  Brazil  ^^  a  person  who  has  commercial  or  civil  capacity 
can  bind  himself  by  means  of  a  bill  of  exchange. 

In  Haiti  ^^  and  Santo  Domingo  ^'^  the  signature  of  a 
married  woman  or  of  a  single  woman  who  is  not  a  merchant, 
to  a  bill  of  exchange,  is  only  valid  as  a  mere  promise,  or  what 
the  French  law  calls  a  simple  promesse. 

As  a  rule  the  capacity  of  a  person  to  engage  in  commerce 


« Art.  622. 

9  Art.  748. 

">  Art.  684. 

"  Art.  20(). 

"  Art.  42. 

"Arts.  HI,  112, 

"Arts.  113,  114. 

480  LATIN-AMERICAN    COMMERCIAL   LAW 

also  makes  him  capable  of  binding  himself  in  a  bill  of  ex- 
change. 

Essential  requisites  of  form. 

Everything  relating  to  the  form  of  a  bill  of  exchange  is 
essential,  since  the  lack  of  any  of  the  legal  requirements  in 
this  particular,  changes  the  nature  of  the  document,  and 
therefore  the  rights  and  obligations  of  the  parties.^' 

The  essential  requisites  of  form  for  a  bill  of  exchange  differ 

somewhat  in  the  Latin-American  codes,  as  appears  from  the 

appended  list  of  these  requisites.^''    The  bill  must  contain: 

(a)  The  words  "bill  of  exchange"  or  their  equivalent 

in  the  corresponding  language.^" 

(h)  The  place  where  the  bill  of  exchange  is  drawn.  ^^ 
(c)  The  date.  ^9 

{d)  Date  or  term  in  which  payment  must  be  made.^° 
(e)  Name  of  the  person,  partnership,  or  corporation 
to  whom  or  to  whose  order  payment  must  be  made.^^ 

1^  Spain,  450;  Argentina,  599;  Bolivia,  365;  Brazil,  2;  Chile,  641;  Colombia, 
767;  Costa  Rica,  16;  Ecuador,  398;  Haiti,  108;  Honduras,  441;  Mexico,  451, 
468;  Peru,  441;  San  Salvador,  396;  Santo  Domingo,  110;  Uruguay,  789; 
Uniform  Regulation,  2;  Venezuela,  365. 

A  faulty  bill  of  exchange  does  not  deprive  its  bearer  of  his  right  to  recover 
in  accordance  with  the  contract  therein  contained,  but  the  action  must  be 
carried  through  in  a  regular  way,  not  by  summary  proceedings  in  execution. 
Infra,  p.  792.  Mexico,  2a  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  Nov.  8,  1909, 
N.  O.  Nelson  Manufacturing  Co.  v.  The  Mexico  Plumbing  Supply  Co.,  Diar. 
de  Jur.,  V.  XIX,  p.  745. 

'8  Spain,  444;  Argentina,  599;  Bolivia,  362;  Brazil,  1;  Chile,  633;  Colombia, 
759;  Costa  Rica,  2,  21;  Ecuador,  393;  Haiti,  108;  Honduras,  435;  Mexico,  451, 
452,  463;  Peru,  436;  San  Salvador,  393,  397;  Santo  Domingo,  110;  Uruguay, 
789;  Uniform  Regulation,  1;  Venezuela,  362  . 

^'  Brazil,  Peru  and  Venezuela.  According  to  the  Uniform  Regulation  the 
words  "letra  commercial"  can  also  be  used. 

'*  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Ecuador,  Haiti,  Honduras, 
Peru,  Santo  Domingo,  Uruguay  and  Venezuela. 

1^  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador 
Haiti,  Honduras,  Me.xico,  Peru,  San  Salvador,  Santo  Domingo,  Uruguay, 
Uniform  Regulation,  Venezuela. 

^  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador, 
Haiti,  Honduras,  Mexico,  Peru,  San  Salvador,  Santo  Domingo,  Uruguay, 
Uniform  Regulation,  Venezuela. 

21  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Co»ta  Rica  (unless 


BILLS   OP   EXCHANGE  481 

(/)  Amount  to  be  paid.-- 

(g)  The  form  in  which  the  price  of  the  draft  was 
received  by  the  drawer  or  the  indication  that  the  price 
is  charged  to  the  account  of  the  payee  or  is  pending 
settlement.-^ 

(h)  Name  of  the  person  by  whose  order  the  bill  of 
exchange  was  drawn.-'* 

(i)  Name  of  the  drawee. ^^ 

(j)  Domicil  of  the  drawee.-^ 

(k)  Signature  of  the  drawer.  ^^ 

(T)  The  indication  whether  one,  two  or  more  copies  of 
the  bill  of  exchange  have  been  issued.-^ 

(m)  Place  in  which  the  draft  must  be  paid.^^ 

Various  provisions  regarding  these  requisites.    The  date. 

In  Argentina  ^°  and  Uruguay  ^^  the  failure  to  state  the 
date  on  which  a  bill  of  exchange  is  drawn  does  not  bring 
about  the  nullity  of  the  obligation  contracted  between  the 
drawer  and  the  payee.  In  Brazil,^-  in  such  a  case,  it  is 
presumed  that  the  holder  has  power  to  fill  in  the  date.    In 

payable  to  bearer),  Ecuador,  Haiti,  Honduras,  Mexico,  Peru,  San  Salvador, 
Santo  Domingo,  Uniform  Regulation,  Uruguay,  Venezuela. 

The  omission  of  the  name  of  the  payee  in  a  bill  of  exchange  makes  it  void. 
Mexico,  Juzgado  1°.  de  lo  Civil  del.  D.  F.,  June  14,  1884,  M.  Quintana  v. 
A.  Lopez  Ortigosa,  An.  de  Leg.  y  Jurisp.  Seccion.  de  Jurisp.,  v.  I,  p.  121. 

22  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador, 
Haiti,  Honduras,  Mexico,  Peru,  San  Salvador,  Santo  Domingo,  Uniform 
Regulation,  Uruguay,  Venezuela. 

2'  Spain,  Bolivia,  Chile,  Colombia,  Ecuador,  Haiti,  Honduras,  Mexico, 
Santo  Domingo. 

^*  Spain,  Bolivia,  Chile,  Colombia,  Honduras. 

25  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Costa  Rica,  Ecuador,  Haiti, 
Honduras,  Mexico,  Peru,  San  Salvador,  Santo  Domingo,  Uniform  Regulation, 
Uruguay,  Venezuela. 

2*  Spain,  Bolivia,  Ecuador,  Honduras,  Venezuela. 

2'  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Haiti, 
Honduras,  Mexico,  Peru,  San  Salvador,  Santo  Domingo,  Uruguay,  Venezuela, 
Uniform  Regulation. 

2*  Argentina,  Costa  Rica,  Haiti,  Peru,  Santo  Domingo,  Uruguay. 

28  Haiti,  Mexico,  Peru,  San  Salvador,  Santo  Domingo,  Uniform  Regulation, 
Venezuela. 

3"  Art.  599.  "  Art.  789.  '^  Art.  4. 


482  LATIN-AMERICAN    COMMERCIAL   LAW 

Costa  Rica  ^^  the  date  of  the  original  draft,  of  its  endorsement 
and  of  its  acceptance  are  presumed  truthful  until  proof  to 
the  contrary  is  produced.  The  use  of  a  date  prior  or  subse- 
quent to  the  actual  date  does  not  invalidate  the  instrument, 
but  this  does  not  relieve  from  liability  those  persons  who 
used  or  consented  to  the  wrong  date  if  damage  has  resulted. 

Name  of  the  payee. 

In  Argentina  ^^  and  in  Uruguay  ^^  if  the  name  of  the  payee 
has  been  left  blank,  a  holder  in  due  course  and  good  faith 
may  fill  in  his  own  name.  In  Costa  Rica,^^  when  the  name  of 
the  payee  is  that  of  a  non-existent  person  the  bill  of  exchange 
is  considered  drawn  to  bearer. 

Number  of  copies  issued. 

In  Argentina  ^^  and  Uruguay  ^^  when  no  statement  is 
made  as  to  the  number  of  copies  issued  and  there  are  several, 
each  is  considered  a  different  bill  of  exchange. 

Signature. 

In  Argentina  ^^  and  Uruguay  "^^  the  lack  of  signature  in  a 
bill  of  exchange  payable  to  the  order  of  the  drawer  himself 
is  supplied  by  the  signature  of  his  endorsement.  In  Costa 
Rica  ^^  if  the  drawer  is  unable  to  sign  his  own  name,  he  must 
present  the  bill  of  exchange  to  a  notary,  to  whom  he  must 
declare  that  he  has  asked  the  person  who  signed  in  his  name, 
to  do  so;  the  notary  inserts  this  statement  in  his  notary's 
book  {protocol)  and  writes  in  the  bill  of  exchange  the  follow- 
ing declaration:  "This  bill  of  exchange  is  authentic,"  or 
some  similar  statement,  signing  it  without  witnesses.  In 
Bolivia  "^^  in  such  case  a  notary  must  authenticate  the 
declaration  of  the  drawer  giving  his  consent  to  the  issuance  of 
the  bill  of  exchange.  In  Mexico  '^^  such  a  bill  of  exchange 
must  be  executed  in  a  public  instrument.       The  Hague 


33  Art.  13. 

34  Art.  599. 

35  Art.  789. 

38  Art.  8. 

37  Art.  599. 

38  Art.  789. 

M  Art.  599. 

«  Art.  789. 

"  Art.  2. 

«  Art.  361. 

«  Art.  463. 

BILLS    OF    EXCHANGE  483 

Convention  "**  suggests  that  every  country  provide  a  way  to 
supply  the  signature  of  a  drawer  in  some  manner  indicating 
by  declaration  that  the  drawer  has  consented  to  subscribe 
the  bill. 

In  Brazil  ^^  Costa  Rica  ^^  and  according  to  the  Uniform 
Regulation,  when  the  bill  of  exchange  is  drawn  or  endorsed 
by  an  incompetent  person,  the  validity  of  the  obligations 
contracted  by  other  subscribers  is  not  impaired,  because  of 
the  independence  of  every  obligation  created  by  the  instru- 
ment. In  other  countries  which  are  silent  on  this  point,  the 
application  of  general  principles  warrants  the  conclusion 
that  if  an  incompetent  person  is  the  drawer  or  endorser  the 
bill  of  exchange  or  the  endorsement,  as  the  case  may  be,  is 
void ;  and  title  to  the  instrument  is  not  vested  in  the  endorsee, 
any  person  sustaining  injury  thereby  reserving  a  right  to 
recover  damages. 

All  persons  who  place  their  signatures  on  a  bill  of  exchange 
in  the  name  of  another  as  drawers,  endorsers,  or  acceptors, 
must,  in  Argentina,'^  Bohvia,'*^  Costa  Rica,^^  Mexico  ^°  and 
Uruguay  ^^  have  previous  authorization  therefor,  with 
special  power  of  attorney,  and  must  express  the  capacity  in 
which  they  sign;  the  payees  and  the  endorsees  have  a  right  to 
demand  from  the  person  who  signs  the  production  of  his 

4"  Art.  3.  *°  Art.  43. 

■"  Art.  19.  By  the  United  States  Uniform  Negotiable  Instruments  Law,  on 
the  other  hand,  endorsement  or  assignment  of  the  instrmnent  by  an  infant 
passes  property  therein,  notwithstanding  that  from  want  of  capacity  the 
infant  may  incur  no  liability  thereon.  Moreover,  if  the  holder  had  no  notice 
of  any  infirmity  in  the  instrument  or  defect  in  the  title  of  the  person  negotiating 
it  he  is  a  holder  in  due  course. 

"  Art.  608.  ^»  Art.  369.  "  Art.  20. 

5»  Art.  465. 

"Art.  804. 

A  citation  for  the  acknowledgment  of  the  signature  placed  on  a  document 
by  a  person  as  the  attorney  in  fact  of  another  must  be  made  to  the  attorney, 
not  to  the  principal,  and  the  request  of  payment  made  to  the  former  is  not  a 
cause  for  a  declaration  of  nullity.  Buenos  Aires,  Cam.  de  Apel.,  Sept.  27,  1913. 
Ludke  Sajonx  y  Cia  v.  R.  Sanserino,  Jurisp.  de  los  Triba.  Naca.,  lb. 

When  a  merchant's  wife  accepts  in  his  name  a  bill  of  exchange  because  in  his 
absence  she  is  in  charge  of  his  business,  the  acceptance  is  binding  upon  the 
husband  inasmuch  as  he  ratified  that  acceptance.  Spain,  Trib.  Hnp.,  Oct.  12, 
1908;  Guceta  of  May  11,  1909,  p.  144. 


484  LATIN- AMERICAN    COMMERCIAL   LAW 

power.  In  Chile  °-  and  Colombia/^  when  the  person  in 
whose  name  another  signed  a  bill  of  exchange  denies  that  he 
has  given  the  latter  power  to  do  so,  the  signer  is  personally 
liable  for  the  payment,  until  he  proves  in  due  form  the 
existence  of  such  power.  The  provisions  of  the  law  in 
Brazil  ^^  and  in  Ecuador  ^^  are  more  radical;  they  make  the 
signer  always  responsible  for  the  payment  of  the  instrmnent. 
According  to  the  Uniform  Regulation  ^^  the  person  who  signs 
a  bill  of  exchange  without  power  or  in  excess  of  his  power  is 
personally  liable  for  the  payment  thereof. 

Clauses  inconsistent  with  the  character  of  a  bill  of  exchange. 

In  Brazil,  ^^  certain  clauses  in  a  bill  of  exchange  which 
might  destroy  its  legal  effect  as  such  are  considered  void, 
namely:  (a)  that  relating  to  interest;  (b)  that  prohibiting 
endorsement  or  protest,  or  releasing  parties  from  respon- 
sibility for  expenses  or  dispensing  otherwise  with  the  obser- 
vance of  terms  or  formalities  prescribed  by  law;  (c)  that 
prohibiting  the  presentation  of  the  bill  of  exchange  to  the 
drawee;  {d)  that  excluding  or  limiting  liability  whether  in 
benefit  of  the  debtor  or  the  creditor  beyond  the  limits  set 
by  the  law.^^ 

In  Costa  Rica  ^^  the  parties  cannot  by  special  stipulation 
modify  the  legal  effects  of  a  bill  of  exchange,  unless  other- 
wise provided  by  the  law.  The  drawer,  however,  can  insert 
in  the  instrument  a  clause  denying  or  limiting  his  respon- 
sibility in  regard  to  the  bearer. 

In  Chile  ^°  and  Colombia,"  the  drawer  and  the  payee  can 
agree  to  the  clause  "devuelta  sin  gastos"  (return  without 
expenses)  "sin  mas  aviso''  (without  further  notice)  and 
other  like  clauses  expressing  accessory  agreements  which  do 
not  alter  the  essence  of  the  instrument. 

"  Art.  626.  63  Art.  752.  "  Art.  43. 

55  Art.  397.  56  Art.  8.  "  Art.  44. 

^  The  endorsement  of  an  instrument  to  order  made  with  the  declaration 
that  the  endorsement  shall  not  produce  any  effect  until  after  the  death  of  the 
endorser  is  void.    Spain,  Trib.  Sup.,  April  24,  1909;  Gaceta  of  Dec.  1,  1909. 

^9  Arts.  17,  18.  80  Art.  640.  "  Art.  766. 


BILLS   OF   EXCHANGE  485 

In  Venezuela  ®^  a  clause  relating  to  interest  is  considered 
as  of  no  effect. 

Effects  of  clauses  "  value  on  account,"   "  value  under- 
stood." 

The  clauses  "value  on  account"  or  ''value  understood" 
inserted  in  a  bill  of  exchange  make  the  payee  responsible 
for  its  value  to  the  drawer,  who  may  set  off  or  demand  it 
in  the  form  and  at  the  time  agreed  on.  They  establish  in 
favor  of  the  drawer  the  presumption  that  he  has  not  re- 
ceived the  price  of  the  bill  of  exchange  until  the  payee 
settles  his  accounts  with  him.  This  presumption  is  of  no 
validity  against  third  parties  and  may  be  overcome  by  proof 
to  the  contrary.^^ 

Terms  of  bills  of  exchange. 

There  are  various  systems  relating  to  the  terms  of  bills 
of  exchange,  namely: 

First  system.  A  bill  of  exchange  can  be  drawn  (a) 
at  sight;  (6)  at  days  or  months  after  sight;  (c)  at  days 
or  months  after  date;  {d)  at  one  or  more  "usances" ; 
(e)  at  a  fixed  date;  (/)  or  at  a  fair.^^ 

82  Art.  365. 

63  Argentina,  603;  Chile,  635;  Colombia,  761;  Mexico,  462;  Uruguay,  793. 

The  statement  that  the  value  of  a  bill  of  exchange  was  received  or  charged  to 
account  in  the  endorsement  of  the  same  is  necessarj^  only  for  determining  the 
obligations  between  the  endorser  and  the  endorsee.  The  clause  "value  under- 
stood," "value  on  account,"  indicates  that  the  endorser  has  not  been  paid 
the  price  of  the  draft.  This  is  also  applicable  to  promissory  notes  and  inland 
bills  of  exchange  {lihranzas).  Ecuador,  Corte  Supreme  de  Justicia,  Jan.  20, 
1908,  Flz.  Martinez  v.  D.  Capuli;  Gacela  Judicial,  1908,  n.  33,  p.  266. 

Endorsement  with  the  clause  "value  on  account"  is  .a  regular  one  and 
transfers  the  bill  of  exchange.  Mexico,  Juzgado  4,  de  lo  Civil  de  Dist.  Fed., 
July  26,  1904,  A  Cervantes  v.  W.  E.  Herman  y  Compania,  Diario  de  Jurisp., 
V.  Ill,  p.  633. 

An  endorsement  with  the  clause  "value  understood"  (valor  entendido)  or 
"value  on  account"  {valor  en  cuenta)  means  as  a  rule  that  the  endorsee  has 
not  paid  the  price  thereof,  and  the  effect  is  that  the  creditors  of  the  endorser 
cannot  suffer  any  damage  by  the  endorsement,  and  the  l)ill  of  exchange  belongs 
to  them,  in  the  absenc(!  of  proof  to  the  contrary.  Mexico,  Juzgado  4.  de  lo 
Civil  de  Dist.  Fed.,  July  20,  1904,  A  Cervantes  v.  W.  H.  Hermann  y  Com- 
pania, Ih. 

8^  Spain,  451;  Bolivia,  370;  Chile,  642;  Colombia,  768;  Honduras,  442. 


486  LATIN-AMERICAN    COMMERCIAL   LAW 

Second  system.  It  can  be  drawn  in  the  form  above 
stated  except  at  fairs  and  furthermore,  at  one  or  more 
"tisances'^  after  sight  or  date.''^ 

Third  system.  It  can  be  drawn  in  the  same  terms 
as  the  first  system,  except  at  usances  and  at  fairs.^^ 

According  to  the  Hague  Uniform  Regulation,  which 
adopted  this  system,  bills  of  exchange  maturing  in  a 
different  way  or  at  successive  periods  of  maturity  are 
void. 

Fourth  system.  It  can  be  drawn  in  the  same  terms 
as  the  first  system  and,  in  addition,  it  may  become  due 
after  an  event  which,  like  death,  must  necessarily 
occur  although  the  date  of  its  happening  is  not  known.^^ 

Fifth  system.  It  must  be  drawn  with  indication 
of  the  date  of  payment.^^ 

Method  of  computing  terms. 

Each  of  the  terms  above  stated  makes  the  payment  of 
the  draft  compulsory,  as  follows:  (a)  the  sight  draft,  on 
its  presentation;  (b)  the  days  or  months  ''after  sight"  draft, 
on  the  day  of  expiration  of  the  period,  to  be  counted  from 
the  day  following  acceptance  or  protest,  if  not  accepted; 
(c)  the  days  or  months  ''after  date"  draft,  as  well  as  that 
at  one  or  more  usances,  on  the  day  at  which  the  period  fixed 
expires,  to  be  counted  from  that  immediately  following  the 
date  of  the  draft;  (d)  the  "certain  date"  draft,  on  the  date 
set;  (e)  the  draft  drawn  on  fairs,  on  the  last  day  thereof. 

Months  must  be  computed  from  date  to  date;  if  in  the 
month  the  draft  falls  due,  there  is  no  day  equivalent  to  that 

85  Haiti,  127;  Santo  Domingo,  129. 

The  circumstance  that  a  bill  of  exchange  is  to  be  paid  after  several  years, 
which  seems  to  be  contrary  to  the  provision  of  Art.  451  of  the  code,  does  not 
impair  the  validity  of  the  obligation  of  the  acceptor.  The  drawer  who  pays 
it  has  a  right  to  recover  from  such  acceptor.  Spain,  Trib.  Sup.,  March  20, 
1909,  C.  Vildalch  v.  N.  Moll;  Gacetas  of  6th  and  7th  Nov.,  1909,  p.  159. 

«8  Argentina,  609;  Brazil,  6;  Ecuador,  394;  Mexico,  455,  456;  Uruguay,  805; 
Uniform  Regulation,  32;  Venezuela,  364. 

"  Costa  Rica,  29,  30. 

88  San  Salvador,  397. 


BILLS    OF    EXCHANGE  487 

of  the  month  in  which  the  bill  of  exchange  was  drawn,  it 
falls  due  on  the  last  day  of  the  month. ^^ 

The  usance  of  a  draft  in  Spain  ^^  is  sixty  days  for  those 
drawn  in  the  Peninsula  and  nearby  islands,  Portugal,  France, 
England,  Holland  and  Germany,  and  ninety  days  for  those 
drawn  on  other  places  J  ^ 

In  Bolivia  ^^  the  usance  for  bills  of  exchange  drawn  from 
one  place  on  another  within  the  Republic,  or  on  foreign 
countries  is  thirty  days;  for  those  drawn  from  without  the 
Republic  on  places  in  Bolivia  the  usance  is  computed  accord- 
ing to  the  law  of  the  place  where  drav^ii. 

In  Chile,  Colombia,  Haiti  and  Honduras,  no  rule  is  pro- 
vided for  the  computation  of  usances. 

In  Santo  Domingo  the  usance  is  a  period  of  thirty  days.^^ 

According  to  the  Uniform  Regulation,  a  bill  of  exchange 
at  sight  is  payable  at  the  time  of  its  presentation.  It  must 
be  presented  withing  the  fixed,  legal  or  conventional  periods 
for  the  acceptance  of  bills  of  exchange  payable  at  a  certain 
period  after  sight/^  The  maturity  of  a  bill  of  exchange 
drawn  and  payable  at  a  certain  period  after  sight  must  be 
determined  by  the  date  of  its  acceptance  or  by  that  of  pro- 
test.^^  When  there  is  no  protest,  an  acceptance  without 
date  must  be  considered  in  so  far  as  the  acceptor  is  con- 
cerned, as  having  been  made  the  last  day  of  the  legal  or 
conventional  period  fixed  for  its  presentation.^^  When  a 
bill  of  exchange  is  drawn  at  one  or  several  months  and  a 
half  from  date  or  from  sight  the  whole  months  must  be 

89  Spain,  452,  454;  Argentina,  610  to  613;  Bolivia,  371,  373,  375;  Brazil,  17; 
Chile,  643  to  645;  Colombia,  769  to  771;  Costa  Rica,  29,  31,  33,  34,  35;  Ecuador, 
394;  Honduras,  443,  445;  Mexico,  458;  Peru,  469  to  472;  Uruguay,  806  to  809; 
Uniform  Regulation,  35;  Venezuela,  364. 

™  Art.  453. 

^1  Art.  453  of  the  Spanish  code  was  applied  to  Cuba  in  the  following  form: 
"Usances"  for  bills  of  exchange  drawn  from  one  place  on  another  of  the  island 
of  Cuba  and  for  those  drawn  on  the  islands  and  coasts  of  the  Caribl)ean  Sc^a 
or  the  Gulf  of  Mexi(!0  from  the  United  States,  Guatemala,  Honduras,  Nicar- 
agua, Costa  Rica,  and  Brazil  are  sixty  days;  for  bills  of  exchange  drawn  from 
other  places  the  "usance"  is  ninety  days. 

"  Art.  374.  "  Art.  132.  74  Art.  33. 

"  Art.  34.  78  Art.  34. 


488  LATIN-AMERICAN    COMMERCIAL    LAW 

previously  computed.^^  If  the  maturity  is  fixed  at  the  begin- 
ning, at  the  middle  (at  the  middle  of  January,  at  the  middle 
of  February,  etc.),  or  at  the  end  of  the  month,  it  is  under- 
stood that  this  means  the  first,  the  fifteenth  or  the  last  day 
of  the  month  respectively.  The  phrases  ''eight  days"  or 
''fifteen  days"  are  understood  not  as  meaning  one  or  two 
weeks,  but  as  an  actual  period  of  eight  or  fifteen  days 
respectively.     The  phrase  half  a  month  means  fifteen  days. 

When  a  bill  of  exchange  is  payable  at  a  fixed  day  in  a  place 
where  the  calendar  is  different  from  that  at  the  place  where 
drawn,  the  date  of  maturity  is  fixed  by  the  calendar  of  the 
place  of  payment. ^^ 

When  a  bill  of  exchange  is  drawn  between  two  places 
which  have  different  calendars  and  it  is  payable  at  a  certain 
period  from  date,  the  date  of  issuance  is  referred  to  the  calen- 
dar of  the  place  of  payment,  and  the  computation  of  the  day 
of  maturity  is  fixed  thereby. 

The  periods  for  the  presentation  of  bills  of  exchange 
are  computed  according  to  the  rules  of  the  preceding 
paragraphs. 

These  rules  are  not  applicable  if  any  clause  of  the  bill  of 
exchange  or  the  wording  of  the  instrument  indicates  that 
the  parties  intended  to  adopt  different  rules. 

Maturity  on  a  holiday. 

When  a  bill  of  exchange  is  due  on  a  holiday  three  systems 
are  followed,   namely: 

First  system.      The  bill  of  exchange  must  be  paid 
the  day  before  the  holiday." 

"  Art.  35.  '8  Art.  36. 

According  to  the  custom  of  English  merchants,  later  adopted  in  the  common 
law,  instruments  payable  at  a  certain  date  or  at  sight,  were  entitled  to  three 
days  of  grace.  But  instruments  payable  "on  demand"  were  not  entitled  to 
grace,  but  were  due  in  fact  without  demand  the  moment  they  were  delivered. 
This  harsh  rule,  however,  is  not  applied  to  bank  notes  which  are  promissory 
notes  payable  on  demand.  By  the  American  Uniform  Negotiable  Instru- 
ments Law,  section  85,  days  of  grace  have  been  abolished,  negotiable  instru- 
ments being  payable  at  the  time  fixed  without  grace. 

'!•  Spain,  455;  Argentina,  613;  Bolivia,  376;  Chile,  646;  Colombia,  772; 
Haiti,  131;  Honduras,  445;  Mexico,  457;  Santo  Domingo,  134;  Uruguay,  809. 


BILLS    OF    EXCHANGE  489 

Second  system.  The  bill  of  exchange  must  be  paid 
the  day  after  the  holiday.^" 

The  law  of  Brazil  ^^  provides  that  the  bill  of  exchange 
must  be  presented  for  payment  the  next  business  day. 
Even  though  a  clearer  statement  would  be  desirable 
it  seems  that  Brazil  thereby  comes  within  the  second 
system. 

Third  system.  The  bill  of  exchange  falls  due  on  the 
day  indicated  therein  without  any  exception.^- 

Time  for  paying  a  bill  of  exchange. 

Some  of  the  codes  enter  into  details  concerning  the  latest 
hour  of  the  day  at  which  a  bill  of  exchange  can  be  paid: 

Spain,^^  Argentina,^^  Bolivia,''^  Chile,^^  Colombia,^' 
Honduras,^  Mexico  ^^  and  Uruguay  ^°  fix  sunset  of  the 
day  of  maturity  as  the  limit.  Costa  Rica  ^^  fixes  the 
Umit  at  6  p.  m. 

Different  forms  of  drawing  a  bill  of  exchange. 

The  drawer  can  draw  a  bill  of  exchange  in  the  Latin- 
American  countries  in  one  of  the  following  forms :  ^- 

1.  To  his  own  order.^^ 

2.  On  one  person  in  order  that  he  may  make  the  pay- 
ment at  the  domicil  of  a  third.^"* 

*"  Costa  Rica,  36;  Ecuador,  428;  Uniform  Regulation,  37;  Venezuela,  396. 

81  Alt.  20. 

The  Negotiable  Instruments  Law  in  the  United  States,  section  85,  also 
makes  the  instrument  payable  on  the  "next  succeeding  business  day." 

s^SanSalvadox,  425. 

8'  Art.  455.  "  Art.  614.  86  Art.  376. 

8«  Art,  646.  87  Art.  772.  88  Art.  445. 

89  Art.  457.  90  Art.  810.  9i  Art.  36. 

»^  Spain,  446;  Argentina,  604;  Bolivia,  353,  354;  Chile,  639;  Colombia,  765 
Costa  Rica,  6,  7;  Ecuador,  394;  Haiti,  109;  Honduras,  437;  Mexico,  464 
Peru,  438;  San  Salvador,  400;  Santo  Domingo,  110,  111;  Uruguay,  794 
Ur.iform  Regulation,  3,  4;  Venezuela,  366. 

93  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Costa  Rica,  Ecuador,  Hon- 
duras, Peru,  San  Salvador,  Santo  Domingo,  Uruguay,  Uniform  Regulation, 
Venezuela. 

9^  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Costa  Rica,  Ecuador,  Haiti, 
Honduras,  San  Salvador,  Uruguay,  Uniform  Regulation,  Venezuela. 


490  LATIN-AMERICAN    COMMERCIAL    LAW 

3.  On  himself  at  a  place  which  is  not  his  domicil.^'^ 

4.  On  a  person  who  Uves  at  the  place  of  residence  of 
the  drawer.^^ 

5.  In  his  own  name  but  by  order  and  for  the  account 
of  another  person,  this  circumstance  being  stated  in  the 
draft.^" 

In  Chile,9«  Colombia  »^  and  Mexico  ^°°  the  bill  of  exchange 
cannot  be  drawn  payable  to  bearer  nor  in  favor  of  the 
drawee.  WTien  made  payable  to  the  drawer  it  is  not  perfect 
until  after  endorsement  at  a  place  different  from  that  desig- 
nated for  payment. 

Liability  of  the  drawer  who  draws  the  bill  of  exchange  in 
the  name  of  a  third  person. 

System  of  Argentina  ^"^  and  Uruguay .^^^  WTien  a  bill 
of  exchange  is  drawn  in  the  name  and  for  the  account 
of  a  third  person,  the  liability  of  the  drawer  with  regard 
to  the  payee  and  endorsers  is  always  the  same,  but 
he  does  not  guarantee  to  supply  the  funds  to  the 
drawee,  and  the  holder  does  not  acquire  any  right 
against  the  third  person  for  whose  account  the  bill 
of  exchange  was  drawn.  Nevertheless,  in  case  of  a 
bill  of  exchange  drawn  in  this  way,  if  the  drawer  and 
the  drawee  become  bankrupt,  the  holder  has  a  right 
of  action  against  the  third  person  for  whose  account 
the  payment  was  to  have  been  made  if  in  the  draft 
itself  or  in  a  written  order  it  appears  that  the  drawer 
drew  the  bill  of  exchange  as  an  agent  of  the  third 
person. 

System  of  Bolivia.  When  a  drawer  draws  a  bill  of 
exchange  in  his  ow^n  name  for  the  account  of  another 
he  is  the  only  one.  liable  to  the  payee,  who  has  no  right 

^*  Spain,  Honduras,  Peru. 

^  Spain,  Honduras,  Peru. 

^^  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Haiti,  Honduras,  Mexico, 
Peru,  San  Salvador,  Santo  Domingo,  Uruguay,  Uniform  Regulation,  Vene- 
zuela. 

98  Art.  639.  99  Art.  765.  i«>  Art.  467. 

101  Art.  604.  102  Art.  794. 


BILLS    OF    EXCHANGE  491 

whatever  against  the  third  person  by  whose  order  the 
bill  of  exchange  was  drawn.  ^"^ 

Contract  between  the  drawer  and  the  payee. 

In  most  cases  the  contract  between  the  drawer  and  the 
payee  is  one  of  purchase  and  sale,  in  which  the  former  binds 
himself  to  dehver  to  the  latter  a  bill  of  exchange,  that  is,  an 
order  to  pay  a  certain  sum  of  money.  This  sale  may  be  in 
cash  or  on  credit  or  may  be  a  contract  of  loan  or  constitute 
payment  for  the  price  of  merchandise,  etc.;  but  without 
entering  into  a  study  of  the  various  origins  of  a  bill  of  ex- 
change, we  must  briefly  note  the  relations  between  the 
drawer  and  the  payee  as  independent  of  the  original  obliga- 
tions. 

Obligations  of  the  drawer. 

The  obligations  of  the  drawer  are: 

IsL  To  guarantee  the  acceptance  and  payment  of  the 
bill  of  exchange. 

Sd.  To  give  to  the  payee  or  holder  as  many  copies  of 
the  bill  as  he  may  desire.  From  the  second  up  all  the 
copies  must  state  that  they  are  valid  only  when  pay- 
ment has  not  been  made  upon  another.  ^^'^  In  San  Salva- 
dor, the  issuing  of  extra  copies  is  not  compulsory.^"' 

The  Uniform  Regulation  limits  this  obligation  of  the 
drawer  to  the  case  in  which  the  bill  of  exchange  itself 
does  not  state  that  it  has  been  issued  in  a  single  copy. 

3d.  To  cause  payment  of  the  bill  to  be  made  to  the 
payee  or  the  holder.  For  that  purpose  the  drawer  is 
under  obligation  to  supply  the  drawee  with  the  necessary 
funds,  unless  the  draft  is  made  for  the  account  of  a  third 
person,  in  which  case  the  obligation  rests  on  the  latter, 
always  reserving  the  direct  liability  of  the  drawer  with 

103  Bolivia,  354;  Ecuador,  397;  Mexico,  464;  Venezuela,  367. 

">*  Spain,  448;  Argentina,  592;  Brazil,  16;  Chile,  627;  Colombia,  753;  Ecua- 
dor, 395;  Mexico,  467;  Peru,  463;  Uniform  Regulation,  63;  Uruguay,  796; 
Venezuela,  368. 

i"*  Art.  401. 


492  LATIN-AMERICAN    COMMERCIAL    LAW 

respect  to  the  payee  or  holder  of  the  bill  of  exchange,  and 
that  of  the  third  person  for  whose  account  the  draft  was 
issued  with  respect  to  the  drawer.^"" 

4th.  To  answer  for  the  result  of  the  draft  to  all 
persons  who  successively  acquire  and  transfer  it.^°'^ 
This  liability  of  the  drawer  ceases  when  the  holder  of  the 
draft  does  not  present  it  or  does  not  protest  it  in  due 
time  and  form,  provided  the  drawer  proves  that  when 
the  bill  fell  due  he  had  supplied  the  funds  for  its  pay- 
ment. ^*^^ 

In  Argentina  ^°^  and  Uruguay,  ^^"  when  in  spite  of  the 
fact  that  the  drawer  had  supplied  the  necessary  funds  to 
the  drawee,  the  latter  fails  to  accept  the  draft,  the  holder, 
whether  or  not  he  has  protested  it,  has  the  powder 
to  request  from  the  drawer  the  assignment  of  all  his 
rights  against  the  drawee  up  to  the  amount  necessary 
to  cover  the  value  of  the  bill  of  exchange,  as  well  as 
the  delivery,  at  the  cost  of  the  holder,  of  all  documents 
which  may  serve  to  support  the  rights  of  the  drawer. 

In  Ecuador,"^  even  where  presentation  or  protest 

108  Spain,  456;  Argentina,  617,  618;  Bolivia,  355;  Chile,  648,  652;  Colombia, 
774,  778;  Costa  Rica,  37,  38;  Ecuador,  399,  400;  Haiti,  113;  Honduras,  446; 
Mexico,  469,  472;  Santo  Domingo,  115;  Uruguay,  813,  814;  Venezuela,  361, 
367. 

"'Spain,  459;  Argentina,  621;  Bolivia,  435;  Brazil,  38,  49;  Chile,  647; 
Colombia,  773;  Costa  Rica,  45;  Ecuador,  454;  Honduras,  449;  Mexico,  473; 
Uruguay,  817;Uniform  Regulation,  9;  Venezuela,  420. 

The  drawer  of  a  bill  of  exchange  is  not,  however,  bound  to  pay  the  amount 
thereof  or  interest  and  expenses  when  he  did  not  receive  any  consideration 
for  the  draft.    Bolivia,  Corte  Suprema,  Oct.  24,  1905;  Gac.  Jud.,  No.  784,  p.  42. 

When  the  drawee  pays  the  bill  of  exchange  without  being  supplied  with 
funds  he  can  demand  reimbursement  from  the  drawer.  Mexico,  Tercera  Sala 
del  Trib.  Sup.  del  Dist.  Fed.,  April  9,  1913,  Garcia  Rodriguez  v.  B.  Acerbal, 
Diario  de  Jurisp.,  XXX,  p.  738. 

The  liability  of  the  drawer  in  regard  to  the  payee  and  endorsees  of  a  bill  of 
exchange  and  of  the  latter  among  themselves  can  be  enforced  even  though 
the  document  has  been  lost,  provided  its  verbatim  contents  are  shown  by  the 
transcription  in  the  memorandum  of  protest.  Spain,  Trib.  Sup.,  Feb.  28,  1915, 
P.  Barquero  v.  D.  Primo;  Gaceta  of  Oct.  4,  1915,  p.  169. 

1"^  Spain,  460;  Argentina,  621;  Brazil,  32,  48;  Chile,  651;  Colombia,  777; 
Costa  Rica,  46,  47;  Ecuador,  456,  459;  Haiti,  115;  Honduras,  450;  Mexico,  518; 
Uruguay,  817;  Uniform  Regulation,  43. 

103  Art.  622.  110  Art.  618.  i"  Art.  460. 


BILLS   OF   EXCHANGE  493 

for  lack  of  payment  was  not  made,  or  the  rights  against 
the  guarantors  were  not  enforced  according  to  the  law, 
the  holder  has  a  right  of  action  against  anyone  who 
transferred  the  bill  to  him  knowing  and  concealing  the 
fact  that  the  drawee  or  some  of  the  guarantors  were  in 
bankruptcy. 

5th.  To  pay  expenses.  The  expenses  arising  from 
non-acceptance  or  non-payment  of  the  draft  must  be 
paid  by  the  drawer  or  by  the  third  person  on  whose 
account  the  bill  was  drawn,  unless  he  proves  that  he  had 
suppUed  the  funds  at  the  proper  time;  in  that  case  the 
drawer  may  require  of  the  person  obligated  to  accept 
and  to  pay,  indemnification  for  the  expenses  which  he 
may  have  paid  the  holder. ^^- 

When  the  funds  are  considered  supplied. 

The  funds  must  be  considered  as  supphed  when  at  the 
maturity  of  the  bill  of  exchange  the  person  on  whom  it  was 
drawn  is  a  debtor  to  the  drawer  or  to  the  third  person  for 
whose  account  the  bill  was  drawn,  in  a  sum  equal  to  or 
greater  than  the  amount  of  the  bill.^^^ 

In  Costa  Rica,  it  is  also  considered  that  the  funds  were 
duly  supplied  when  the  drawer  sent  the  drawee  merchan- 
dise for  that  purpose,  whether  the  drawee  bound  himself 
to  pay  the  bill  of  exchange  at  once,  or  whether  in  his 
relations  with  the  drawer,  he  conditioned  payment  upon 

'12  Spain,  458;  Argentina,  620;  Bolivia,  429,  430;  BrazU,  366,  370;  Chile, 
647;  Colombia,  773;  Costa  Rica,  44;  Ecuador,  402;  Honduras,  338;  Mexico, 
473;  Uruguay,  816. 

'"Spain,  457;  Argentina,  619;  Bolivia,  356;  Chile,  649;  Colombia,  775; 
Costa  Rica,  39;  Ecuador,  401;  Haiti,  114;  Honduras,  447;  Mexico,  470  to  472; 
Santo  Domingo,  116;  Uruguay,  815. 

The  fact  that  the  drawee  accepts  a  bill  of  exchange  does  not  prove  that  he 
owes  the  amount  of  it  to  the  drawer,  even  though  there  exists  between  the 
drawer  and  drawee  a  current  account,  the  balance  of  which  has  not  been 
determined.  Spain,  Trib.  Sup.,  Jan.  28,  1909,  C.  Boamonde  v.  A.  Hereras; 
Gacelas  of  Jan.  31,  and  Feb.  1,  1910,  p.  44. 

A  person  who  owes  another  the  balance  of  an  account  is  obliged  to  accept 
and  pay  the  bills  of  exchange  drawn  by  the  creditor  in  order  to  colI(>ct  it. 
Spain,  Trib.  Sup.,  Oct.  28,  1914;  GaceLa  of  April  16,  1915,  p.  157. 


494  LATIN-AMERICAN   COMMERCIAL   LAW 

the  prior  sale  of  the  merchandise,  where  he  received  them 

as  an  agent.  ^^"^ 

In  Ecuador,  too,  the  funds  are  considered  as  supphed  when 
the  drawee  has  in  his  possession  enough  merchandise  for  the 
account  of  the  person  bound  to  supply  the  funds,  provided 
the  bill  of  exchange  has  already  been  accepted. ^^^ 

In  Spain,ii«  Argentina,!!^  Bohvia,ii»  Chile,^^^  Colombia,i-o 
Costa  Rica,^^^  Honduras,^^^  Mexico,^^^  and  Uruguay,^-^ 
funds  are  also  considered  as  having  been  supplied  when  the 
drawee  expressly  authorized  the  drawer  to  draw  on  him  for 
the  amount  of  the  bill. 

"*  Art.  40.  "5  Art.  401.  "«  Art.  458. 

"'  Art.  619.  "8  Art.  358.  i"  Art.  649. 

120  Art.  775.  "I  Art.  44.  i"  Art.  448. 

123  Art.  470.  124  Art.  815. 


CHAPTER  XXIX 

Bills  of  Exchange  (2) 
endorsement 

Definition. 

An  endorsement  is  a  statement  written  on  the  back  of  a 
bill  of  exchange  with  the  legal  requirements  for  transferring 
ownership  in  it.^ 

In  Costa  Rica  ^  and  San  Salvador  ^  an  endorsement 
conveys  to  the  endorsee  all  accessory  rights  attached  to  a  bill 
of  exchange.  If  a  mortgage  secures  its  payment,  he  can 
enforce  it  even  though  his  name  has  not  been  inscribed  in 
the  corresponding  registry  of  the  property  as  that  of  the 
person  entitled  to  such  security. 

Formalities  of  endorsement. 

An  endorsement  may  be  either  formal  or  in  blank.  The 
requisites  for  the  former  are  not  the  same  in  all  countries; 
they  may  be  enumerated  as  follows: 

(a)  the  date  of  the  endorsement;  ^ 
(6)  the  name  of  the  endorsee;  '" 

(c)  a  statement  of  the  amount  received  for  the  bill  of 
exchange  and  whether  it  was  in  cash,  charged  to  account 
or  understood;  ^ 

1  Spain,  461;  Argentina,  634;  Bolivia,  380;  Brazil,  8;  Chile,  655,  656;  Colom- 
bia, 781,  783;  Costa  Rica,  48,  49;  Ecuador,  405,  408;  Haiti,  133;  Honduras,  451; 
Mexico,  477;  Peru,  442;  San  Salvador,  416,  417;  Santo  Domingo,  136;  Uniform 
Regulation,  10,  12;  Uruguay,  820;  Venezuela,  370,  372. 

2  Art.  53.  3  Art.  417. 

••  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Ecuador,  Haiti,  Honduras, 
Mexico,  Nicaragua,  Peru,  San  Salvador,  Santo  Domingo,  Uruguay,  Venezuela. 

*  Spain,  Argentina,  Bolivia,  Cliile,  Colombia,  Costa  Rica,  Ecuador,  Guate- 
mala, Haiti,  Honduras,  Mexico,  Nicaragua,  Peru,  Santo  Domingo,  Uruguay, 
Venezuela. 

'  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Guatemala,  Haiti,  Honduras, 
Mexico,  Nicaragua,  Santo  Domingo,  Uruguay. 

495 


496  LATIN-AMERICAN    COMMERCIAL   LAW 

{d)  the  name  of  the  person  from  whom  the  price  was 
received  or  to  whom  it  is  charged,  when  he  is  not  the 
endorsee  himself;  ^ 

(e)  the  signature  of  the  endorser.^ 

Notwithstanding  the  fact  that  in  Haiti,  Mexico  and 
Santo  Domingo  the  law  does  not  expressly  require  the 
signature  of  the  endorser,  it  is  self-evident  that  even  in 
those  countries  his  signature  is  indispensable.^ 

(J)  Costa  Rica  requires  a  statement  that  ownership  in 
the  bill  of  exchange  is  transferred,  by  the  use  of  the  word 
"pdguese"  (be  it  paid)  or  some  similar  expression. 

Blank  endorsement. 

Blank  endorsements  containing  merely  the  signature  of 
the  endorser  are  valid  as  a  means  of  transferring  property  in  a 
bill  of  exchange.^" 

In  Colombia  ^^  a  blank  endorsement  is  also  lawful,  but  if 
the  date  has  not  been  wTitten  by  the  endorser  the  endorse- 
ment is  considered  with  respect  to  creditors  merely  as  an 
order  for  collection. 

In  Mexico  ^-  endorsement  in  blank  is  recognized,  but 
actions  arising  therefrom  cannot  be  brought  without 
supplementing  it  with  the  requisites  of  a  regular  formal 
endorsement. 

The  endorsement  of  a  bill  of  exchange  must  state  in  what  way  the  instru- 
ment was  received  by  the  endorsee  and  in  what  form  its  amount  was  received 
by  the  endorser.  Mexico,  Tercera  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  Au- 
gust 18,  1913,  C.  Belina  v.  T.  S.  Gore,  Diar.  de  Jurisp.,  vol.  XXXI,  p.  531. 

'  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Guatemala,  Honduras, 
Uruguay. 

^  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Costa  Rica,  Ecuador, 
Guatemala,  Honduras,  Nicaragua,  Peru,  Uniform  Regulation,  Uruguay,  Vene- 
zuela. 

'Spain,  462;  Argentina,  626;  Bolivia,  381;  Brazil,  8;  Chile,  658;  Colombia, 
785;  Costa  Rica,  50;  Ecuador,  405;  Haiti,  134;  Honduras,  452;  Mexico,  478; 
Peru,  444;  San  Salvador,  416;  Santo  Domingo,  137;  Uniform  Regulation,  12; 
Uruguay,  822;  Venezuela,  372. 

10  Spain,  465;  Argentina,  627;  Brazil,  8;  Chile,  661;  Colombia,  788;  Costa 
Rica,  63,  64;  Honduras,  455;  Mexico,  479;  Peru,  444;  San  Salvador,  416; 
Uniform  Regulation,  12;  Uruguay,  823;  Venezuela,  373. 

"  Art.  788.  12  Art.  479. 


BILLS   OF   EXCHANGE  497 

Bolivia  "  and  Ecuador  ^'*  absolutely  prohibit  the  blank 
endorsement;  the  former  goes  so  far  as  to  declare  that  the 
endorser  in  such  case  cannot  demand  the  price  of  the  bill  of 
exchange  so  transferred  and  must  pay  back  any  money  he 
may  have  received. 

Effects  of  endorsement. 

Endorsement  of  a  bill  of  exchange  binds  every  one  of  the 
endorsers  to  guarantee  its  payment  when  it  is  not  accepted, 
or  to  pay  it  if  it  is  not  honored  at  maturity  by  the  drawee, 
just  as  the  drawer  must,  provided  that  all  the  requisites  of 
presentation  and  protest  have  been  fulfilled  in  proper  time 
and  form.^^ 

Clauses  modifying  these  effects. 

The  liability  of  the  endorser  ceases  when  he  uses  a  clause 
rejecting  liability.  Even  in  that  case,  however,  he  guaran- 
tees his  power  to  transfer  the  bill.^^ 

In  Spain  the  clause  required  by  the  law  is  "sin  mi  respon- 
sahilidad^'  (without  my  responsibility);  in  other  countries 
any  clause  which  connotes  the  same  idea  may  be  used. 

The  codes  of  Argentina,  Bolivia,  Haiti,  Mexico,  Santo 
Domingo  and  Uruguay  are  silent  on  this  matter. 

Brazil  ^^  prohibits  the  use  of  any  clause  limiting  the 
hability  established  by  law  with  respect  to  the  persons 
concerned  in  a  bill  of  exchange. 

13  Art.  385.  "  Art.  406. 

16  Spain,  467;  Argentina,  624,  625;  Bolivia,  380;  Brazil,  39;  Chile,  663; 
Colombia,  782;  Costa  Rica,  54;  Ecuador,  409;  Honduras,  457;  Mexico,  482; 
Peru,  442;  San  Salvador,  418;  Uniform  Regulation,  14;  Uruguay,  821;  Vene- 
zuela, 370. 

Ownership  of  bills  of  exchange  is  transferred  by  means  of  endorsement,  the 
endorsee  having  thereby  the  same  rights  as  the  payee  or  original  holder. 
Mexico,  Segunda  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  April  26,  1912,  G.  Rivera 
V.  M.  Z.  Alvarado,  Diar.  de  Jurisp.,  vol.  XXVI,  p.  159;  and  Tcrcera  Sala  del 
Trib.  Sup.  del  Dist.  Fed.,  March  15,  1912,  J.  Liebes  v.  W.  E.  Hermann  y  Cia. 
y  G.  S.  Gibbon,  Ih.,  p.  57. 

i«  Spain,  467;  Chile,  665;  Colombia,  792;  Costa  Rica,  66,  57;  Ecuador,  409; 
Peru,  445;  San  Salvador,  417;  Uniform  Regulation,  14;  Venezuela,  375. 

"  Art.  44. 


498  LATIN-AMERICAN    COMMERCIAL   LAW 

In  general,  only  the  endorser  who  uses  a  clause  limiting 
liability  may  take  advantage  of  it;  but  San  Salvador  ^^ 
provides  that  such  clause  benefits  all  endorsers  following  the 
original  user  thereof. 

Effects  of  defective  endorsement. 

In  some  countries  the  endorsement  may  be  either  in  blank 
or  with  all  requirements  of  formal  endorsement.  The  lack  of 
any  single  requirement,  however,  makes  the  endorsement 
defective.  The  provision  does  not  seem  to  be  very  con- 
sistent and  the  consequences  of  the  omission  vary,  as 
follows: 

In  Spain  ^^  and  Honduras,  ^^  when  the  date  of  the 
endorsement  is  omitted  property  in  the  bill  is  not 
transferred;  it  merely  constitutes  an  agency  for  collec- 
tion. When  no  consideration  for  the  endorsement  is 
expressed  endorsement  transfers  ownership  in  the 
instrument  as  if  the  clause  'S^alue  received"  had  been 
written  in.  In  Argentina  -^  and  Uruguay,  ^^  when  the 
endorsement  is  neither  in  blank  nor  complete  it  produces 
merely  the  effect  of  an  agency  for  collection  or  making 
protest;  if  it  is  made  to  order,  the  holder  can  by  means 
of  a  new  endorsement  transfer  that  power;  if  the  defec- 
tive endorsement  was  made  in  a  foreign  country,  the 
holder  can,  furthermore,  demand  payment  judicially. 
In  Bonvia,^^  Chile,-^  and  Colombia, ^^  the  endorsement 
is  void  if  no  mention  is  made  of  the  name  of  the  endorsee 
or  if  it  lacks  the  signature  of  the  endorser.  When  no 
statement  is  made  of  the  value  received  or  the  date  of 
the  endorsement,  its  effects  are  only  those  of  an  agency 
for  collection. 

Endorsement  for  collection. 

In  general,  endorsement  made  with  the  clause  "for  collec- 
tion" {valor  al  cobro)  or  any  other  equivalent  does  not  transfer 


18  Art.  417. 

"  Arts.  463,  465. 

2»  Arts.  453,  455. 

21  Art.  628. 

22  Art.  824. 

23  Art.  383. 

^*  Art.  659. 

2=  Art.  786. 

feiLLS    OF   EXCHANGE  499 

ownership  in  the  negotiable  instrument;  it  is  only  a  power  to 
collect  and  endorse. 

But  in  Argentina,-®  Brazil,-^  Costa  Rica,-®  and  Uruguay, ^^ 
such  clause  implies  the  power  to  transfer  ownership  in  the 
bill. 

Statement  of  a  date  previous  to  the  real  one. 

The  statement  in  an  endorsement  of  a  date  anterior  to  its 
actual  date  is  prohibited  and  makes  its  author  liable  to 
punishment  for  forgery.  ^° 

Forgery. 

The  provision  of  the  law  in  Costa  Rica  referring  to  forged 
endorsement  warrants  special  mention  as  an  illustration  of 
the  effects  of  the  independence  of  the  contracts  involved  in  a 
bill  of  exchange.  When  the  bearer  of  a  bill  of  exchange 
acquired  in  good  faith  and  without  negligence,  cannot  en- 
force payment  from  the  drawee  by  reason  of  the  fact  that 
the  bill  was  forged  or  obtained  through  duress,  he  has  a  right 
of  action  against  those  who  transferred  it  after  the  forgery 
or  duress  took  place  just  as  if  the  instrument  had  neither  of 
these  vices. 

Forgery  of  an  endorsement  does  not  confer  any  right  to 
compel  the  holder  to  surrender  the  bill  thus  conveyed  if  he 
acquired  it  in  good  faith  and  without  negligence.  ^^ 

28  Art.  623.  "  Art.  8.  ^s  Art.  60. 

29  Art.  819. 

An  endorsement  made  for  collection  does  not  transfer  ownership  in  a  bill  of 
exchange;  it  gives  the  endorsee  merely  a  power  to  collect  the  amount  of  the 
instrument  but  not  to  appear  in  court  in  Ix'half  of  the  endorser.  Mexico, 
Juzgado  1°  Menor  del  Dist.  Fed.,  April  20,  1909,  T.  Pujol  Jr.  v.  M.  Del  C. 
Moreno,  Diar.  de  Jurisp.,  vol.  XVIII,  p.  187. 

3«  Spain,  464;  Argentina,  633;  Bolivia,  3,84;  Chile,  662;  Colombia,  789; 
Haiti,  136;  Honduras,  454;  Mexico,  481;  Santo  Domingo,  139;  Uruguay,  829. 

•■'1  Arts.  69,  70. 

The  holder  of  a  bill  of  exchange  who  acquired  it  by  means  of  an  endorsement 
made  by  a  person  who  received  it  in  the  same  manner  cannot  be  compelled  to 
pay  back  its  amount,  even  though  it  is  proved  that  one  of  the  form(T  endorse- 
ments was  forged.  Spain,  Trib.  Sup.,  Oct.  6,  1904,  Comi)ania  Ooiicrai  de 
Tabacos  de  Filipinas  v.  Credit  Lyonnais;  Caceta  of  Oct.  0,  1904. 


500  LATIN-AMERICAN   COMMERCIAL   LAW 

Partial  endorsement. 

The  effect  of  a  partial  endorsement  in  Argentina  ^^  and 
Uruguay  ^^  is  to  extinguish  the  balance.  In  Brazil  ^^  partial 
endorsement  is  prohibited  and  the  Uniform  Regulation  ^^ 
declares  it  void. 

Cases  in  which  a  bill  of  exchange  cannot  be  endorsed. 

There  are  cases  in  which  a  bill  of  exchange  cannot  be 
endorsed,  namely: 

Ist.  When  the  bill  of  exchange  is  not  made  to  order, 
except  in  Brazil,  ^^  Costa  Rica,^^  and  according  to  the 
Uniform  Regulation.  ^^  In  Brazil  and  Costa  Rica  the 
statement  that  the  instrument  is  not  endorseable  is 
considered  as  not  written  and  void;  in  Costa  Rica  when 
the  instrument  does  not  state  that  it  is  payable  to  order, 
the  power  to  endorse  is  implied. 

The  Uniform  Regulation  contains  a  like  provision, 
but  if  there  is  a  prohibition  to  endorse  the  bill,  it  can  be 
transferred  by  means  of  assignment  according  to  civil 
law. 

2d.  When  the  bill  of  exchange  has  already  ma- 
tured. ^^      Costa  Rica  ^°  and  Mexico  ^^  expressly  auth- 

32  Art.  634.  "  Art.  830.  "  Art.  8. 

"  Art.  11.  '« Art.  44.  •  "  Art.  66. 

38  Art.  10. 

39  Spain,  466;  Argentina,  635;  Brazil,  8;  Colombia,  783;  Honduras,  456; 
Peru,  446;  San  Salvador,  419;  Uruguay,  831;  Venezuela,  376. 

Endorsement  in  blank  made  after  the  maturity  of  a  bill  of  exchange  is  void, 
according  to  article  635  of  the  commercial  code.  Argentina,  Camara  de  Apel. 
Com.  Buenos  Aires,  March  15,  1913,  P.  Gartland  v.  J.  y  C.  M.  Fernandez, 
Jurisp.  de  los  Tribs.  Macs.,  1913,  Marzo. 

Endorsement  of  a  bill  of  exchange  is  governed  by  art.  783  of  the  commercial 
code  even  though  the  parties  to  it  are  not  merchants.  Endorsement  of  a 
matured  bill  of  exchange  by  means  of  a  simple  note  on  the  back  of  the  docu- 
ment produces  no  effect.  Colom.bia,  Trib.  Sup.  del  Dist.  de  Cauca,  Feb.  11, 
1896;  Gaceta  Judic.  del  Cauca,  v.  V,  p.  1421;  and  July  28,  1898,  ib.,  p.  1401. 

Endorsement  of  a  bill  of  exchange  can  be  made  even  after  a  suit  for  its 
collection  has  been  started.  Mexico,  Tercera  Sala  del  Trib.  Sup.  del  Dist. 
Fed.,  March  15,  1912,  J.  Liebes  v.  W.  E.  Hermann  y  Cia.  and  G.  S.  Gibbons, 
Diario  de  Jur.,  vol.  XXVI,  p.  57. 

«  Art.  58.  "  Art.  480. 


BILLS    OF    EXCHANGE  501 

orize  endorsements  after  maturity  of  the  instrument, 
and  the  Uniform  Regulation  '^-  does  the  same;  but  when 
it  is  made  after  protest  for  non-payment  or  after  the 
period  for  making  protest  has  elapsed,  the  endorsement 
produces  only  the  effects  of  an  assignment  of  rights. 

3d.  AATien  the  bill  of  exchange  is  impaired  by  reason 
of  lack  of  presentation  or  protest,  when  proper.  ^^ 

Liability  of  agents  in  endorsing  a  bill  of  exchange. 

In  Spain  ^^  and  Honduras  ^^  the  comisionista  of  bills  of 
exchange  or  endorseable  promissory  notes  is  a  guarantor  of 
those  he  acquires  or  negotiates  for  another's  account,  pro- 
vided he  endorses  them,  and  he  can  only  refuse  to  endorse 
when  there  has  been  an  express  stipulation  dispensing  him 
from  that  obligation. 

^2  Art.  19. 

"Spain,  466;  Chile,  664;  Colombia,  791;  Ecuador,  410;  Honduras,  456; 
Mexico,  480. 
"  Art.  468.  «  Art.  458. 


CHAPTER  XXX 

Bills  of  Exchange  (3) 
presentation,  acceptance  and  suretyship 

Obligations  of  the  holder. 

The  holder  must  fulfill  certain  obligations  in  order  to 
preserve  his  rights  against  the  drawer  and  the  endorsers. 
These  obligations  are: 

1.  to  present  the  bill  of  exchange  for  acceptance  in 
case  it  is  payable  at  a  period  "after  sight"; 

2.  to  present  it  for  pajTnent  at  maturity; 

3.  to  prove  in  legal  form  that  he  complied  with  these 
requisites,  otherwise  the  instrument  is  defective  and 
the  rights  of  the  payee  or  holder  are  lost;  ^ 

4.  to  notify  the  endorsers  and  drawer  of  the  failure 
of  the  drawee  to  pay  the  bill  of  exchange  (notice  of  dis- 
honor). This  obligation  is  subject  to  variations  in  the 
different  countries  of  Latin- America,  as  follows: 

(a)  In  Spain, 2  Costa  Rica  ^  and  Honduras,^  the 
holder  must  notify  every  endorser  and  the  drawer 
of  the  failure  of  payment.  In  Spain  and  Honduras 
the  notification  must  be  made  through  a  notary. 
The  endorsers  who  are  not  notified  are  released  from 
their  obligations;  the  drawer  is  also  released  if  he 
proves  that  he  supplied  the  drawee  with  funds. 

Mexico  makes  similar  provision,  but  the  notary 
who  makes  the  protest  is  obliged  to  give  the  notice 
to  the  endorsers  and  drawer.  ° 

1  Spain,  469;  Argentina,  661;  Bolivia,  453,  454;  Brazil,  9,  20,  30;  Chile,  686, 
688;  Colombia,  813,  815,  825;  Costa  Rica,  72  to  81,  98;  Ecuador,  411;  Haiti, 
165;  Honduras,  459;  Mexico,  493;  Peru,  447;  San  Salvador,  402;  Santo  Do- 
mingo, 162;  Uniform  Regulation,  52;  Uruguay,  856;  Venezuela,  377. 

2  Art.  517.  »  Art.  133.  *  Art.  502. 
6  Arts.  530,  532. 

502 


BILLS   OP   EXCHANGE  503 

(b)  In  Argentina  ^  and  Uruguay ''  the  holder  of  a 
protested  bill  of  exchange  is  obliged  to  notify  the 
protest  to  his  endorser,  sending  him  a  certified  copy 
of  the  protest  at  the  first  opportunity,  under  penalty 
of  losing  all  right  of  action  against  the  drawer  and 
the  endorsers.  Every  endorser  upon  receiving  such 
notification,  must  transmit  it  to  his  endorser  under 
penalty  of  damages.  When  the  person  concerned 
hves  in  the  same  town  the  notification  must  be  made 
within  three  days.^ 

(c)  In  Bolivia,^  when  the  acceptor  of  a  bill  of  ex- 
change is  sued  for  pa>Tnent,  the  drawer  and  endorsers 
must  be  notified  judicially  of  the  protest  within  a 
period  proportioned  to  the  distance  of  their  residence, 
counting  one  day  for  every  three  leagues.  Omission 
of  this  requisite  discharges  the  drawer  and  endorsers 
from  their  liability. 

(d)  In  BraziV"  Chile,ii  Colombia, ^^  Peru,!^  San 
Salvador,  ^^  countries  governed  by  the  Uniform 
Regulation  ^'^  and  Venezuela,^''  the  holder  must  notify 
the  protest  to  his  endorser  and  every  endorser  must 
notify  his  transferer  under  penalty  of  paying  dam- 
ages. ^^ 

(e)  In  Ecuador,  ^^  the  holder  of  a  protested  bill  of 
exchange  must  notify  his  endorser  within  twenty-four 

8  Arts.  663,  664.  ^  Arts.  858,  859. 

*  The  lapsing  of  a  bill  of  exchange  due  to  failure  of  the  holder  to  give  notice 
of  protest  can  be  alleged  by  the  drawer  and  the  last  endorser,  according  to 
article  664  of  the  Code  of  Commerce.  Buenos  Aires,  July  11,  1914,  A.  Vat- 
tuone  V.  Locatelli  y  Michelena,  Cam.  de  Apel.  Com.,  Jurisp.  de  loa  Tribs.  Noes., 
Julio,  1914,  p.  251. 

9  Art.  432.  i«  Art.  30.  "  Arts.  698,  701. 

12  Art.  825.  i»  Art.  504.  "  Art.  454. 

15  Art.  44.  18  Art.  433. 

"  Under  the  American  Negotiable  Instruments  Law  adopted  in  nearly  all 
the  states,  where  notice  of  dishonor  is  given  by  the  holder  or  by  an  endorser 
entitled  to  give  notice,  it  inures  to  the  benefit  of  the  holder  and  of  all  parties 
subsequent  to  the  party  to  whom  notice  was  given;  and  to  the  benefit  of  all 
prior  parties  who  have  a  right  of  recourse  against  the  party  to  whom  it  was 
given. 

18  Art.  451. 


604  LATIN-AMERICAN    COMMERCIAL    LAW 

hours;  should  the  latter  be  absent,  the  notification 
must  be  made  by  the  next  mail.  No  specific  penalty- 
is  provided  for  a  failure  to  fulfill  this  requisite. 

(/)  In  Haiti  "  and  Santo  Domingo,  ^o  if  the  holder 
enforces  his  rights  severally  against  his  assignor  he 
must  notify  the  latter  of  the  protest. 

Periods  for  the  presentation  of  a  bill  of  exchange. 

There  are  in  Latin-America  almost  as  many  ways  to 
compute  the  period  for  the  presentation  of  a  bill  of  exchange 
as  there  are  countries: 

In  Spain  ^^  bills  of  exchange  drawn  on  any  place  in  the 
Peninsula  or  Balearic  Islands  at  sight  or  at  a  period  after 
sight  must  be  presented  for  collection  or  acceptance  within 
forty  days  from  their  date.  The  person,  however,  who  draws 
a  bill  of  exchange  at  sight  or  at  a  period  after  sight  can  fix 
the  time  for  presentation,  and  the  holder  is  bound  to  present 
it  within  that  time.  Bills  of  exchange  drawn  between  the 
Peninsula  and  the  Canary  Islands  must  be  presented  within 
three  months.  Those  drawn  between  the  Peninsula  and 
the  Spanish  West  Indies  on  places  overseas  east  of  Cape 
Horn  and  west  of  the  Cape  of  Good  Hope  must  be  presented 
at  the  latest  within  six  months  whatever  the  period  indi- 
cated in  the  instrument. ^^  For  places  beyond  those  capes 
the  maximum  period  is  one  year. 

In  Argentina  ^^  and  Uruguay,  ^^  the  holder  of  a  bill  of 

"  Art.  162.  20  Art.  165.  "  Arts.  470  to  472. 

22  The  Spanish  Royal  Decree  which  put  the  commercial  code  of  Spain  into 
force  in  Cuba  did  not  make  any  change  in  article  470,  in  view  of  the  distance 
between  Spain  and  Cuba.  Referring  to  this  circumstance,  Dr.  Betancourt 
{loc.  cil.)  says: 

"This  difficulty  is  a  serious  omission  which  cannot  be  overcome  by  inter- 
pretation, but  only  by  amendment,  and  for  that  purpose  it  is  necessary  to 
proceed  analogically.  In  this  respect,  according  to  the  opinion  of  distin- 
guished lawyers,  it  must  be  considered  that  the  period  is  forty  days  as  indicated 
in  article  474,  for  bills  of  exchange  drawn  from  abroad.  This  opinion  seems  to 
us  acceptable,  as  the  period  is  the  same  as  that  of  article  470,  which  refers  to  a 
case  very  similar,  namely,  to  bills  of  exchange  drawn  within  the  same  terri- 
tory, and  as  that  of  article  474. 

23  Arts.  652,  655.  24  Arts.  847,  850.. 


BILLS    OF    EXCHANGE  505 

exchange  payable  at  sight  or  at  a  period  after  sight  must 
send  a  copy  of  it  for  acceptance  at  the  first  opportunity,  and 
not  later  than  by  the  second  mail,  to  the  place  of  residence 
of  the  drawee,  otherwise  prior  endorsers  are  released  from 
their  obligations;  the  rights  of  the  holder  against  the  drawer 
who  has  not  supplied  the  drawee  with  funds,  or  to  compel 
the  drawer  to  assign  his  rights  against  the  drawee  who  has 
received  funds,  are  reserved. 

The  person  receiving  the  bill  of  exchange  must  present 
it  to  the  drawee  for  acceptance  within  twenty-four  hours; 
if  it  is  not  accepted,  he  must  protest  it  in  legal  form. 

In  Bolivia,  2^  bills  of  exchange  drawn  from  one  place  on 
another  within  the  Republic,  must  be  presented  for  payment, 
if  at  sight,  or  for  acceptance,  if  payable  at  a  period  after 
sight  or  from  date,  within  a  term  varying  according  to  the 
distance,  counting  six  leagues  for  every  day.  If  drawn  from 
a  foreign  country  upon  a  place  in  Bolivia,  the  terms  above 
referred  to  are  reckoned  from  the  date  at  which  the  bill  of 
exchange  reaches  Bolivia. 

In  Brazil,  26  bills  of  exchange  drawn  at  a  certain  period 
after  sight  must  be  presented  for  acceptance  within  the 
period  fixed  therein;  otherwise,  within  six  months  from  the 
date  of  the  instrument. 

In  Chile,"  bills  of  exchange  drawn  from  one  place  on 
another  within  the  Republic  payable  at  sight  or  at  a  certain 
time  after  sight,  must  be  presented  within  three  months 
from  their  date.  Those  drawn  in  the  Republic  at  sight  or 
a  period  after  sight  on  a  place  in  the  American  continent 
or  its  islands,  must  be  presented  within  six  months  from  the 
date  thereof;  those  drawn  on  a  place  in  Europe,  within  nine 
months;  and  those  drawn  on  any  other  place,  within  one 
year. 

In  Colombia,-^  bills  of  exchange  drawn  at  sight  or  at  a 
period  after  sight  from  one  state  on  another  in  the  Republic 
must  be  presented  within  three  months,  provided  the  dis- 
tance between  the  two  places  is  more  than  one  hundred 

"  Arts.  377,  379.  ^^  Art.  9.  "  Art.  685. 

»  Art.  812. 


506  LATIN-AMERICAN   COMMERCIAL   LAW 

mjTiameters;  otherwise  within  two  months.  Those  drawn 
on  a  place  in  the  American  continent  and  its  islands,  within 
four  months,  provided  the  drawer  resides  in  the  maritime 
littoral  of  Colombia;  otherwise,  within  six  months.  Those 
drawn  on  a  place  in  Europe,  within  six  months,  provided 
the  drawee  resides  in  the  maritime  littoral  of  the  Republic; 
otherwise,  within  eight  months.  Those  drawn  on  any  other 
place  in  the  world,  within  eight  months,  if  the  drawee  re- 
sides in  the  maritime  littoral  of  the  Republic;  otherwise, 
within  ten  months. 

Costa  Rica  -^  provides  that  when  no  date  is  fixed  for 
presentation  of  the  bill  of  exchange  for  acceptance,  should 
such  presentation  not  be  forbidden,  it  may  or  may  not  be 
presented,  at  the  option  of  the  holder,  who  may  do  so  any 
time  within  a  year  from  its  issuance;  provided  time  enough 
has  elapsed  for  the  drawer  to  advise  the  drawee  of  its  issu- 
ance. 

Article  411  of  the  code  of  Ecuador  provides  that  bills  of 
exchange  drawn  upon  a  place  in  the  Republic  must  be 
presented  within  three  months,  if  drawn  therein;  within 
six  months,  if  drawn  from  any  place  on  the  American  con- 
tinent; within  eight  months,  if  drawn  in  Europe;  and  within 
one  year,  if  drawn  in  any  other  part  of  the  world. 

In  Haiti  ^°  a  bill  of  exchange  drawn  from  any  island  of 
the  West  Indies  and  payable  in  Haiti  at  sight  or  at  a  period 
after  sight  must  be  presented  within  six  months  from  its 
date;  if  draun  from  any  place  on  the  American  continent, 
the  Bermudas  or  Newfoundland,  within  eight  months;  and 
if  drawn  from  Europe,  within  one  year.  No  mention  is 
made  of  other  parts  of  the  world. 

In  Honduras  ^^  bills  of  exchange  drawn  from  one  place 
upon  another  in  the  Republic,  or  upon  a  place  in  the  Cen- 
tral-American Republics,  must  be  presented  within  two 
months  from  their  dates.  Those  drawn  from  other  parts 
of  the  American  continent  or  its  islands,  within  three  months; 
from  Europe,  within  six  months;  and  from  any  other  place, 
within  nine  months. 

29  Arts.  72,  96.  ^o  Art.  157.  "  Art.  460. 


BILLS    OF    EXCHANGE  507 

The  periods  in  Mexico  ^^  are  two  months  for  bills  of  ex- 
change drawn  in  the  territory  of  the  Republic,  three  months 
for  those  drawn  from  the  United  States  of  America  or  Europe, 
and  four  months,  for  those  drawn  from  any  other  place  upon 
places  in  Mexican  Territory. 

In  Peru  ^^  the  period  for  presentation  is  one  year  in  every 
case. 

San  Salvador  ^^  allows  two  months  for  bills  on  places 
within  the  Republic  and  Central  America,  six  months  for 
bills  drawn  from  other  places  of  America  and  Europe,  and 
nine  months  for  those  from  other  parts  of  the  world. 

In  Santo  Domingo  ^'^  bills  of  exchange  drawn  from  Haiti, 
West  Indies  or  the  United  States  upon  the  Republic  must  be 
presented  within  three  months;  from  countries  of  the  Ameri- 
can continent  south  of  the  Rio  Grande  del  Norte  up  to  the 
Orinoco  on  the  Atlantic  coast,  within  four  months;  from 
other  countries  of  South  America,  within  five  months;  from 
any  other  place,  six  months. 

According  to  the  Uniform  Regulation  a  bill  of  exchange 
drawn  at  a  period  from  sight  must  be  presented  for  accept- 
ance within  six  months  from  its  date,  although  the  drawer 
and  endorsers  can  shorten  or  extend  this  period.  ^^ 

Venezuela  provides  ^''  that  for  bills  of  exchange  payable  in 
the  place  at  which  they  are  drawn  the  period  is  three  months, 
and  six  months  for  those  payable  in  other  places. 

The  periods  above  referred  to  are  doubled  in  case  of  war 
which  may  affect  the  transmission  of  the  bill.^^ 

Case  of  force  majeure. 

When  the  holder  of  a  bill  of  exchange  fails  to  present  it  in 
proper  time  for  acceptance  or  payment,  or  to  protest  it 
because  of  force  majeure,  his  right  to  collect  the  amount  is 
not  impaired. ^^ 

32  Art.  485.  "  Art.  447.  "  Art.  402. 

35  Art.  160.  '«  Art.  22.  "  Art.  377. 

'^  Ecuador,  412;  Peru,  447;  Santo  Domingo,  160;  Venezuela,  377. 
39  Spain,  483;  Argentina,  654;  Brazil,  20;  Costa  Rica,  101;  Honduras,  468; 
Mexico,  494;  San  Salvador,  409;  Uniform  Regulation,  53;  Uruguay,  849. 


508  LATIN-AMERICAN   COMMERCIAL   LAW 

Cases  in  which  previous  acceptance  is  not  necessary. 

When  a  bill  of  exchange  is  payable  at  or  after  sight,  pre- 
vious presentation  or  acceptance  thereof  is  necessary  to  fix 
the  maturity  of  the  instrument;  but  when  it  is  payable  at  a 
certain  date  the  presentation  is  optional,  as  its  object  then 
is  only  to  satisfy  the  holder  that  the  drawee  binds  himself  to 
pay  the  bill.^^"  The  laws  of  Spam,^«  Brazi^^  Chile,^^  Co- 
lombia, ^^  Honduras,'^*  Mexico  ^^  and  San  Salvador  ^^  ex- 
pressly provide  that  bills  of  exchange  payable  at  a  certain 
date  do  not  need  to  be  presented  for  acceptance. 

Bills  of  exchange  not  sent  in  proper  time. 

Those  who  send  bills  of  exchange  from  one  place  to 
another  after  the  time  allowed  for  presentation  and  protest, 
are  responsible  for  the  consequences  thereof.  ^^ 

In  Argentina, ^^  Chile, ^^  Colombia,^"  Guatemala  ^^  and 
Uruguay, ^^  however,  the  person  who  takes  a  bill  of  exchange 
in  the  case  above  mentioned,  must  require  from  the  endorser 
an  assumption  of  the  obligation  to  pay  the  draft  even 
though  presented  and  protested  out  of  proper  time,  otherwise 
he  loses  his  rights  against  the  endorser. 

Place  in  which  acceptance  must  be  requested. 

Before  acceptance  no  rights  and  duties  exist  between  the 
holder  and  the  drawee;  the  former  has  the  power  of  request- 
ing of  the  latter  an  acceptance  of  the  obligation  of  paying 
the  draft,  and  the  request  must  be  made  at  the  residence  of 
the  drawee  even  though  payment  must  be  made  in  another 

'^  In  the  United  States,  such  optional  presentation  has  the  further  object 
of  enabling  the  payee,  in  case  of  refusal  of  acceptance  by  the  drawee,  to  create 
the  drawer's  liability,  after  protest  and  notice,  immediately  to  pay. 

^  Art.  476.  The  American  Uniform  Negotiable  Instruments  Law  contained 
a  similar  provision. 

"  Art.  9.  «  Art.  674.  «  Art.  801. 

"  Art.  461.  «  Art.  484.  «  Art.  402. 

«  Spain,  485;  Argentina,  657;  Chile,  696;  Colombia,  823;  Honduras,  470; 
Uruguay,  852. 

«  Art.  658.  "  Art.  697.  »  Art.  824. 

"  Art.  581.  "  Art.  853. 


BILLS    OF   EXCHANGE  509 

place.  So  the  law  provides  in  Costa  Rica.^^  The  provision 
is  more  detailed  in  Argentina,"  Chile, '^^  Colombia  '"^  and 
Uruguay.  "'^^  There  the  bill  of  exchange  must  be  presented 
to  the  drawee  at  his  house,  or  at  his  office  or  at  the  building 
designated  in  the  draft;  should  his  residence  or  office  be  un- 
known, presentation  must  be  made  at  the  place  designated 
by  the  law  for  protest. 

Period  within  which  acceptance  must  be  made  or  refused. 

There  are  three  systems  in  reference  to  the  period  within 
which  the  drawee  must  grant  or  refuse  acceptance  of  the 
bill  of  exchange: 

First  system.  Acceptance  must  be  given  on  the  day 
of  presentation.^^ 

Second  system.  Acceptance  must  occur  within 
twenty-four  hours  after  presentment.^''  According  to 
the  Uniform  Regulation  the  drawee  can  ask  for  a  second 
presentation  of  the  bill  on  the  following  day. 

Third  system.  In  Brazil  and  Mexico,  no  period  is 
fixed,  hence  it  must  be  made  immediately. 

Who  has  to  keep  the  bill  of  exchange  between  presentation 
and  acceptance. 

The  safest  way  for  the  holder  of  a  bill  of  exchange,  and  the 
best  for  the  safety  of  all  interests  involved  is  for  the  holder 
to  retain  the  instrument  while  allowing  the  drawee  to  note 
all  its  details  in  order  to  verify  the  document  and  the  signa- 
ture of  the  drawer;  he  cannot  require  anything  else.  There 
are,  however,  four  systems  in  this  respect: 

"  Art.  74.  "  Art.  659.  "  Art,  691. 

«>  Art.  818.  "  Art.  854. 

^  The  Uniform  Negotiable  Instruments  Law  in  the  United  States  provides 
that  the  draft  must  be  presented  at  the  domicil  of  the  drawee. 

S9  Spain,  478;  Argentina,  644;  Bolivia,  387;  Chile,  667;  Coloml)i:i,  794; 
Honduras,  463;  Uruguay,  833. 

«oCo.sta  Rica,  75;  Ecuador,  417;  Haiti,  123;  Peru,  451;  San  Salvador,  403; 
Santo  Domingo,  125;  Uniform  Regulation,  23;  Venezuela,  3S2. 

By  the  Negotiable  Instruments  Law  the  drawer  has  24  hours  to  acicej)!,  but 
"acceptance,  if  given,  dates  as  of  the  day  of  presentation."  The  hoklcr  may 
give  the  drawer  a  longer  time  if  he  sees  fit. 


510  LATIN- AMERICAN    COMMERCIAL    LAW 

1.  The  person  from  whom  acceptance  is  requested 
cannot  retain  the  bill  of  exchange  under  any  pretext 
whatever." 

2.  The  drawee  can  keep  the  bill  if  the  holder  allows 
him  to  do  so.^- 

3.  The  drawee  is  supposed  to  keep  the  bill.^^ 

4.  No  reference  is  made  to  this  matter  in  Ecuador, 
Guatemala  and  Mexico;  in  these  countries  the  holder 
may  keep  the  bill  or  not,  according  to  commercial  usage. 

Effects  of  the  failure  to  give  back  the  bill  of  exchange  to  the 
holder. 

In  those  countries  in  which  the  holder  must  or  may  leave 
the  bill  of  exchange  in  the  hands  of  the  drawee  a  certain 
period  of  time,  the  failure  of  the  drawee  to  return  it  with  his 
acceptance  or  refusal  produces  certain  efTects  which  vary  in 
different  countries.  They  may  be  reduced  to  the  following 
systems : 

1.  The  drawee  is  liable  for  payment  of  the  bill  of 
exchange,  even  though  he  has  not  accepted  it.^"* 

2.  The  drawee  is  liable  for  damages.''^ 

The  law  of  Brazil  provides  that  when  it  is  proved 
that  the  drawee  refuses  to  surrender  the  bill  received 
by  him  for  acceptance  or  pa^nnent,  he  may  be  impris- 
oned unless  he  deposits  in  court  the  amount  thereof  and 
the  expenses.*^^  The  codes  of  Ecuador,  Peru,  Venezuela 
and  the  Uniform  Regulation  are  silent  on  the  subject. 

61  Spain,  478. 

«2  Argentina,  644;  Chile,  667;  Colombia,  794;  San  Salvador,  405;  Uruguay, 
839;  Uniform  Regulation,  23. 

83  Bolivia,  387;  Brazil,  31;  Costa  Rica,  75;  Haiti,  123;  Peru,  451;  Santo 
Domingo,  125;  Venezuela,  382. 

Under  the  law  in  the  United  States,  the  bill  during  the  interim  for  decision 
as  to  acceptance,  may  be  in  the  hands  of  the  payee  or  of  the  drawee.  If  in  the 
former,  at  the  end  of  the  period,  he  may  treat  it  as  dishonored.  We  shall  see 
presently  the  legal  effects  of  its  retention  by  the  drawee. 

««  Argentina,  644;  Bolivia,  387;  Chile,  667;  Colombia,  794;  Uruguay,  839. 

'*  Costa  Rica,  75;  Haiti,  123;  San  Salvador,  405;  Santo  Domingo,  125. 

^  Art.  31.  By  the  law  in  the  United  States,  if  the  drawer  retains  the  bill 
mth  the  consent  of  the  holder,  no  le4,al  consequences  follow,  since  an  "accept- 


BILLS    OF    EXCHANGE  511 

Revocations  of  an  acceptance. 

Acceptance  of  a  bill  of  exchange  on  the  part  of  the  drawee 
is  merely  a  form  of  consent  binding  upon  the  drawee,  who 
cannot  afterwards  revoke  it.  This  is  merely  the  application 
of  a  general  principle  of  the  law  of  contracts.  Argentina," 
Brazil,^^  Chile,*^^  Colombia,^"  Ecuador  "^  and  Uruguay  "^ 
provide  consequently  that  the  drawee  cannot  erase  or  re- 
voke his  acceptance  once  it  is  signed,  even  though  the  bill 
has  not  been  returned  to  the  holder. 

Peru,'^^  San  Salvador  ^^  and  Venezuela  ''•^  provide  that  the 
acceptance  is  irrevocable  when  the  bill  has  been  returned  to 
the  holder;  it  is,  therefore,  permissible  to  revoke  it  after  it 
is  signed  but  before  its  return. 

Costa  Rica  "^^  provides  that  once  acceptance  is  given  it  can- 
not be  withdrawn  except : 

1.  when  it  has  been  obtained  through  violence; 

2.  when  the  signature  of  the  drawer  or  any 
other  substantial  part  of  the  instrument  has  been 
forged; 

3.  when  the  signature  of  the  drawer  was  obtained 
through  violence. 

In  the  two  latter  cases  acceptance  is  irrevocable  as  to 
the  holder  in  due  course  who  acquired  the  bill  after 
acceptance. 

The  Uniform  Regulation  ^''  provides  that  when  the 
drawee  who  has  signed  his  acceptance  on  the  bill  of 
exchange  crosses  or  erases  it  before  delivering  the  docu- 
ment to  the  holder,  acceptance  is  considered  as  refused; 
such  drawee,  however,  is  bound  in  the  terms  of  his 
acceptance  if  he  crossed  or  erased  it  after  he  in  writing 

ance  must  be  in  writing  and  signed  by  the  drawer."  If  retained  wilhoul  the 
consent  of  the  holder,  an  action  lies  to  recover  damages  for  the  wrongful  de- 
tention. Some  state  statutes — although  not  the  Negotiable  Instruments 
Law — provide  that  if  the  drawee  destroys  the  l)ill  or  refuses  to  return  it 
within  twenty-four  hours  or  on  demand,  he  will  be  deemed  to  have  accepted  it. 

"  Art.  639.  88  Art.  12.  s"  Art.  609. 

™  Art.  796.  "  Art.  420.  "  Art.  834. 

"  Art.  4.51.  ""^  Art.  403.  '«  Art.  382. 

'«  Art.  78.  "  Art.  28. 


512  LATIN- AMEKICAN    COMMEKCIAL   LAW 

advised  the  holder  or  any  other  of  the  parties  concerned 
that  he  accepted  it. 

Persons  qualified  to  present  a  bill  of  exchange  for  accept- 
ance. 

A  holder  in  due  course  of  a  bill  of  exchange  is  the  person 
entitled  to  request  its  acceptance.  Nevertheless,  the  law  in 
some  countries  gives  power  to  present  a  draft  for  acceptance 
to  any  person  who  is  in  possession  of  the  bill  of  exchange 
whatever  his  title,  with  a  view  to  preserving  the  rights  of  the 
parties.^^ 

Form  of  acceptance. 

With  reference  to  the  form  in  which  the  acceptance  of  a 
bill  of  exchange  must  be  given  there  are  three  systems: 

1.  That  which  requires  the  use  of  the  specific  word 
"acepto"  (I  accept)  if  the  drawee  is  an  individual,  or 
"aceptamos"  (we  accept)  if  it  is  a  partnership  or  corpora- 
tion, otherwise  the  acceptance  is  void.^^ 

In  Haiti  ^°  and  Santo  Domingo  ^^  the  unchangeable 
word  is  "aceptada"  (accepted). 

2.  That  which  permits  the  word  ''acepto"  or  any 
other  equivalent  as  essential  for  accepting.^^ 

3.  That  which  admits  any  word  expressive  of  accept- 
ance or  even  the  mere  signature  of  the  drawee  as  suffi- 
cient for  its  validity.^^ 

Brazil  prescribes  ^^  that  the  mere  signature  of  the  drawee, 

'8  Argentina,  668;  Brazil,  41;  Chile,  690;  Colombia,  817;  Costa  Rica,  73; 
Uniform  Regulation,  20;  Uruguay,  863. 
"Spain,  477;  Bolivia,  388;  Honduras,  462. 
80  Art.  120.  81  Art.  122. 

82  Ecuador,  414;  Mexico,  487. 

An  acceptance  is  null  when  it  is  made  without  stating  the  date  thereof  and 
the  place  in  which  it  was  made.  The  accion  ejecuHva  therefore,  is  to  be  dis- 
missed, reserving  to  the  plaintiff  his  right  to  bring  a  regular  action.  Mexico, 
Juzgado  7°  menor,  del  distrito  Fed.,  July  22,  1892,  S.  Puron  v.  R.  Arguero  y 
Cia.    Anuario  de  Legislacilm  y  Juris.  Seccidn  de  Jurisp.,  v.  IX,  p.  149. 

83  Argentina,  639;  Chile,  668;  Colombia,  795;  Costa  Rica,  76;  Peru,  448; 
Uruguay,  834;  Venezuela,  379. 

8*  Art.  11. 


BILLS    OF   EXCHANGE  513 

written  in  his  own  hand  or  in  that  of  his  special  representa- 
tive suffices  for  the  vaHdity  of  the  acceptance;  that  any 
declaration  which  does  not  indicate  a  clear  refusal  or  quali- 
fication is  considered  as  an  unconditional  acceptance.^^ 

According  to  the  Uniform  Regulation  the  acceptance  may 
be  signified  by  the  word  ^'aceptada  "  (accepted)  or  any  other 
equivalent  and  must  be  coupled  with  the  signature  of  the 
drawee;  the  mere  signature  of  the  drawee  on  the  face  of  the 
instrument  amounts  to  an  acceptance. ^^ 

San  Salvador  makes  no  reference  to  this  point. 

All  the  codes  agree  in  the  requirement  that  the  acceptance 
must  be  in  writing  and  on  the  bill  of  exchange  itself;  that  of 
Ecuador  ^'^  is  the  only  exception  in  that  it  prescribes  that  the 
acceptance  given  by  means  of  a  letter  or  a  separate  document 
is  valid. 

In  Argentina,^^  Chile,^^  Colombia  ^°  and  Uruguay,^^  an 
acceptance  incorporated  in  a  separate  document  is  only 
binding  in  favor  of  the  person  to  whom  it  was  given,  but  it 
cannot  be  conveyed  by  means  of  an  endorsement. 

The  date  of  acceptance. 

In  bills  of  exchange  payable  at  sight  or  after  sight  it  is 

necessary  for  the  acceptor  to  insert  the  date  of  his  acceptance, 

since  that  date  fixes  the  maturity  of  the  bill.    If  the  acceptor 

fails  to  comply  with  that  requisite  the  legal  consequences  are: 

(a)  in  Spain,^^  Bolivia  ^^  and  Honduras, ^^  that  the 

period  for  the  maturity  of  the  bill  runs  from  the  day  the 

holder  might  have  presented  it,  assuming  no  delay  in 

**  The  United  States  Negotiable  Instruments  Law  merely  provides  that  the 
"acceptance  must  be  in  writing  and  signed  by  the  drawee."  Any  words  on 
the  face  or  back  of  the  instrument  signifying  the  drawee's  assent  to  the  order 
are  sufficient,  provided  they  bear  the  drawer's  signature.  The  signature 
alone  has  been  held  a  sufficient  acceptance. 

«  Art.  24.  «'  Art.  414.  88  Art.  639. 

89  Art.  670.  90  Art.  797.  si  Art.  834. 

According  to  the  American  Negotiable  Instruments  Law  "where  an  ac- 
ceptance is  written  on  a  paper  other  than  the  bill  itself  it  does  not  bind  the 
acceptor  except  in  favor  of  a  person  who,  on  the  faith  thereof,  receives  the 
bill  for  value." 

"2  Art.  477.  w  Art.  389.  »<  Art.  462. 


514  LATIN-AMERICAN    COMMERCIAL    LAW 

the  mail;  if  by  so  computing,  the  period  for  presentation 
has  elapsed,  the  bill  is  considered  due  the  day  after  its 
presentation. 

(6)  in  Argentina,^^  Chile, ^^  Colombia,^^  Peru,^^  coun- 
tries governed  by  the  Uniform  Regulation,^^  and  Uru- 
guay, ^^°  that  the  bill  must  be  protested  and  the  period 
runs  from  the  date  of  protest; 

(c)  in  Brazil  ^°^  and  Costa  Rica,^"^  that  the  holder 
can  insert  in  the  bill  the  date  of  acceptance; 

(d)  in  Ecuador,  ^"^  Haiti  ^°^  and  Santo  Domingo,  ^°' 
that  the  bill  is  due  and  enforceable  at  the  time  fixed  in 
it,  counting  from  its  date; 

(e)  in  San  Salvador,  ^°^  that  it  is  enforceable  without 
any  other  requisite; 

(J)  in  Venezuela,""  that  the  period  is  reckoned  from 
the  day  presentation  is  made  in  authentic  form. 

Bills  of  exchange  payable  at  a  place  different  from  the 
residence  of  the  drawee. 

If  the  bill  presented  for  acceptance  must  be  paid  at  a 
place  different  from  the  residence  of  the  acceptor,  the  exact 
address  in  which  payment  is  to  be  made  must  be  indicated 
therein."^ 

Failure  to  state  the  address  at  which  pajTnent  must  be 
made  results  in  Costa  Rica  in  the  bill  having  to  be  protested; 
and  in  Peru,  in  the  place  of  payment  being  that  of  the  resi- 
dence of  the  acceptor. 

In  Venezuela,  if  the  acceptor  fails  to  indicate  the  person 
from  whom  pajanent  must  be  requested  at  the  place  desig- 
nated in  the  bill,  it  assumed  that  he  himself  is  the  person  to 
pay. 

95  Art.  640. 

98  Art.  449. 

101  Art.  9. 

"« Art.  120. 

!<"  Art.  380. 

I"*  Spain,  478;  Argentina,  641;  Bolivia,  390;  Brazil,  20;  Chile,  675;  Colombia, 
802;  Costa  Rica,  74;  Ecuador,  415;  Haiti,  121;  Honduras,  463;  Mexico,  488; 
Peru,  450;  Uniform  Regulation,  26;  Uruguay,  836;  Venezuela,  381. 


9«  Art.  673. 

^  Art.  800. 

99  Art.  24. 

loo  Art.  835. 

W2  Art.  77. 

10'  Art.  414. 

105  Art.  122. 

106  Art.  405. 

BILLS    OF    EXCHANGE  515 

A  person  who,  receiving  a  bill  for  acceptance,  if  drawn 
upon  him,  or  for  acceptance  by  another,  if  drawn  upon 
another  person,  retains  it  pending  arrival  of  another  copy  and 
states  in  writing  that  it  has  been  accepted,  is  liable  to  the 
drawer  and  endorsers  as  if  acceptance  had  been  noted  in  the 
bill  itself,  notwithstanding  there  has  been  no  actual  accept- 
ance and  notwithstanding  his  refusal  to  surrender  the  ac- 
cepted copy  to  the  person  who  lawfully  demands  it.^°^ 

Conditional  and  partial  acceptances. 

Bills  of  exchange  cannot  be  conditionally  accepted.  In 
regard  to  this  matter  as  well  as  to  cases  of  an  acceptance 
limited  to  a  sum  less  than  the  full  amount,  there  are  three 
systems,  namely: 

1.  The  drawee  can  limit  his  acceptance  to  less  than 
the  full  amount,  in  which  case  the  holder  must  protest 
the  bill  for  the  balance.  ^^^ 

2.  The  holder  however  can  refuse  an  acceptance 
reduced  to  an  amount  smaller  than  that  stated  in  the 
bill.  Ill 

3.  Even  though  the  holder  is  not  obliged  to  receive  a 
conditional  acceptance,  the  drawee  is  bound  by  the 
terms  in  which  he  makes  it."^ 

los  Spain,  478;  Honduras,  463. 

""Spain,  479;  Argentina,  643;  Bolivia,  .391;  Chile,  671;  Colombia,  798; 
Costa  Rica,  79,  80;  Haiti,  122;  Honduras,  464;  Mexico,  490;  Peru,  452;  San 
Salvador,  404;  Uruguay,  838;  Venezuela,  379,  383. 

"1  Argentina,  643;  Chile,  671;  Colombia,  798;  Uruguay,  838. 

"-  Brazil,  11;  Peru,  452;  Uniform  Regulation,  25;  Venezuela,  383. 

In  the  United  States  the  Negotiable  Instruments  Law  admits  a  qualified 
acceptance  which  varies  the  effect  of  the  bill  as  drawn.  Such  a  qualified 
acceptance  may  be  (a)  conditional,  that  is,  which  makes  payment  by 
the  acceptor  dependent  on  the  fulfillment  of  the  condition  therein  stated; 
(6)  partial,  that  is,  an  acceptance  to  pay  part  only  of  the  amount  for  which 
the  bill  is  drawn;  (c)  local,  that  is,  an  acceptance  to  pay  only  at  a  particular 
place;  (d)  qualified  as  to  time;  and  (c)  the  acceptance  of  some  one  or  more  of 
the  drawees,  but  not  all.  The  holder  is  under  no  duty  to  take  a  (lualified 
acceptance.  If  a  general  unqualified  acceptance  is  refused,  he  may  treat  the 
bill  as  dishonored.  Where,  however,  "a  qualified  acceptance  is  taken,  the 
drawer  and  indorsers  are  diselitirged  from  lialiility  on  the  bill,  unless  they  liave 
expressly  authorized  the  holder  to  take  a  (lualified  acceptance,  or  subsequently 


516  LATIN-AMERICAN    COMMERCIAL   LAW 

Effect  of  a  promise  to  accept  a  bill  of  exchange. 

A  promise,  whether  oral  or  in  writing,  to  accept  a  bill  of 
exchange  is  equivalent  to  acceptance  in  favor  of  the  person 
to  whom  such  promise  was  made,  in  Argentina, ^^^  Chile  ^" 
and  Colombia;  ^^^  failure  to  fulfill  the  promise  obUges  the 
promisor  to  pay  damages  to  the  drawer,  and  in  Uruguay  ^^^ 
obliges  the  promisor  to  pay  damages  generally,  not  merely 
to  the  drawer. 

Effect  of  acceptance. 

The  acceptance  of  a  bill  of  exchange  binds  the  acceptor  to 
pay  it  when  it  becomes  due.^^^  The  drawee  is  not  Uable  on 
the  bill  until  he  accepts. 

The  acceptor  is  released  from  the  obhgation  to  pay  in 
certain  cases  as  follows: 

(a)  when  the  acceptance  has  been  forged;  "^ 
(6)  when  the  bill  itself  has  been  forged;  ^^^ 

(c)  when  the  acceptor  has  a  personal  defense  against 
the  plaintiff  or  defenses  arising  out  of  a  lack  of  formal 
requisites  of  the  instrument,  or  out  of  a  lack  of  necessary 
requisites  in  bringing  the  action;  ^-° 

(d)  when  the  bill  or  the  acceptance  has  been  obtained 
by  duress,  or  when  the  signature  of  the  drawer  or  any 
other  substantial  part  of  the  instrument  has  been 
forged;  ^^^ 

assented  thereto."    Failure,  after  notice,  to  express  dissent  within  a  reasonable 

time,  is  deemed  constructive  assent. 

"3  Art.  637.  1"  Art.  666.  "»  Art.  793. 

^'^  Art.  832.  Such  a  written  promise  to  accept,  which  must  be  uncondi- 
tional, is  known  in  the  United  States  as  "virtual  acceptance,"  and  is  deemed 
an  actual  acceptance  in  favor  of  every  person  who,  upon  the  faith  thereof, 
receives  the  bill  for  value.      (Neg.  Instr.  Law,  Sec.  134.) 

^"  The  acceptor  of  a  letter  of  credit  who  did  not  pay  it  is  not  obliged  to 
credit  its  amount  to  the  drawer  of  the  same,  unless  the  latter  proves  that  he 
had  supplied  special  funds  therefor,  and  the  acceptance  of  such  letter  does  not 
create  any  obligation  between  the  acceptor  and  the  drawer.  Spain,  Trib. 
Sup.,  Feb.  8,  1905,  A.  Herrero  v.  C.  Vaamonde;  Gaceta  of  March  15,  1905, 
p.  176. 

'^*  Spain,  480;  Honduras,  465;  Uniform  Regulation,  27;  Venezuela,  385. 

i'9  Argentina,  647;  Bolivia,  392;  Chile,  676;  Colombia,  803;  Mexico,  491; 
Uruguay,  842. 

120  Brazil,  43,  51.  i"  Costa  Rica,  78. 


BILLS   OF   EXCHANGE  517 

(e)  when  the  bill  has  been  forged  the  acceptor  is, 
nevertheless,  bound  to  pay  it  if  it  is  not  in  the 
hands  of  the  payee  or  of  a  person  responsible  for  the 
forgery.  ^22 

Effect  of  bankruptcy  of  the  drawer. 

After  the  acceptance  of  a  bill  of  exchange  the  acceptor  is 
directly  liable  for  its  payment,  independently  of  his  rights 
and  duties  towards  the  drawer.  The  bankruptcy  or  the 
insolvency  of  the  latter  is  no  excuse  for  non-payment,  even 
when  the  bankruptcy  or  insolvency  occurred  prior  to  the 
acceptance  but  unknown  to  the  acceptor. ^-^ 

If  the  bankruptcy  of  the  drawer  was  made  public  before 
presentation,  the  drawee  must  refuse  acceptance  or  pay- 
ment. ^^^ 

Costa  Rica  ^-^  provides  that  if  before  the  bill  is  due  the 
drawer  fails,  the  drawee  must  retain  the  funds  supplied 
whether  or  not  he  has  accepted.  If  a  credit  not  due  when 
the  bill  matures  was  designated  for  its  payment,  the  drawee 
must  retain  the  credit  for  such  payment,  notwithstanding 
the  bankruptcy. 

In  case  of  the  bankruptcy  of  the  drawer  of  several  bills 
who  has  not  supplied  funds  enough  for  the  payment  of  all, 
nor  made  special  designation  of  certain  funds  for  the  pay- 
ment thereof,  the  bills  must  be  paid  in  the  order  of  their 
creation,  excepting  those  which  bear  a  clause  forbidding 
their  presentation  for  acceptance. 

Reference. 

When  the  drawer  or  any  of  the  endorsers  of  a  bill  indicates 
in  it  other  persons  from  whom  acceptance  must  be  requested 
in  case  it  is  refused  by  the  drawee,  the  holder  must,  after 
protest,  if  the  drawee  refuses  acceptance,  ask  it  from  the 

1"  Ecuador,  416. 

i2»  Argentina,  646;  Chile,  679;  Colombia,  806;  Ecuador,  416;  Peru,  454; 
San  Salvador,  406;  Santo  Domingo,  121;  Uruguay,  841. 

124  Argentina,  645;  Chile,  678;  Colombia,  805;  Uruguay,  840. 
'"  Arts.  42,  43. 


518  LATIN-AMERICAN    COMMERCIAL    LAW 

persons  indicated.  Such  persons  are  known  as  referees  in 
case  of  need.  ^ 2^ 

In  Spain  ^-"  and  Honduras/-^  the  holder  may  demand 
acceptance  from  the  other  persons  indicated  in  the  bill,  even 
though  it  was  accepted  by  the  drawee,  provided  other  bills 
accepted  by  the  same  drawee  have  been  protested.  In  that 
event,  the  holder  must  protest  the  instrument  for  better 
security. 

In  Argentina, ^^^  Chile  ^■^'^  and  Colombia, ^^^  a  distinction  is 
made:  if  the  persons  are  jointly  designated  the  holder  must 
request  acceptance  from  every  one  of  them;  but  if  they  are 
designated  in  the  alternative,  acceptance  or  payment  must 
be  demanded  from  the  first,  and  in  case  of  his  refusal,  then 
from  the  others,  in  the  order  of  their  designation. 

In  Brazil  ^^^  when  there  are  two  or  more  drawees,  the 
holder  must  present  the  bill  to  the  first  one  designated; 
should  he  refuse  to  accept,  then  to  the  second,  provided  he 
resides  in  the  same  place,  and  so  on,  in  spite  of  the  order 
mentioned  in  the  bill. 

In  Costa  Rica  ^^^  and  Uruguay  ^^^  the  holder  must  first 
request  acceptance  and  payment  from  the  persons  designated 
by  the  drawer,  and  then  from  the  endorsers  in  their  successive 
order. 

SURETYSHIP    (Aval) 

Suretyship  is  an  independent  contract  by  virtue  of  which 
a  person  who  is  not  a  party  to  the  bill  of  exchange  guarantees 
its  payment. 

The  aval  is  always  in  writing  whether  in  the  bill  itself  or  on 
a  separate  paper;  the  former  is  more  frequent,  thus  facilitat- 
ing the  circulation  of  the  draft. ^-^^ 

128  Spain,  484;  Honduras,  469;  Mexico,  489;  San  Salvador,  410. 

1"  Art.  48L  128  Art.  466.  '«  ^rt.  655. 

"0  Art.  693.  1"  Art.  820.  "^  Art.  10. 

"'Art.  89.  "*  Art.  851. 

"5  Spain,  486;  Argentina,  679,  680;  Bolivia,  410;  Brazil,  14;  Chile,  680,  681; 
Colombia,  807,  808;  Costa  Rica,  155,  156;  Ecuador,  424;  Haiti,  138;  Honduras, 
471;  Mexico,  496,  497;  Peru,  460;  Santo  Domingo,  141;  San  Salvador,  420,  421; 
Uruguay,  872,  873. 


BILLS    OF    EXCHANGE  519 

Only  Venezuela  ^^^  and  countries  governed  by  the  Uniform 
Regulation  require  that  the  aval  be  written  in  the  bill  itself 
and  not  on  separate  paper. 

The  aval  may  be  given  in  general  terms,  or  limited  to  a 
certain  person,  amount  or  condition.^" 

Effect  of  the  "  aval." 

When  the  aval  is  given  for  a  limited  time,  case,  amount  or 
person,  the  obligation  of  the  surety  is  ruled  by  his  own 
stipulation;  but  when  there  is  no  limitation  established  at 
the  time  he  gives  his  guaranty,  various  systems  are  followed, 
namely: 

1st  System.  The  obligation  of  the  surety  is  the  same 
as  that  of  the  person  for  whom  he  guaranteed,  the  law 
taking  no  account  of  the  case  in  which  no  name  is 
mentioned.  ^^® 

M  System.  The  surety  is  jointly  and  severally  liable 
in  the  same  form  as  the  drawer  and  endorsers.  ^^^ 

"«Art.  391. 

1"  Argentina,  682;  Bolivia,  411,  412;  Chile,  682,  683;  Colombia,  809,  810 
Costa  Rica,  158;  Ecuador,  425,  426;  Haiti,  139;  Honduras,  472;  Mexico,  498 
Peru,  461;  San  Salvador,  423;  Santo  Domingo,  142;  Uruguay,  875,  876 
Venezuela,  394. 

The  following  are  forms  of  the  aval  written  on  the  back  of  the  document: 
Unlimited  aval 
Por  aval 
Juan  L<5pez. 
Aval  limited  to  a  certain  amount. 
Por  aval  mil  pesos. 
Juan  L6pez. 
Aval  subject  to  a  period  of  time. 

Por  aval  a  quince  dias  despues  del  vencimiento  de  esta  letra. 
Juan  L6pez. 
Aval  for  a  si)ecified  person. 

Por  aval  a  favor  unicamentc  del  tomador  don  Pedro  P6rez. 
Juan  L6pez. 
Aval  subject  to  condition. 

Por  aval  dospues  de  que  se  haya  hecho  cxcusion  en  los  Ijicncs  del  accptantc. 
Juan  L6i)cz. 
"8  Spain,  487;  Bolivia,  412;  Costa  Rica,  158;  Honduras,  472;  Venezuela, 
393. 

139  Argentina,  682;  Chile,  683;  Colombia,  810;  Ecuador,  426;  Haiti,  139; 
Santo  Domingo,  142;  Uruguay,  875. 


520  LATIN-AMERICAN    COMMERCIAL    LAW 

8d  System.  The  surety  assumes  the  liability  of  the 
person  under  whose  name  he  places  his  signature; 
otherwise  he  is  responsible  like  the  acceptor.  Should 
the  bill  not  be  accepted,  his  liabiUty  is  still  like  that  of 
the  drawer.  ^^° 
4th  System.  The  surety  is  liable  as  an  endorser.  ^^^ 
5th  System.  He  is  liable  like  the  acceptor,  but  if  the 
bill  has  not  been  accepted,  his  responsibiUty  is  like  that 
of  the  drawer.  "2 

6th  System.  The  surety  is  responsible  in  the  same 
manner  as  the  drawer.  ^^^ 
Peru  ^^^  and  Venezuela  ^^^  as  well  as  the  Uniform  Regula- 
tion ^^^  provide  by  way  of  exception  to  the  general  principles 
of  contracts,  that  the  aval  is  valid  and  binding  notwithstand- 
ing the  nullity  of  the  bill.  This  rule  is  a  consequence  of  the 
independent  character  of  every  obligation  contracted  with 
respect  to  a  bill  of  exchange. 

Capacity  of  women  to  sign  an  "  aval." 

In  Argentina,  non-merchant  women  can  sign  an  aval  only 
subject  to  the  rules  established  by  the  civil  law."^ 

PAYMENT 

Time  of  payment. 

The  second  obUgation  of  the  holder  of  a  bill  of  exchange 
desiring  to  safeguard  his  rights  against  the  drawer  and 
endorsers  is  to  present  it  for  pajnnent  the  day  of  its  maturity, 
and  the  drawee  must  pay  it  that  very  day,  even  though  it 
was  protested  for  lack  of  acceptance.  Should  the  day  of 
maturity  be  a  holiday,  presentation  and  payment  must  be 
made  the  day  before.  ^'^^ 

1*0  BrazU,  15.  "i  Mexico,  498. 

"2  Peru,  461;  San  Salvador,  423. 
"'  Uniform  Regulation,  30. 

"''  Art.  461.  i«  Art.  393.  i«  Art.  31. 

i«  Art.  684. 

1*8  Spain,  488;  Argentina,  662;  Chile,  698;  Colombia,  825;  Honduras,  473; 
Mexico,  499;  San  Salvador,  427;  Uruguay,  857. 


BILLS    OF    EXCHANGE  521 

In  Brazil/''^  Costa  Rica,^^°  Ecuador/'^^  Venezuela/^^ 
as  well  as  under  the  Uniform  Regulation,  ^^^  payment  must 
be  made  the  day  after.  ^^^ 

Costa  Rica  makes  the  presentation  for  payment  not  nec- 
essary: 

(a)  when  the  drawee  is  a  fictitious  person; 
(6)  with  reference  to  the  drawer,  when  the  drawee 
was  not  obliged  to  pay  the  draft,  and  the  drawer  had 
no  reason  to  suppose  that  the  bill  would  be  paid; 

(c)  with  reference  to  the  endorser,  when  the  bill  was 
created  and  accepted  for  accommodation,  and  he  had 
no  reason  to  suppose  that  the  draft  would  be  paid; 

(d)  when,  in  benefit  of  the  holder,  he  has  been  re- 
leased from  the  obligation  to  present  the  bill  within 
the  term  fixed  by  the  law; 

(e)  with  reference  to  bills  payable  at  the  residence 
of  a  third  person,  if  the  draft  itself  does  not  state  the 
address  at  which  payment  is  to  be  made  and  the  drawee 
fails  to  designate  it; 

(J)  when  it  cannot  be  made,  notwithstanding  the 
exercise  of  due  diligence.  ^^^ 

Money  in  which  payment  must  be  made. 

Bills  of  exchange  must  be  paid  in  the  kind  of  money  therein 
designated.  Should  such  money  not  be  in  circulation  in  the 
place,  payment  must  be  made  in  the  currency  of  the  coun- 
try, the  amount  being  computed  according  to  the  rate  of 
exchange  at  the  day  and  place  of  payment.  ^^^ 

J«  Art.  20.  ISO  Art.  36.  i"  Art.  428. 

1"  Art.  396.  1"  Art.  72. 

IS"*  The  endorsee  of  a  bill  of  exchange  which  was  accepted  and  afterwards 
impaired  because  not  presented  for  payment  in  proper  time  is  a  lawful  creditor, 
and  therefore  can  be  a  party  to  the  proceedings  in  bankruptcy  against  the 
acceptor.  Spain,  Trib.  Sup.,  Dec.  28,  1908;  Gacetas  of  June  14  and  17,  1909, 
p.  455. 

1"  Art.  102. 

1^  Spain,  489;  Argentina,  685;  Bolivia,  394;  Brazil,  25;  Chile,  712;  Colom- 
bia, 843;  Costz  Rica,  112;  Ecuador,  429;  Haiti,  140;  Honduras,  474;  Mexico, 
509;  Peru,  479;  Han  vSalvador,  428;  Urugiiay,  878;  Vonoziiela,  397. 

The  rate  of  exchange  for  paying  a  foreign  bill  of  exchange  is  that  of  the  day 


522       -  LATIN-AMEEICAN   COMMERCIAL   LAW 

The  law  of  Brazil  ^"  and  the  Uniform  Regulation  ^^^ 
provide  also  that  when  the  kind  of  money  stipulated  is  not 
in  circulation  in  the  place,  payment  can  be  made  in  the 
legal  currency  of  the  country  at  the  current  rate  of  exchange, 
in  the  absence  of  agreement  to  the  contrary. 

In  Chile,  by  decree  of  September  10,  1892,  all  commercial 
obhgations  must  be  paid  in  the  exact  money  stipulated, 
unless  otherwise  agreed,  thus  reiterating  article  114  of  the 
code  of  commerce. 

In  Santo  Domingo  ^^^  payment  must  always  be  made  in 
the  money  agreed  upon. 

Payment  before  maturity. 

The  person  who  pays  a  bill  of  exchange  before  its  maturity 
does  not  liberate  himself  from  the  obhgation  of  paying  it 
again,  if  the  person  who  received  the  payment  is  not  the 
lawful  holder  of  the  instrument.  ^^° 

The  codes  of  Argentina,^"  Bolivia, ^^^  Colombia, ^^^  Costa 
Rica  ^^*  and  Uruguay, ^^^  in  dealing  with  the  situation  of  a 
person  who  receives  payment  before  the  bill  is  due,  provide 
that  when  the  payer  has  become  bankrupt  all  payments  in 
anticipation  made  by  him  after  he  ceased  to  pay  creditors, 
as  fixed  by  the  declaration  of  the  court,  are  null.  The  holder 
of  the  bill  must  surrender  the  amount  received  to  the  re- 
ceivers, and  obtain  the  return  of  the  bill  for  the  further 
exercise  of  his  rights  and  powers. 

it  was  due.  But  if  by  the  failure  to  pay  od  that  date,  the  bearer  suffers  any 
damage,  this  must  be  for  the  account  of  the  debtor.  Colombia,  Trib.  Sup. 
del  Cauca,  Nov.  29,  1905;  Gaceta  Jud.  del  Cauca,  Nov.  29,  1905,  v.  II,  p.  66. 

When  the  judge  has  issued  an  order  to  pay  a  foreign  bill  of  exchange,  com- 
puting its  amount  at  the  rate  of  exchange  on  the  day  of  maturity  none  of  the 
parties  to  the  suit  may  ask  that  payment  be  made  at  the  rate  on  the  day  of  its 
performance.  Colombia,  Trib.  Sup.  del  Distrito  del  Cauca,  Feb.  20,  1906; 
Gaceta  Judic.  del  Cauca,  v.  II,  p.  180,  and  IV,  1906,  ib.,  p.  182. 

1"  Art.  25.  158  Art.  40.  i*'  Art.   143. 

180  Spain,  490;  Argentina,  686;  Bolivia,  400;  Brazil,  22;  Chile,  714;  Colom- 
bia, 845;  Costa  Rica,  103;  Ecuador,  431;  Haiti,  141;  Honduras,  475;  Mexico, 
501;  Peru,  480;  San  Salvador,  429;  Santo  Domingo,  144;  Uniform  Regulation, 
39;  Uruguay,  879;  Venezuela,  399. 

181  Art.  686.  "2  Art.  401.  "' Art.  846. 
"«  Arts.  108,  109.                       "^  Art.  880. 


BILLS  OF  ENCHANGE  523 

A  holder  cannot  be  compelled  to  receive  payment  in  ad- 
vance. 

As  a  correlative  to  the  foregoing  rule,  the  holder  of  a 
bill  cannot  be  compelled  to  receive  payment  before  ma- 
turity. ^''^ 

Payment  of  a  matured  bill  is  presumed  valid. 

Payment  made  to  the  holder  of  a  matured  bill  is  presumed 
valid  unless  its  amount  has  been  attached  by  judicial 
decree.^"  The  attachment  of  the  amount  of  a  bill  can  be 
effected  only  in  case  of  loss  or  theft  of  the  instrument  or  when 
the  holder  is  a  bankrupt.  ^^^  In  Brazil,  ^''^  Chile,  ^"°  Colom- 
bia ^'^^  and  Costa  Rica,^"  the  attachment  can  also  be  made 
when  the  holder  is  legally  encompetent. 

Identification  of  the  holder. 

The  holder  of  a  bill  who  requests  payment  must  identify 
himself  by  means  of  documents  or  resident  persons  of  his 
acquaintance  who  will  guarantee  his  identity.  ^^^ 

188  Spain,  493;  Argentina,  687;  Bolivia,  402;  Brazil,  22;  Chile,  713;  Colom- 
bia, 844;  Costa  Rica,  97;  Ecuador,  431;  Honduras,  478;  Mexico,  500;  Peru,  480; 
San  Salvador,  432;  Uniform  Regulation,  39;  Uruguay,  881. 

The  acceptor  of  a  bill  has  a  privilege  of  paying  it,  and  when  payment  is  not 
accepted  by  the  creditor,  he  can  deposit  the  amount  in  court  following  the 
proper  proceedings.  Spain,  Trib.  Sup.,  June  13,  1914,  V.  Perez  Ventoso  v. 
A.  Trujillo;  Gaceta  of  22  and  24  of  Nov.,  1914,  p.  411. 

1"  Spain  491;  Argentina,  691;  Bolivia,,  404;  Brazil,  23;  Chile,  716;  Colom- 
bia, 848;  Costa  Rica,  104;  Ecuador,  434;  Haiti,  142;  Honduras,  476;  Mexico, 
502;  San  Salvador,  430;  Santo  Domingo,  145;  Uniform  Regulation,  39;  Uru- 
guay, 884;  Venezuela,  403, 

The  person  who  pays  a  bill  at  maturity  and  without  any  opposition  is 
legally  exonerated  even  though  payment  is  not  made  to  the  owner.  Good 
faith  on  the  part  of  the  payer  is  presumed.  Colombia,  Trib.  Sup.  del  Dis- 
trito  de  Bogota,  March,  12,  1896,  Registro  Judicial  de  Cundinamarca,  v.  XI, 
p.  1724. 

198  Argentina,  692;  Bolivia,  404;  Brazil,  23;  Chile,  716;  Colombia,  848; 
Costa  Rica,  105;  Ecuador,  433;  Haiti,  146;  Peru,  484;  Santo  Domingo,  149; 
Uruguay,  885;  Venezuela,  402. 

i«»  Art.   123.  1™  Art.  716.  "i  Art.  848. 

i"Art.   105. 

1''^  The  drawee  must  pay  the  bill,  however,  when  it  falls  due  even  though 
he  does  not  know  the  bearer;  the  latter  need  not  identify  himself,  as  such 


524  LATIN-AMERICAN    COMMERCIAL   LAW 

The  lack  of  such  identification  is  no  hindrance  to  the 
acceptor  or  drawee  making,  or  to  the  holder  demanding 
judicial  deposit  of  the  amount  thereof  on  the  day  of  its 
presentation,  at  the  house  or  with  a  person  designated  by- 
agreement  between  the  holder  and  the  payer,  in  which  case 
such  house  or  person  must  retain  the  amount  until  lawful 
pajTnent  can  be  made.^^^ 

Nicaragua  ^^^  and  Peru,^^^  favoring  the  holder,  declare 
that  the  holder  is  bound  to  prove  the  property  of  the  bill 
by  a  non-interrupted  series  of  endorsements  only. 

Partial  payments. 

When  the  drawee  or  acceptor  of  a  bill  pays  a  part  of  the 
total  amount  opinions  are  divided  as  to  the  question  whether 
or  not  the  holder  is  obliged  to  receive  such  partial  payment. 
According  to  general  principles  he  is  not  bound;  but  con- 
sidering that  his  refusal  makes  more  burdensome  the  con- 
dition of  the  endorsers  and  drawer  whose  interests  he  in 
some  degree  represents,  it  has  been  held  in  some  countries 
that  he  is  obliged  to  receive  such  partial  payment. 
There  are  consequently  two  systems: 

(a)  the  one  giving  the  holder  the  privilege  not  to 
accept  less  than  full  payment;  ^" 

(6)  the  other  making  it  compulsory  for  the  holder 
to  receive  a  partial  payment.  ^^^ 

Payment  in  case  the  bill  was  previously  acepted. 

Bills  of  exchange  which  have  been  accepted  must  be  paid 

requisite  is  contrary  to  the  main  advantage  of  a  bill  of  exchange,  namely,  the 
immediate  payment  of  its  amount.  Colombia,  Trib.  Sup.  del  Dist.  de  Bogota, 
March  12,  1896,  Registro  Judicial  de  Cundinamarca,  v.  XI,  p.  1724.  Cf. 
Colombia,  art  847. 

"4  Spain,  492;  Argentina,  694;  Bolivia,  393;  Chile,  715;  Colombia,  847; 
Costa  Rica,  110;  Ecuador,  438;  Honduras,  477;  Mexico,  508;  San  Salvador,  431; 
Uruguay,  887. 

i^Art.  275.  1^8  Art.  473. 

1"  Spain,  494;  Bolivia,  403;  Chile,  713;  Colombia,  844;  Ecuador,  430n; 
Honduras,  479;  San  Salvador,  433.  This  is  the  system  adopted  generally  in 
the  United  States. 

1™  Brazil,  22;  Costa  Rica,  113;  Mexico,  503;  Peru,  478;  Uniform  Regu- 
lation, 28;  Venezuela,  398. 


BILLS    OF    EXCHANGE  525 

in  exact  accordance  with  the  acceptance  on  the  copy  pre- 
sented. Should  payment  be  made  on  any  other  copy,  the 
payer  remains  hable  for  the  amount  thereof  to  any  holder 
in  due  course  of  the  accepted  copy.^"^ 

The  acceptor  cannot  be  compelled  to  pay  in  the  fore- 
going case,  even  though  the  holder  of  the  unaccepted  copy 
offers  to  give  a  bond  to  the  acceptor's  satisfaction;  but  the 
holder  can  demand  the  deposit  of  the  amount  and  on  non- 
compliance protest  according  to  law. 

If  the  acceptor  voluntarily  takes  the  bond  and  makes 
payment,  the  bond  will  de  jure  be  cancelled  as  soon  as  the 
action  arising  out  of  the  acceptance  which  gave  origin  to 
the  bond  is  barred  by  limitation.  ^^'^ 

Brazil  ^^^  provides  that  the  drawee  is  bound  to  pay  every 
one  of  the  copies  to  which  he  has  set  his  signature,  when 
there  is  no  indication  that  the  bills  were  merely  different 
copies  of  the  same  draft;  and  that  the  endorser  to  different 
persons  of  two  or  more  copies  of  the  same  bill  which  have 
no  such  indication  as  well  as  the  successive  endorsers  or 
sureties  are  bound  to  pay  their  amount.  The  person  who 
receives  a  copy  of  a  bill  for  the  sole  purpose  of  presenting 
it  for  acceptance  is  bound  to  deliver  it  to  the  holder  in  due 
course  of  the  duplicate,  under  penalty  of  paying  damages. 

According  to  the  Uniform  Regulation  ^^^  payment  made 
upon  any  of  the  copies  releases  the  drawer  from  the  obli- 
gation of  paying  the  others  even  in  the  absence  of  agreement 
to  that  effect.  The  drawee,  however,  is  bound  on  every  one 
of  the  copies  he  accepts  and  does  not  recover.  The  endorser 
who  transfers  the  copies  to  different  persons,  as  well  as  the 
subsequent  endorsers  are  bound  on  every  copy  bearing  their 
signature. 

The  person  who  sends  one  of  the  copies  for  acceptance, 

"9  Spain  495;  Argentina,  689;  Bolivia,  398;  Chile,  717,  719;  Colombia, 
850,  852;  Ecuador,  432;  Haiti,  145;  Honduras,  480;  Mexico,  504;  San  Sal- 
vador, 434;  Santo  Domingo,  148;  Uniform  Regulation,  09;  Uruguay,  883; 
Venezuela,  401. 

180  Spain,  496;  Bolivia,  399;  Chile,  718;  Colombia,  851;  Honduras,  481; 
San  Salvador,  435. 

»"  Art.  16.  1*2  Art.  64. 


526  LATIN-AMEEICAN    COMMERCIAL    LAW 

must  indicate  in  the  other  copies  the  name  of  the  person 
to  whom  that  copy  was  sent  and  the  latter  must  surrender 
it  to  the  holder  in  due  course  of  the  other  copy.  Should  he 
refuse  thus  to  surrender  the  copy  to  the  holder,  the  latter 
can  enforce  his  rights  only  after  he  has  evidenced  them  by 
means  of  a  protest:  (a)  that  he  has  demanded  the  copy 
sent  for  acceptance  and  it  has  not  been  delivered  to  him; 
(6)  that  the  acceptance  and  payment  have  not  been  ob- 
tained by  means  of  another  copy.^^^ 

Payment  in  case  the  bill  has  not  been  accepted. 

Non-accepted  bills  of  exchange  can  be  paid  after  they 
become  due  but  not  before,  upon  the  second,  third  or  any 
other  of  the  copies  issued  by  the  drawer,  but  not  upon  copies 
issued  by  endorsers,  unless  one  of  the  copies  issued  by  the 
drawer  is  attached  thereto.  ^^^ 

Case  of  loss  of  a  bill  of  exchange. 

There  are  various  systems  with  reference  to  the  procedure 
to  be  followed  by  the  holder  of  a  bill  in  case  of  its  loss, 
namely: 

System  of  Spain.  When  a  person  has  lost  a  bill  of 
exchange,  whether  accepted  or  not,  and  has  no  other 
copy  for  requesting  payment,  he  can  demand  from  the 
payer  the  deposit  of  the  amount  of  the  draft  in  the 
proper  public  depositary,  or  with  a  trustworthy  person 
agreeable  to  both  parties,  or  one  designated  by  the 
judge  in  case  of  disagreement.  Should  the  person  ob- 
liged to  pay  refuse  to  make  the  deposit,  such  refusal  must 
be  authenticated  by  means  of  a  protest,  and  with  this 
document  the  holder  retains  his  rights  against  the 
person  responsible  for  the  payment  of  the  bill. 
For  obtaining  payment  after  the  deposit  is  made  the  law 
distinguishes  two  cases: 

(a)  where  the  bill  was  drawn  in  a  foreign  country  or 

i8»  Art.  65. 

18"  Spain,  497;  Bolivia,  396,  397;  Chile,  720;  Colombia,  853;  Ecuador,  432; 
Haiti,  147;  Honduras,  482;  Mexico,  505;  San  Salvador,  436;  Santo  Domingo, 
150;  Uniform  Regulation,  64;  Uruguay,  882;  Venezuela,  401. 


BILLS    OP    EXCHANGE  527 

from  over  seas,  in  which  case  the  holder  has  a  right  to 
demand  dehvery  of  the  amount  of  the  draft  if  he  proves 
title  to  it  through  his  books  and  correspondence  with 
the  person  from  whom  he  got  it  or  by  means  of  a  certif- 
icate of  the  broker  through  whom  the  negotiation  was 
undertaken  and,  besides,  gives  a  bond  sufficient  to 
guarantee  the  money.  This  bond  will  subsist  until  a 
copy  of  the  bill  issued  by  the  drawer  is  produced,  or 
until  the  action  arising  therefrom  has  been  barred  by 
the  statute  of  limitations; 

(6)  that   of  an   inland   bill   of  exchange,    in   which 
case  the  delivery  of  the  money  cannot  be  demanded 
until  a  copy  of  the  bill  issued  by  the  drawer  is  pro- 
duced. 
This  copy  is  obtained  by  the  last  holder  from  his  endorser, 

and  so  on  from  one  endorser  to  another  up  to  the  drawer. 

None  of  them  can  refuse  his  name  and  services  for  obtaining 

the  new  copy,  and  the  expense  thereof  must  be  paid  by  the 

owner  of  the  bill.^^^ 

System  of  Argentina.  Whenever  a  well-known  person 
asks  the  payer  of  a  bill  to  withhold  payment  because  of 
its  loss,  the  latter  must  delay  payment  throughout  the 
day  of  maturity;  should  legal  notice  of  a  formal  attach- 
ment not  be  served  upon  the  payer  during  that  term,  he 
must  pay  to  the  holder.  ^^^ 

System  of  Brazil.  After  proving  the  absence,  loss,  or 
partial  or  total  destruction  of  a  bill  clearly  and  accu- 
rately described,  its  owner  can  demand  from  a  judge  of 
competent  jurisdiction  at  the  place  of  payment  an  order 
directed  to  the  drawee,  acceptor  or  co-obligors  not  to 
pay  the  draft,  and  to  summon  its  unlawful  detainer  to 
appear  in  court  within  three  months.  In  case  the  bill 
went  astray  or  was  destroyed  he  must  demand  the  sum- 
moning of  the  co-debtors  in  order  that  within  the  same 
period  they  may  bring  their  action  objecting  to  the 

"6  Spain,  498  to  500;  Bolivia,  406  to  408;  Honduras,  483  to  485;  San  Sal- 
vador, 437  to  439. 

1^  Argentina,  G93;  Costa  Rica,  lOG;  Uruguay,  886. 


528  LATIN-AMERICAN   COMMERCIAL   LAW 

bill  for  lack  of  formal  or  essential  requisites.     These 

citations  must  be  made  by  means  of  the  press,  in  the 

Diario  Oficial  of  the  federal  district  and  in  other  papers 

indicated  by  the  judge,  and  in  the  customary  places 

and  in  the  exchange  of  the  place  of  payment.     The 

period  of  three  months  is  reckoned  from  maturity;  but 

if  the  bill  is  already  due,  then  from  the  date  of  the 

publication  of  the  citation  in  the  official  paper.    During 

that  period  the  owner,  provided  with  a  certificate  of 

his  demand,  and  of  the  judicial  decree,  can  take  any 

step  necessary  for  guaranteeing  the  credit,  and  at  its 

maturity,   ask  from  the  acceptor  the  deposit  of  the 

amount  due.    When  three  months  have  elapsed  without 

a  holder  in  due  course  having  presented  himself,  and 

without  any  objection  on  the  part  of  the  debtor,  the 

judge  must  declare  the  nullity  of  the  lost  or  destroyed 

bill  and  order  the  depositary  to  deliver  the  amount 

deposited  to  the  owner  of  the  bill.     This  judgment 

enables  the  owner  to  enforce  the  accidn  ejecutiva  against 

the  acceptor  and  other  obligors. 

If  in  the  meantime  a  holder  in  due  course  presents  the  bill 

or  any  of  the  obligors  enter  an  objection,  the  judge  must 

drop  the  demand  of  nullity,  reserving  to  the  applicant  all  his 

legal  remedies.    The  institution  of  this  action  is  no  obstacle 

to  demanding  a  duplicate  nor  does  it  dispense  the  holder  from 

the  obligation  of  immediately  notifying  the  loss  of  the  draft 

in  legal  form  to  the  obligors.  ^^'' 

Systern  of  Ecuador.  When  a  bill  of  exchange  is  lost, 
whether  accepted  or  not,  and  the  holder  has  no  other 
copy  or  has  not  time  enough  to  ask  the  drawer  for  one, 
he  can  obtain  payment  by  judicial  decree,  proving  the 
ownership  of  the  bill  by  means  of  his  books  and  corre- 
spondence and  giving  a  bond,  which  subsists  until  the 
original  copy  is  produced  or  the  action  arising  there- 
from is  barred  by  limitation.  ^^^ 
System  of  Mexico.    When  a  bill  of  exchange,  whether 

18'  Art.  36. 

188  Bolivia,  436;  Venezuela,  405;  Haiti,  149;  Santo  Domingo,  15L 


BILLS    OF    EXCHANGE  529 

accepted  or  not,  is  lost,  and  there  is  no  other  copy,  the 
holder,  besides  the  right  to  have  it  replaced  by  those 
who  must  do  so,  may: 

1.  Ask,  under  his  responsibility,  the  payer  of  the 
bill  of  exchange  to  deposit  the  amount  thereof  on  the 
day  of  its  maturity  in  a  credit  institution  or  in  a 
commercial  house  designated  by  common  agreement 
or  by  the  judge. 

2.  Protest  the  bill  for  non-payment  if  the  payer 
refuses  to  do  so. 

3.  Demand  pajmcient  of  the  bill  through  the 
decree  of  a  judge,  before  whom  he  must  prove 
ownership. 

Obligation  of  the  payer  to  verify  the  endorsement. 

A  general  rule  admitted  by  commercial  customs  and 
expressly  recognized  by  the  law  in  BraziV^^  Costa  Rica,^^" 
Peru  ^^^  and  Venezuela, ^^^  exempts  the  payer  from  the  obli- 
gation to  verify  the  authenticity  of  the  endorsements,  when 
he  pays  a  bill  of  exchange  at  maturity. 

In  connection  with  this  rule  the  code  of  Argentina  ^^^ 
provides  that  the  acceptor  of  a  bill  is  bound  to  pay  it  even 
though  it  was  fraudulently  endorsed,  provided  the  holder  has 
received  it  in  good  faith  and  due  course  from  a  person 
qualified  to  convey  it. 

The  code  of  Colombia  ^^^  provides  that  the  good  faith  of 
the  holder  does  not  suffice  to  authorize  the  payer  to  pay  a 
bill  fraudulently  transferred  if  he  has  knowledge  of  the 
defect. 

The  rule  is  more  strict  in  Costa  Rica  ^^^  where,  if  there  is 
reasonable  ground  for  the  drawee  to  suppose  that  the  last 
endorsement  was  forged  and  pays  the  bill,  or  if  in  making 
payment  he  has  been  in  some  way  negligent,  he  is  responsible 
with  respect  to  the  bill.  A  payment  made  in  good  faith  to 
an  insolvent  or  incompetent  holder  is  lawful.  ^^^ 


«» Art.  40. 

lix'Art.  107. 

191  Art.  473. 

i«  Art.  395. 

"» Art.  090. 

J9*  Art.  849. 

"6  Art.  107. 

»9«Art.  104. 

530  LATIN-AMERICAN    COMMERCIAL   LAW 

The  Uniform  Regulation  "^  provides  that  if  a  person  is 
dispossessed  of  a  bill  of  exchange  in  any  way,  the  holder  who 
can  show  his  rights  by  means  of  an  uninterrupted  series  of 
endorsements  even  though  the  last  one  be  in  blank,  need  not 
surrender  the  instrument,  unless  he  acquired  it  in  bad  faith 
or  through  gross  negligence. 

1"  Art.  15. 


CHAPTER  XXXI 

Bills  of  Exchange  (4) 
PROTEST 

ACCEPTANCE   AND   PAYMENT   FOR   HONOR,    ACTIONS,    ETC. 

Protest  as  a  matter  of  public  policy. 

The  public  interest  involved  in  all  matters  relating  to  the 
fulfillment  of  the  obligations  created  by  a  bill  of  exchange, 
the  number  of  persons  whose  liability  is  involved  in  such 
obligations,  the  fact  that  they  may  not  know  one  another, 
that  they  may  reside  in  different  and  distant  places,  and 
the  many  consequences  produced  by  the  bankruptcy  of  the 
drawee  before  payment  of  the  amount  drawn — all  these 
considerations  make  it  necessary  to  provide  some  strict 
method  of  evidencing  the  fact  that  all  the  legal  requisites 
have  been  complied  with  in  the  presentation  of  the  bill  of 
exchange  for  acceptance  or  payment;  inasmuch  as  upon 
compUance  with  these  formalities  depends  the  liability  or 
the  release  of  the  drawer  and  endorsers,  and,  in  a  general 
way,  the  confidence  of  the  people  in  these  instruments  of 
circulation,  so  important  for  the  general  welfare.  This  is  the 
reason  why  the  law  of  all  the  countries  of  America  establishes 
a  solemn  and  strictly  formal  method  of  attesting  the  non- 
acceptance  and  non-payment  of  a  bill  of  exchange,  with  the 
necessity  of  having  recourse  to  a  public  officer  charged  with 
the  function  of  making  such  attestation. 

The  special  formalities  connected  with  such  attestation  are 
called  '^  protest."  ^ 

No  other  act  or  document  can  supply  the  want  of  protest 

1  Spain,  502;  Argentina,  655;  Bolivia,  413,  417;  Brazil,  27;  Chile,  722; 
Colombia,  855;  Costa  Rica,  81,  118;  Ecuador,  441;  Haiti,  170;  Honduras,  487; 
Mexico,  510;  Peru,  489;  San  Salvador,  444;  Santo  Domingo,  173;  Uiiiforin 
Regulation,  43;  Uruguay,  850;  Venezuela,  409. 

531 


532  LATIN-AMERICAN    COMMERCIAL    LAW 

for  the  preservation  of  the  rights  of  the  holder  against  the 
persons  responsible  for  the  payment  of  a  bill  of  exchange.^ 

In  some  countries  the  law,  with  a  view  to  emphasizing  the 
public  interest  involved  in  the  making  of  a  protest,  expressly 
declares  that  a  clause  in  a  bill  of  exchange  dispensing  the 
holder  from  the  obligation  of  protesting  it,  must  be  con- 
sidered as  void.^ 

Exceptions  to  the  rule. 

In  some  countries,  however,  the  rule  has  certain  exceptions : 
In  Argentina  ^  and  Uruguay  ^  a  protest  is  not  necessary 
to  preserve  rights  against  the  drawer,  when  he  has  not 
supplied  the  drawee  with  funds,  or  when  the  latter  becomes 
bankrupt  before  the  maturity  of  the  bill  of  exchange;  against 
the  endorsers,  when  the  acceptor,  the  drawer  and  the  pre- 
vious endorsers  are  bankrupt;  against  the  endorsers  and  the 
drawer,  when  they  have  received  the  amount  of  the  bill  of 
exchange,  whether  in  cash,  merchandise  or  valuables,  or 
when  they  are  debtors  of  the  drawee,  according  to  their 
accounts;  and  finally,  when  the  laws  of  the  country  where  the 
bill  must  be  paid  create  some  obstacle,  direct  or  indirect,  to 
the  making  of  the  protest. 

2  Spain,  509;  Argentina,  723;  Bolivia,  417;  Chile,  735;  Colombia,  868; 
Ecuador,  449;  Haiti,  172;  Honduras,  494;  Mexico,  510;  Peru,  496;  Santo 
Domingo,  175;  Uruguay,  916;  Venezuela,  416. 

Lack  of  protest  of  a  bill  of  exchange  cannot  bar  the  action  brought  by  the 
holder  against  the  acceptor.  Ecuador,  Corte  Suprema  de  Justicia,  May  15, 
1912,  A.  Manque  v.  C.  E.  Hoeb  y  Cia.;  Gacela  Judicial,  No.  138,  p.  1100. 

The  endorser  who  pays  a  bill  of  exchange  has  the  same  rights  of  action 
against  prior  co-obligors  as  the  holder  has,  and  can  avail  himself  of  the  accidn 
ejecutiva  to  collect  the  amount  he  paid,  as  the  substitution  of  creditor  results 
in  tliis  case  by  mere  operation  of  law.  Mexico,  Tercera  Sala  del  Trib.  Sup. 
del  Dist.  Fed.,  Oct.  23,  1913,  V.  Salmean  v.  M.  Ponce,  Diario  de  Jurisp.,  vol. 
31,  p.  2. 

Failure  to  protest  a  bill  of  exchange  extinguishes  the  rights  of  the  holder 
against  the  drawer,  payee  and  endorsers,  but  not  against  the  acceptor  nor 
against  the  maker  of  a  promissory  note.    76. 

The  bearer  of  an  unprotested  bill  of  exchange  preserves  his  rights  against 
the  acceptor.  Mexico,  3a  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  May  8,  1909, 
J.  Ballesteros  v.  Emilio  Manuel  y  Cia.,  Diar.  de  Jur.,  vol.  17,  p.  419. 

3  Brazil,  44;  Mexico,  519;  Peru,  497;  San  Salvador,  448;  Venezuela,  418. 
*  Art.  714.  5  Art.  907. 


BILLS    OF    EXCHANGE  533 

In  Costa  Rica  ®  the  protest  can  be  waived  and  substi- 
tuted, if  agreeable  to  the  holder,  by  a  document  from  the 
drawee  or  acceptor,  declaring  his  refusal  to  accept  or  to  pay 
the  bill  of  exchange;  but  within  two  days  after  the  date  of 
such  document,  it  must  be  authenticated  by  a  public  notary, 
who  must  present  it  to  the  drawee  before  drawing  the 
memorandum  of  the  tacts,  and  ask  him  if  the  signature 
in  the  document  was  his.  The  notary  must  note  the  answer 
given  to  this  question. 

The  protest  or  the  document  above  referred  to  cannot  be 
substituted  by  any  other  form  of  proof,  unless  the  drawer  or 
the  endorsers  have  otherwise  stipulated.  Furthermore,  it 
is  not  necessary  to  protest  a  bill  of  exchange  for  non-accept- 
ance, when  the  drawee  has  died,  or  was  declared  insolvent 
or  bankrupt,  or  when  he  cannot  be  located  after  diligent 
search. 

Protest  for  non-payment  is  also  unnecessary  when  the 
holder  is  dispensed  from  the  obligation  of  presenting  the 
bill  for  payment. 

The  Uniform  Regulation  provides  ^  that  the  drawer  or 
any  of  the  endorsers  can,  by  means  of  the  clause  "retorno 
sin  gastos'^  (return  without  expenses),  "sin  protesto"  (with- 
out protest)  or  any  other  equivalent,  dispense  the  holder 
from  the  obligation  of  protesting  a  bill  of  exchange  for  want 
of  acceptance  or  payment.  This  clause  does  not  exonerate 
the  holder  from  the  obligation  of  presenting  the  draft  in 
proper  time,  nor  of  giving  notice  of  non-acceptance  or  non- 
payment to  the  last  prior  endorser  and  the  drawer.  The 
burden  of  proving  non-observance  of  the  periods  provided 
for  presentation  lies  upon  the  holder's  opponent.  When 
the  clause  is  inserted  in  the  bill  by  the  drawer,  it  is  effective 
as  to  each  and  all  the  parties  to  the  bill;  if,  in  spite  of  the 
clause,  the  holder  protests  it,  the  expenses  are  for  his  account. 
If  the  clause  is  inserted  by  one  of  the  endorsers,  the  expenses 
of  protest,  should  there  be  any,  may  be  charged  to  any  of 
the  obligors. 

In  Venezuela,^  the  protest  can  also,  with  the  consent  of 

« Arts.  85  to  87,  129,  130.  '  Art.  45.  »  Art.  416. 


534  LATIN-AMERICAN   COMMERCIAL   LAW 

the  holder,  be  substituted  by  a  statement  of  the  drawee's 
reasons  for  refusing  acceptance  or  payment.  This  statement 
must  be  made  within  the  period  fixed  for  the  protest,  and 
must  be  filed  within  two  days  after  its  date  in  the  Commer- 
cial Registry.  If  this  statement  is  made  in  a  separate 
document,  it  must  contain  a  verbatim  transcription  of  the 
bill  of  exchange. 

Time  of  protest. 

With  regard  to  the  time  within  which  protest  must  be 
made  the  following  systems  may  be  noted: 

System  of  Spain.  Protest  is  to  be  made  before  sunset 
of  the  day  following  that  on  which  acceptance  or  pay- 
ment was  refused.  Should  such  day  be  a  holiday,  the 
protest  must  be  made  on  the  next  working  day.^ 

System  of  Brazil.  The  bill  of  exchange  which  is  to  be 
protested  must  be  deUvered  to  the  proper  official  the 
day  after  the  refusal  of  acceptance,  or  after  the  maturity 
thereof  (as  the  case  may  be)  and  the  protest  must  be 
made  within  three  working  days.^° 

System  of  Argentina.  The  bill  of  exchange  must  be 
delivered  to  the  notary  who  is  to  make  the  protest 
within  twenty-four  hours  after  the  acceptance  or  pay- 
ment should  have  been  made.  The  protest  must  be 
made  the  next  working  day  before  3  P.  M." 

System  of  Chile.  The  protest  must  be  made  before 
three  o'clock  of  the  day  after  the  refusal  of  acceptance 
or  pajTQentjOr  if  that  is  a  holiday,  on  the  following  day.^^ 

System  of  Costa  Rica.  Non-acceptance  is  proved  by 
means  of  a  protest  made  any  time  before  the  bill  is  due, 
unless  it  must  be  presented  within  a  certain  period. 
Protest  for  non-payment  must  be  made  not  later  than 
the  second  day  after  maturity,  not  counting  holidays. 
The  delay  is  not  imputable  to  the  holder  if  due  to  rea- 

9  Spain,  504;  Bolivia,  415,  426;  Honduras,  489;  Mexico,  514,  517;  Peru,  491. 

ii'Art.  28. 

"Argentina,  713;  Uruguay,  906. 

'2  Chile,  723,  724,  736;  Colombia,  856,  869. 


BILLS    OF    EXCHANGE  535 

sons  not  dependent  on  his  will.  The  protest  must  be 
made  not  before  8  A.  M.  or  after  6  P.  M.^^ 

System  of  Ecuador.  The  protest  must  take  place 
before  three  o'clock.  There  is  no  indication  of  the  day 
on  which  it  is  to  be  made.  It  is  assumed,  however, 
that  it  must  be  made  the  day  after  the  refusal  of  accept- 
ance or  payment.  ^^ 

System  of  San  Salvador.  Protest  for  non-acceptance 
must  be  made  within  the  period  established  for  the 
presentation  of  the  bill  of  exchange,  and  protest  for 
non-pajrment,  the  day  after  maturity.  ^^ 

System  of  the  Uniform  Regulation.  Protest  for  non- 
payment must  be  made  on  the  date  of  maturity  or  on 
either  of  the  following  two  working  days.  Protest  for 
non-acceptance  must  be  made  in  the  periods  provided 
for  the  presentation  of  the  bill  for  acceptance.  If  the 
drawee  asks  for  a  second  presentation,  in  accordance 
with  article  23,  and  the  first  was  made  on  the  last  day 
of  the  period,  the  protest  can  be  made  the  following  day.^^ 

System  of  Venezuela.  No  period  is  established  for 
protest  in  case  of  non-acceptance.  We  may  assume  it 
to  be  the  next  working  day  after  refusal.  In  case  of 
non-payment,  protest  must  be  made  within  two  work- 
ing days  after  maturity.  ^^ 

When  protest  can  be  anticipated. 

Protest  of  a  bill  of  exchange  can  be  anticipated  when  the 
drawee  becomes  bankrupt,  and  after  the  protest  is  made, 
the  holder  can  enforce  his  rights  against  the  persons  obli- 
gated therein.  ^^ 

When  protest  is  unnecessary. 

The  Uniform  Regulation  provides  that  a  protest  is  un- 
necessary : 

"Arts.  81,  119,  126.  "Art.  447.  »*  Art.  445. 

"  Art.  43.  "  Art.  396. 

18  Spain,  510;  Argentina,  725;  Chile,  725;  Colombia,  857;  Ecuador,  453; 
Honduras,  495;  Mexico,  515;  Uruguay,  918. 


536  LATIN-AMERICAN    COMMERCIAL    LAW 

1st.  When  acceptance  is  refused,  in  which  case  the 
protest  for  non-payment  is  excused; 

M.  When  the  drawee  is  bankrupt  or  has  suspended 
payments,  although  no  judicial  declaration  thereof 
has  been  made,  or  when,  in  an  attachment  of  his  prop- 
erty, insufficient  property  was  found. 

3d.  When  the  drawer  becomes  bankrupt  and  the 
bill  of  exchange  is  not  subject  to  previous  acceptance. ^^ 

Place  where  protest  must  be  made. 

With  reference  to  the  place  of  protest,  the  following 
systems  may  be  noted: 

System  of  Spain.  The  place  where  protest  must  be 
made  is: 

1st.    That  designated  in  the  bill  of  exchange. 

2d.  If  there  is  no  designation,  then  at  the  residence 
of  the  drawee. 

3d.  If  there  is  no  designation  and  the  residence 
is  not  known,  then  at  the  last  known  residence  of  the 
drawee.^'' 

System  of  Brazil.  Protest  must  be  made  at  the  place 
designated  in  the  bill  of  exchange  for  acceptance  or 
payment.  When  the  bill  is  drawn  or  is  accepted  for 
payment  at  any  other  place  than  the  residence  of  the 
drawee,  it  must  be  protested  at  that  place. ^^ 

System  of  Haiti.    The  place  for  protest  is: 

1st.    The  actual  residence  of  the  drawee,  or 

2d.     His  last  known  residence.^- 

System  of  Costa  Rica.  Protest  must  be  made  at  the 
residence  of  the  drawee.  ^^ 

System  of  San  Salvador.     Protest  must  be  made: 

1st.    At  the  place  indicated  in  the  bill; 

19  Arts.  42,  43. 

20  Spain,  505;  Argentina,  716;  Bolivia,  421;  Chile,  733;  Colombia,  866, 
Ecuador,  442;  Honduras,  490;  Mexico,  511;  Peru,  492;  Uruguay,  909;  Vene- 
zuela, 411. 

21  Art.  28. 

22  Haiti,  170;  Santo  Domingo,  173. 
2SArts.  74,  121. 


BILLS    OF    EXCHANGE  537 

2d.  If  no  place  is  indicated,  then  at  the  residence 
of  the  drawee.^* 

Official  who  performs  the  protest. 

The  official  charged  with  performing  the  formalities  of 
protest,  and  the  procedure  incidental  thereto,  vary  as 
follows: 

System  of  Spain.    A  notary  public. ^^ 

System  of  Argentina.  A  notary  public  and  two  resi- 
dent witnesses  not  employed  by  the  notary,-^ 

System  of  Chile.  A  notary  public  and  two  witnesses 
or  if  there  is  no  notary,  the  Subdelegado  (first  political 
authority)  of  the  place  and  two  witnesses.  ^^ 

System  of  Costa  Rica.  A  notary  and  two  witnesses, 
or  two  notaries.-^ 

System  of  Ecuador.  A  licensed  broker  and  two  wit- 
nesses, or,  in  default,  a  municipal  judge  with  an  equal 
number  of  witnesses.  ^^ 

System  of  Haiti.  Two  notaries,  a  notary  and  two 
witnesses,  or  a  judicial  clerk  and  two  witnesses. '''' 

System  of  Mexico.  A  notary,  or  in  default,  the  mayor 
of  the  town  and  two  witnesses." 

System  of  Uruguay.  A  notary  who  must  enter  the 
protest  in  a  formal  public  instrument.  ^^ 

System  of  Venezuela.  A  broker  or  a  judge  without 
witnesses.  ^^ 

Necessary  persons  attending  at  the  protest. 

The  protest  must  be  carried  out  before  the  drawee;  or  if 
he  cannot  be  located,  before  his  employees,  if  he  has  any; 
and  in  default  of  same,  before  his  wife,  children  or  servants.^* 

24  Art.  244. 

"Spain,  504;  Honduras,  489;  Peru,  491. 

28  Arf^entina,  712;  Bolivia,  419. 

"  Chilo,  727;  Colombia,  859. 

28  Art.  120.  2»Art.  442. 

»» Haiti,  170;  Santo  Domingo,  173. 

»i  Art.  512.  "  Art.  905.  "  Art.  410. 

"Spain,  504;  Argentina,  715;  Bolivia,  421,  423;  Chile,  728,  729;  Colombia, 


538  LATIN-AMERICAN    COMMERCIAL    LAW 

In  case  none  of  the  above  mentioned  persons  can  be 
located,  the  proceedings  must  be  carried  out,  in  Spain, 
Honduras,  Mexico  and  Peru,  before  one  of  the  neighbors; 
in  Argentina,  BoUvia,  Chile,  Colombia,  Ecuador,  Nicaragua, 
San  Salvador  and  Uruguay,  before  the  municipal  au- 
thority. 

Brazil,  ^^  Costa  Rica  ^^  and  Venezuela  ^^  provide  that  the 
act  of  protest  must  be  made  before  the  drawee  or  his  repre- 
sentative; or  if  after  proper  inquiry  the  notary  is  unable 
to  locate  either  of  them,  he  can  draw  up  the  memorandum, 
stating  the  futility  of  his  search. 

While  the  codes  of  Haiti  and  Santo  Domingo  are  silent 
on  this  point,  it  may  be  inferred  from  articles  170  and  173, 
respectively,  that  the  system  is  like  that  of  Brazil. 

Requisites  of  the  memorandum  of  protest. 

The  laws  of  all  Latin-American  countries  uniformly  re- 
quire the  following  requisites  in  a  memorandum  of  protest.  ^^ 

(a)  a  full  and  verbatim  transcription  of  the  biU  of 
exchange;  its  acceptance,  if  there  was  one,  and  every 
endorsement  and  indication  therein  contained.  Costa 
Rica,  instead  of  a  verbatim  transcription,  requires  a 
description  only  of  the  bill  of  exchange,  showing  the 
names  of  the  drawer,  payee  and  drawee; 

(6)  the  demand  of  acceptance  or  payment  made  upon 
the  proper  person; 

(c)  the  answer  given  to  such  demand.  In  Brazil  the 
demand  is  not  necessary  in  case  the  drawee  or  acceptor 
signs  the  declaration  refusing  acceptance  or  payment, 
and  is  unnecessary  when  protest  is  due  to  the  bank- 
ruptcy of  the  acceptor. 
Besides  these  requisites,  which  are  provided  for  in  all  the 

860,  861;  Ecuador,  443;  Honduras,  489;  Mexico,  511;  Peru,  491;  San  Salvador, 
444;  Uruguay,  908. 

'5  Art.  29.  36  Arts.  121,   124.  ^7  Arts.  411,  412. 

'«  Spain,  504;  Argentina,  717;  Bolivia,  420;  Brazil,  29;  Chile,  732;  Colombia, 
865;  Costa  Rica,  124;  Ecuador,  445;  Haiti,  171;  Honduras,  489;  Mexico,  513; 
Peru,  491;  San  Salvador,  446;  Santo  Domingo,  174;  Uruguay,  910;  Venezuela, 
412. 


BILLS    OF    EXCHANGE  539 

Latin-American  countries,  there  are  further  individual 
requirements  of  the  law  in  various  countries,  as  fol- 
lows : 

(a)  Admonition  by  the  notary  to  the  drawee  that 
if  he  does  not  pay,  the  expenses  and  damages  caused 
by  his  refusal  to  accept  or  pay  the  bill  of  exchange  will 
be  for  his  account.  ^^ 

(6)  The  signature  of  the  debtor  or  person  in  whose 
presence  the  protest    is   carried    out,  or  that  of  two 
witnesses,    in   case   he   cannot   or   does   not   wish   to 
sign.^° 
In  Bolivia,  the  signature  of  two  witnesses  is  necessary. 
In  Chile,  Colombia,  Ecuador,  Haiti,  Mexico,  Santo  Do- 
mingo and  Venezuela,  in  case  the  person  to  whom  the  pro- 
test is  made  does  not  wish,  cannot  or  does  not  know  how 
to  sign,  the  notary  attests  that  fact  in  the  memorandum. 

Argentina  and  Uruguay  require  the  signature  of  the  holder 
instead  of  that  of  the  drawee  or  acceptor. 

Brazil  only  requires  the  signature  of  the  official  who  makes 
the  protest. 

In  Costa  Rica  the  notary  must  always  be  in  the  company 
of  two  witnesses  or  with  another  notary,  and  their  signatures 
only  are  required. 

(c)  The  date  and  hour  of  the  protest.  ^^ 

(d)  In  Brazil  and  Costa  Rica,  it  must  be  stated  that 
the  drawee  could  not  be  located  or  was  unkno^vn. 
Should  that  be  the  case,  Brazil  requires  the  official  to 
post  the  demand  of  payment  in  the  customary  public 
places  and  through  the  press,  if  possible. 

(e)  Brazil  also  requires  the  protest  to  state  acceptance 
for  honor,  with  indication  of  the  person  for  whose  honor 
the  guaranty  was  given  and  finally,  the  acquiescence  of 
the  holder  in  such  acceptance. 

''Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Honduras,  Peru,  San  Sal- 
vador and  Uruguay. 

*•  Spain,    Honduras,    Peru. 

*^  Spain,  Argentina,  Bolivia,  Chile,  Colombia,  Costa  Rica,  Honduras, 
Mexico,  Peru,  Uruguay,  Venezuela. 


540  LATIN-AMERICAN   COMMERCIAL   LAW 

Other  requisites  of  the  protest. 

Besides  these  formalities  rather  generally  prescribed,  other 
codes  mention  special  requisites,  as  follows: 

(a)  Copy  of  the  memorandum.  The  notary  must  give 
a  copy  of  the  memorandum  to  the  person  before  whom 
the  proceedings  were  carried  out,^^ 

In  Argentina,  ^^  Costa  Rica  ^^  and  Uruguay,  ^^  the 
copy  must  be  given  to  any  person  concerned  demand- 
ing it. 

In  Brazil  ^^  the  memorandum  must  be  entered  in  the 
registry  of  protests  and  thereupon  the  holder  is  given 
a    copy. 

(6)  Unity  of  the  memorandum.  All  the  proceedings  of 
protest  must  be  set  out  in  a  single  instrument  in  the 
order  in  which  they  are  performed,  and  a  copy  of  the 
document  must  be  given  to  the  holder  who  presented 
the  bill  for  protest.  "^^ 

In  Venezuela,  the  original  memorandum  is  given  to 
the  holder.  ^^  In  Mexico,  also,  the  original  memorandum 
is  given  to  the  holder  when  the  protest  was  made  by  the 
mayor. '^^ 

(c)  Solemnity  of  the  memorandum  of  protest.  The 
memorandum  must  be  entered  in  the  protocolo  (official 
record  book)  of  the  notary,  under  penalty  of  nullity. ^° 

Time  limit  for  payment. 

The  law  allows  the  acceptor  a  certain  period  of  time  for 
payment  of  a  bill  of  exchange,  as  follows : 

(o)  In  Spain, ^1  Argentina,^^  Bolivia,^^  Chile,^^  Colom- 

*2  Spain,  504;  Chile,  732;  Colombia,  862;  Ecuador,  446;  Honduras,  489; 
Peru,  491;  Venezuela,  413. 

«  Art.  718.  "  Art.  125.  «  Art.  911. 

«  Art.  29. 

*'  Spain,  508;  Argentina,  722;  Bolivia,  425;  Brazil,  29;  Chile,  731;  Colombia, 
864;  Costa  Rica,  125;  Haiti,  170,  173;  Honduras,  493;  Mexico,  516;  Peru,  495; 
Santo  Domingo,  173,  176;  Uruguay,  915;  Venezuela,  411. 

^  Art.  414.  «  Art.  516. 

^0  Chile,  732;  Ecuador,  448;  Haiti,  173;  Santo  Domingo,  176;  Venezuela,  415. 

"  Art.  506.  62  Art.  713.  "  Art.  426. 


BILLS    OF    EXCHANGE  541 

bia,^^  Honduras,  ^^  IXIexico,^^  Peru/^  and  Uruguay/^ 
notaries  must  keep  the  protested  bill  of  exchange  and 
the  copy  belonging  to  the  holder  until  sunset  of  the  day 
of  protest;  if  the  protest  was  due  to  nonpayment  and 
the  drawee  presents  himself  in  the  meantime  to  pay 
the  draft  and  the  expenses  of  protest,  the  notary  must 
accept  payment  and  surrender  the  bill  of  exchange  to 
the  payer,  stating  therein  that  it  was  paid  and  that  the 
protest  is  cancelled. 

(6)  In  Ecuador  ^°   the   time  fixed  for  the  notary  to 
keep  the  bill  and  receive  pajrment  is  6  P.  M. 

Protest  for  non-payment  is  required  even  if  there  was  pro- 
test for  non-acceptance. 

The  fact  that  the  drawee  fails  to  accept  a  bill  of  exchange 
does  not  establish  a  presumption,  according  to  law,  that  he 
will  refuse  to  pay  in  proper  time;  therefore  both  refusals 
must  be  proved  in  the  authentic  form  of  a  protest,  and  the 
protest  for  non-acceptance  is  no  excuse  for  not  protesting 
the  bill  for  nonpayment." 

Only  the  Uniform  Regulation  ^^  prescribes  that  the  non- 
acceptance  of  a  bill  of  exchange  dispenses  the  holder  from 
the  obligation  of  presenting  it  for  payment  and  of  protesting 
it  for  non-payment. 

Protest  carried  out  before  the  persons  indicated. 

When  a  protested  bill  of  exchange  has  indications  of 
further  alternative  obligors,  the  demand  of  acceptance  or 
payment,  the  answer  given  thereto,  and  the  acceptance  or 
payment,  if  made,  must  be  stated  in  the  memorandum.*'^ 

"  Art.  736.  66  Art.  869.  ^  Art.  491. 

"  Art.  517.  ^  Art.  493.  6o  Art.  906. 

80  Art.  447. 

"Spain,  502;  Bolivia,  418;  Chile,  723;  Colombia,  856;  Ecuador,  4.52; 
Haiti,  160;  Honduras,  487;  Mexico,  510;  Peru,  489;  San  Salvador,  447;  Vene- 
zuela, 417. 

82  Art.  43. 

85  Spain,  507;  Argentina,  719;  Brazil,  29;  Chile,  730;  Colombia,  863;  Costa 
Rica,  122,  131;  Ecuador,  444;  Haiti,  170;  Honduras,  492;  Mexico,  511;  Peru, 
494;  Santo  Domingo,  173;  Uruguay,  912;  Venezuela,  411. 


542  LATIN-AMERICAN    COMMERCIAL    LAW 

Argentina  ^^  and  Uruguay  ^^  in  this  respect  provide, 
however,  that  the  holder  of  a  bill  of  exchange  is  not  bound  to 
make  the  protest  before  the  person  indicated  therein  as 
alternative  acceptor  or  drawee;  but  in  case  he  omits  to  do  so, 
the  endorser  who  made  the  indication  and  his  assignees  can 
refuse  pajTnent  so  long  as  the  holder  fails  to  make  demand 
upon  the  person  indicated,  provided  the  endorser  or  assignees 
prove  that  since  the  date  of  protest  before  the  drawee,  the 
person  indicated  had  and  continued  to  have  funds  of  the 
endorser  for  the  payment  of  the  bill  of  exchange  and  of  the 
expenses  of  protest. 

Effect  of  protest  for  non-acceptance. 

By  vu'tue  of  the  protest  for  non-acceptance  of  a  bill  of 
exchange  the  holder  can  compel  the  drawer  or  any  of  the 
endorsers  to  guarantee  the  amount  of  the  instrument  to  the 
holder's  satisfaction  or  to  deposit  that  amount,  or  else  to 
make  reimbursement  of  the  amount  and  the  expenses  of 
protest  and  re-exchange,  deducting  legal  interest  for  the 
whole  period  to  maturity  of  the  draft.^^ 

In  Colombia  ^^  the  holder  of  a  bill  of  exchange  pro- 
tested either  for  non-acceptance  or  non-payment,  has  no 
claim  upon  the  funds  supplied  by  the  drawer,  but  he 
can  ask  the  latter  to  assign  all  his  rights  of  action  against 
the  drawee  up  to  the  amount  of  the  bill  of  exchange  and 
expenses.  The  drawer  is  obliged  to  make  such  assign- 
ment and  to  surrender  all  documents  in  proof  of  his 
rights  at  the  expense  of  the  holder.  This  assignment  is  no 
bar  to  any  actions  of  the  holder  against  the  obhgors  for 
payment  of  the  bill. 

Effect  of  protest  for  non-payment. 

Every  protest  for  non-payment  imposes  upon  the  person 

"  Arts.  720,  721.  ss  Arts.  9L3,   914. 

88  Spain,  481;  Argentina,  651;  Bolivia,  429;  Chile,  687;  Colombia,  814; 
Costa  Rica,  84;  Ecuador,  450;  Haiti,  118;  Honduras,  466;  Mexico,  529; 
San  Salvador,  408;  Santo  Domingo,  120;  Uruguay,  846;  Venezuela,  387. 

6' Art.  822. 


BILLS   OF   EXCHANGE  543 

responsible  the  obligation  to  pay  the  amount  of  the  bill  of 
exchange  and  the  expenses,  interest  and  damages.^^ 

ACCEPTANCE  OR  PAYMENT  FOR  HONOR 

When  and  how  a  bill  of  exchange  can  be  accepted  or  paid 
for  honor. 

After  a  bill  of  exchange  has  been  protested  for  non- 
acceptance  or  non-pa}anent  a  third  party  can  accept  or  pay 
it  for  honor  of  the  drawer  or  of  any  endorser,  even  though  he 
has  not  received  any  request  to  do  so.  The  acceptance  or 
payment  must  be  admitted,  the  notary  making  note  of  it  in 
the  continuation  of  the  memorandum  of  protest,  stating  the 
name  of  the  person  for  whose  honor  the  acceptance  or  pay- 
ment is  made,  and  signing  the  memorandum  together  with 
the  acceptor  or  payer  for  honor.^^ 

In  Brazil,^"  Costa  Rica,^^  and  according  to  the  Uniform 
Regulation,''-  the  holder  is  not  obliged  to  receive  the  accept- 
ance, but  he  is  bound  to  receive  the  payment  for  honor 
made  by  a  third  party. 

Preference  in  case  of  several  acceptors  or  payers  for  honor. 

When  several  persons  undertake  to  accept  or  pay  a  bill  of 
exchange  for  honor,  the  one  who  does  so  for  the  drawer  is  to 
be  preferred.    If  they  act  for  honor  of  endorsers,  the  person 

«s  Spain,  503;  Argentina,  669;  Bolivia,  428;  Chile,  703,  737;  Colombia, 
830,  870;  Costa  Rica,  118;  Ecuador,  437,  456;  Honduras,  488;  Mexico,  518; 
Peru,  490;  San  Salvador,  452;  Uruguay,  864;  Venezuela,  435. 

The  deed  of  protest  for  non-acceptance  of  a  bill  of  exchange  does  not  imply  a 
confession  of  judgment;  but  the  deed  of  protest  for  non-payment  does.  Colom- 
bia, Trib.  Sup.  del  Dist.  de  Magdalena,  July  10,  1893,  Revista  Jud.  vol.  7, 
p.    597. 

The  effect  of  the  protest  is  that  all  the  signatories  of  a  Ijill  of  exchange  are 
kept  jointly  and  severally  liable  for  the  payment  thereof.  Mexico,  2a  Sala  del 
Trib.  Sup.  del  Dist.  Fed.,  May  13,  1909,  N.  Cervantes  f.  A.  Roiz,  Diar.  de  Jur., 
vol.  17,  p.  601. 

89  Spain,  511;  Argentina,  696;  Bolivia,  4.38;  Chile,  738;  Colombia,  871; 
Ecuador,  421,  439;  Haiti,  124,  1.55;  Honduras,  496;  Mexico,  .520,  521;  Peru, 
4.56,  485;  San  Salvador,  411,  441;  Santo  Domingo,  126,  158;  Uruguay,  8S9; 
Venezuela,   386,  407. 

™Arts.  34,  35.  "Arts.  90,  114.  "Arts.  55,  .58. 


544  LATIN-AMEEICAN    COMMERCIAL    LAW 

who  acts  for  the  account  of  the  earUest  endorser  is  to  be 
preferredJ^ 

Brazil  ^^  provides  that  if  no  indication  is  given  of  the  per- 
son for  whose  honor  the  bill  of  exchange  is  paid,  it  must  be 
understood  that  it  was  paid  for  the  drawer,  but  if  the 
drawee  accepted,  the  payment  is  presumed  to  be  made  in 
his  behalf. 

If  several  persons  undertake  to  pay,  whether  co-obUgors 
concur  or  not,  preference  must  be  given  to  the  person  who 
discharges  the  greater  number  of  obligors.  When  several 
persons  undertake  to  pay  for  the  same  obhgor,  his  co- 
obHgor,  or  in  default,  the  drawee  has  the  preference;  other- 
wise the  holder  may  elect. 

According  to  the  Uniform  Regulation  ^^  when  several 
persons  undertake  to  pay  for  honor,  the  one  who  discharges 
the  most  persons  must  be  preferred.  Should  this  rule  not  be 
observed,  the  payer  who  knows  it  loses  his  rights  against 
those  who  would  have  been  discharged  had  it  been  observed. 

Payment  for  honor  is  prohibited  to  the  acceptor  and  his 
surety. 

Obligations  of  the  acceptor  for  honor. 

Two  obligations  rest  upon  the  person  who  accepts  a  bill 
of  exchange  for  honor,  namely: 

(a)  to  pay  it  just  as  if  the  bill  had  been  drawn  upon 
him;  and 

(6)  to  notify  his  acceptance  to  the  person  for  whose 
honor  he  accepted.'^ 
Brazil "  simply  provides  that  the  liability  of  the  acceptor 
for  honor  is  equivalent  to  that  of  the  drawee  who  accepts. 

"Spain,  511;  Argentina,  703;  Bolivia,  439;  Chile,  740;  Colombia,  873; 
Costa  Rica,  117;  Ecuador,  440;  Haiti,  156;  Honduras,  496;  Mexico,  522; 
Peru,  458;  San  Salvador,  412;  Santo  Domingo,  159;  Uruguay,  895;  Venezuela, 
389. 

'^  Art.  35.  "  Art.  62. 

"8  Spain,  512;  Argentina,  698;  Bolivia,  441;  Chile,  742;  Colombia,  875; 
Costa  Rica,  92;  Ecuador,  422;  Haiti,  125;  Honduras,  497;  Mexico,  524; 
Peru,  459;  San  Salvador,  415,  442;  Santo  Domingo,  127,  159;  Uniform  Regu- 
lation, 54;  Uruguay,  895,  897;  Venezuela,  388,  389. 

"  Art.  34. 


BILLS    OF    EXCHANGE  545 

Rights  of  the  holder  in  case  of  acceptance  for  honor. 

The  fact  that  a  person  accepts  a  bill  of  exchange  for  honor 
does  not  deprive  the  holder  of  his  right  to  compel  the  drawer 
or  endorsers  to  guarantee  payment  thereof/^ 

In  Brazil/^  Costa  Rica,^°  and  the  countries  which  have 
adopted  the  Uniform  Regulation/^  the  rule  is  just  the 
reverse,  for  the  holder  cannot  demand  from  the  drawer  or 
endorsers  the  guaranty  of  payment  of  a  bill  which  has  been 
accepted  for  honor. 

Payment  by  the  drawee  who  does  not  accept. 

If  the  drawee  who  refused  to  accept  a  bill  of  exchange, 
thereby  giving  ground  for  protest,  wishes  to  pay  it  at  matu- 
rity, his  payment  must  be  accepted  in  preference  to  that  of 
the  person  who  accepted  or  wished  to  pay  for  honor,  but  he 
must  bear  the  expenses  arising  from  his  refusal  to  accept  at 
the  proper  time.^- 

In  Brazil  ^^  any  co-obligor  of  a  bill  of  exchange  who  wishes 
to  pay  for  honor  is  given  preference  over  the  drawer  and  the 
drawer  over  the  holder,  who  is  willing  to  pay  for  honor. 

Rights  of  the  payer  for  honor. 

A  person  who  pays  a  bill  of  exchange  for  honor  is  subro- 
gated to  the  rights  and  obligations  of  the  holder,  with  the 
following  limitations : 

(a)  If  he  pays  for  honor  of  the  drawer,  the  latter  is 
only  responsible  for  the  payment  of  the  disbursed 
amount;  the  endorsers  are  released. 

(6)  If  he  pays  for  one  of  the  endorsers,  he  has  a  right 
of  action  against  the  drawer,   the  endorser  for  whose 

78  Spain,  513;  Argentina,  700;  Bolivia,  442;  Chile,  744;  Colombia,  877; 
Ecuador,  42)3;  Haiti,  126;  Honduras,  498;  Mexico,  525;  Peru,  456;  San  Sal- 
vador, 413;  Santo  Domingo,  128;  Uruguay,  893;  Venezuela,  387. 

"  Art.  34.  80  Art.  94.  "  Art.  55. 

82  Spain,  514;  Argentina,  702;  Bolivia,  443;  Chile,  747;  Colombia,  880 
Costa  Rica,  116;  Ecuador,  440;  Haiti,  156;  Honduras,  499;  Mexico,  523 
Peru,  456,  488;  San  Salvador,  412;  Santo  Domingo,  159;  Uruguay,  895 
Venezuela,    387. 

8»  Art.  35. 


546  LATIN-AMERICAN   COMMERCIAL   LAW 

honor  he  paid  and  the  prior  endorsers,  but  not  against 
the  subsequent  ones.*^ 

Rights  of  the  payer  for  honor  of  an  unprotested  bill  of  ex- 
change. 

The  person  who  pays  for  honor  an  unprotested  bill  of 
exchange  has  no  other  action  than  that  possessed  by  the 
holder  against  the  drawer  who  failed  to  supply  the  drawee 
with  funds,  or  against  one  who  kept  in  his  possession  the 
amount  of  the  bill  of  exchange.^^ 

In  Argentina,^^  Chile,^^  Colombia  ^^  and  Uruguay, ^^  the 
payer  in  the  case  above  mentioned  has  only  an  action 
against  the  drawer  who  failed  to  supply  the  drawee  with 
funds. 

Mexico  provides  that  the  payer  is  subrogated  to  the  rights 
of  the  holder,  whatever  they  may  be.^° 

The  Uniform  Regulation  ^^  makes  the  same  provision  with 
the  addition  that  the  payer  cannot  endorse  the  bill  of  ex- 
change. 

actions  arising  out  of  a  bill  of  exchange 
(accion  cambiaria) 

Actions  in  case  of  non-acceptance. 

In  case  a  bill  of  exchange  is  not  accepted,  the  holder,  after 
protest  thereof,  has  a  right  to  compel  the  drawer  or  any 
endorser  to  guarantee,  to  his  satisfaction,  the  payment 
thereof  or  to  deposit  the  amount  or  pay  it  with  the  expenses 
of  protest  and  re-exchange,  deducting  the  legal  interest 
to  maturity,  as  has  been  already  observed  in  explaining  the 
effects  of  the  protest ;  and  the  fact  that  a  third  party  accepts 
the  bill  of  exchange  for  honor,  does  not  bar  this  action  of 

8^  Spain,  512;  Argentina,  704;  Brazil,  35;  Bolivia,  444;  Chile,  743;  Colombia, 
876;  Costa  Rica,  115;  Ecuador,  440;  Haiti,  156;  Honduras,  497;  Mexico,  526; 
Peru,  486;  San  Salvador,  442,  443;  Santo  Domingo,  159;  Uruguay,  897; 
Venezuela,    408. 

8*  Spain,  515;  Honduras,  500. 

8«  Art.  706.  «>  Art.  746.  ^  Art.  879. 

89  Art.  899.  90  Art.  526.  "  Art.  62. 


BILLS    OF    EXCHANGE  547 

the  holder,  except,  as  previously  stated,  in  Brazil,  Costa 
Rica,  and  according  to  the  Uniform  Regulation. 

On  the  other  hand,  if  the  bill  of  exchange  was  not  accepted 
by  the  principal  drawee  but  was  accepted  by  one  of  the 
persons  indicated  in  the  instrument  for  that  purpose,  the 
holder  has  no  right  of  action  against  the  drawer  or  endorsers, 
inasmuch  as  in  taking  the  bill  he  accepted  its  conditions. 

The  action  above  mentioned  is  of  the  type  known  as 

executive ' '  {accion  ejecutiva)  .^^ 

The  Uniform  Regulation  ^^  provides  that  the  holder  of  a 
bill  of  exchange  which  is  not  accepted,  can  bring  his  action 
for  payment  against  the  drawer  and  other  obligors  without 
awaiting  maturity  or  a  protest  for  non-payment. 

Actions  in  case  of  non-payment. 

In  case  a  bill  of  exchange  duly  presented  and  protested 
is  not  paid,  the  holder  has  a  right  to  compel  the  acceptor, 
the  drawer  or  any  of  the  endorsers  to  pay  it  with  the  ex- 
penses of  protest  and  re-exchange;  but  once  the  action  is 
instituted  against  one  of  them,  the  holder  cannot  proceed 
against  the  others,  except  in  case  of  insolvency  of  the  de- 
fendant.94 

In  Chile  ^^  and  Colombia  ^^  the  rule  is  almost  the  same, 
but  the  holder  who  has  instituted  his  action  against  one  of 
the  obUgors,  can  drop  it  and  begin  suit  against  any  other 
co-debtor,  in  three  cases,  namely: 

(a)  in  case  of  total  or  partial  insolvency  of  the  de- 
fendant, legally  proved; 

(6)  in  case  of  bankruptcy  of  the  defendant; 
(c)  in  case  the  action  is  abandoned   (desistimiento) 
against  the  defendant,  in  which  case  the  cost  of  the  suit 
is  to  be  borne  by  the  plaintiff. 

92  Spain,  522;  Argentina,  673;  Brazil,  49;  Costa  Rica,  150;  Honduras,  507; 
Mexico,  534;  Peru,  509;  Uruguay,  868;  Venezuela,  438.  See  infra,  under 
Procedure. 

«»  Arts.  42,  43. 

9«  Spain,  516;  Argentina,  669;  Bolivia,  430,  431;  Brazil,  50;  Costa  Rica, 
144,  145,  147;  Ecuador,  456;  Honduras,  .'501;  Mexico,  528;  Uruguay,  864. 

»5  Arts.  703,  705.  ^  Arts.  830,  832. 


548  LATIN-AMERICAN    COMMERCIAL   LAW 

In  Ecuador,^^  Haiti  ^^  and  Santo  Domingo,^^  the  holder 
of  an  unpaid  bill  of  exchange,  without  prejudice  to  his  action, 
can  attach  personal  property  of  the  obhgors  and  obtain  a 
judicial  decree  of  lis  pendens  prohibiting  said  persons  from 
selhng  real  estate  to  the  amount  necessary  to  guarantee 
payment. 

The  rule  in  Peru  ^°°  and  Venezuela  ^°^  is  somewhat  differ- 
ent: the  holder  of  an  unpaid  bill  of  exchange  can  bring  his 
action  against  several  obligors  simultaneously,  or  against 
any  one  of  them,  without  thereby  impairing  his  rights 
against  the  others.  Article  46  of  the  Uniform  Regulation 
provides  that  every  person  who  signed  a  bill  of  exchange 
as  drawer,  acceptor,  endorser  or  surety  is  jointly  and  sever- 
ally liable  to  the  holder  as  guarantor.  The  latter  can  begin 
an  action  against  any  or  all  these  persons  jointly  or  sepa- 
rately, without  being  obliged  to  follow  the  order  in  which 
they  became  bound.  The  same  right  attaches  to  any  of 
the  signatories  who  pays  the  bill  of  exchange.  The  action 
against  any  one  of  the  co-obligors  does  not  bar  a  proceeding 
against  the  others,  though  they  bound  themselves  subse- 
quently to  the  person  first  sued. 

Rights  of  the  endorser  who  pays. 

The  endorser  who  pays  a  protested  bill  of  exchange  is 
subrogated  to  the  rights  of  the  holder. ^°- 

The  drawer  as  well  as  any  endorser  of  a  protested  bill  of 
exchange,  as  soon  as  he  has  knowledge  of  the  protest,  can 
compel  the  holder  to  receive  payment  and  thereupon  to 
surrender  the  instrument  with  the  memorandum  of  protest 
and  the  account  for  the  redraft.  ^°^ 

»^  Art.  461.  98  Art.  169.  "^  Art.  172. 

lo"  Art.  505.  i"!  Art.  434. 

'02  Spain,  519;  Argentina,  624,  625;  Bolivia,  435;  Brazil,  24;  Chile,  704; 
Colombia,  831;  Costa  Rica,  142;  Ecuador,  456;  Haiti,  161;  Honduras,  504; 
Mexico,  528;  Peru,  506;  San  Salvador,  455;  Santo  Domingo,  164;  Uniform 
Regulation,  48;  Uruguay,  821;  Venezuela,  431,  435. 

1"' Spain,  520;  Bolivia,  437;  Ecuador,  472;  Honduras,  505;  Mexico,  531; 
Uniform  Regulation,  49;  Venezuela,  429. 


BILLS    OF    EXCHANGE  549 

Character  of  the  action. 

The  action  for  payment  of  a  bill  of  exchange  is  "ejecu- 
tiva"  ^°'*  against  the  drawer,  endorsers  or  acceptor,  that  is,  a 
writ  of  attachment  issues  by  virtue  of  the  mere  exhibition  of 
the  bill  of  exchange  and  the  memorandum  of  protest,  without 
any  other  requisite  than  the  acknowledgment  of  his  signa- 
ture by  the  defendant,  if  drawer  or  endorser.  Such  acknowl- 
edgment is  not  necessary  when  the  action  is  brought 
against  the  acceptor,  unless  he  declared  at  the  time  of  pro- 
test that  his  signature  was  forged.  ^''^ 

Defenses  to  a  suit  arising  out  of  a  bill  of  exchange. 

To  a  suit  for  the  collection  of  the  amount  of  a  bill  of  ex- 
change, the  defendant  has  the  following  defenses  only: 

In  Spain,  forgery  of  the  bill;  set-off  consisting  in  a 
claim  against  the  plaintiff  enforcible  by  means  of  an 
"accion  ejecutiva  ";  the  statute  of  limitations;  partial 
or  total  release;  and  extension  of  the  period  for  pay- 
ment. ^°^ 

In  Argentina  ^°^  and  Uruguay  ^°^  the  same  defenses 
are  admitted,  but  it  is  necessary  to  produce  in  support 
thereof  a  public  or  a  private  instrument;  the  signature 
of  the  private  instrument  must  have  been  judicially 
acknowledged. 

Brazil  ^°^  admits  all  defenses  based  on  a  personal 
right  of  the  defendant  against  the  plaintiff,  on  defects 
of  form  in  the  instrmnent,  and  on  absence  of  the  nec- 
essary requisites  to  bring  an  action. 

In  Colombia  ^^°  all  kinds  of  defenses  are  valid,  pro- 
vided they  arise  out  of  acts  or  contracts  of  the  owner 
of  the  bill  of  exchange,  and  not  out  of  acts  of  the  drawer 
or  endorsers,  except  forgery  of  the  bill  itself. 

^°*  Sec  chapter  on  Procedure. 

105  Spain,  521;  Argentina,  073,675;  Bolivia,  430, 431;  Brazil,  49;  Chile  455  c.  c. 
p.;  Colombia,  834;  Costa  Rica,  150,  151;  Haiti,  169;  Honduras,  506;  Mexico, 
534;  Peru,  509;  Santo  Domingo,  172;  Uruguay,  868,  869;  Venezuela,  438. 

i««  Arts.  523  and  1465  c.  c.  p. 

i<"  Art.  676.  i"*  Art.  870.  "9  Art.  51. 

"0  Art.  835. 


550  LATIN-AMERICAN    COMMERCIAL    LAW 

In  Costa  Rica  ^^^  only  those  defenses  are  admitted 
which  derive  from  substantial  vices  of  the  obligation 
contracted,  and  those  of  a  personal  character  against 
the  plaintiff,  even  though  not  derived  from  the  bill 
itself.  These  defenses,  however,  can  be  advanced  only 
when  they  can  be  proved  in  writing  or  by  admission 
of  the  plaintiff,  or  when  there  is  at  least  a  foundation 
of  evidence  in  writing. 

In  Mexico  ^^-  the  defenses  are  the  same  as  in  Spain, 
but  the  extension  of  the  period  for  payment  of  the  bill 
of  exchange  and  total  or  partial  release  must  be  eA^- 
denced  by  means  of  a  pubUc  or  private  instrument 
judicially  acknowledged. 

In  Venezuela  ^^^  the  defenses  are:  formal  defects  of 
the  instrument,  absence  of  the  necessary  requirements 
for  bringing  the  action,  and  personal  defenses  against 
the  plaintiff. 

Releases. 

Any  release  by  the  creditor  of  a  debtor  from  whom  the 
payment  of  a  bill  of  exchange  is  asked,  inures  to  the  benefit 
of  the  other  debtors. ^^"^  This  rule  is  a  consequence  of  the 
character  of  the  obligations  involved  in  a  bill  of  exchange. 

Actions  derived  from  a  lapsed  bill  of  exchange. 

When  the  holder  of  a  bill  of  exchange  fails  to  comply  with 
the  legal  requisites  of  presentation  and  protest,  as  the  law 
provides,  his  action  is  limited  to  certain  persons  and  depends 
upon  certain  conditions.  Three  systems  are  followed  in 
this  regard,  namely: 

First  system.  The  holder  of  a  bill  of  exchange  which 
has  become  impaired  because  of  failure  to  present  or 
protest  it  or  to  notify  the  protest  in  proper  time  and 
form,  preserves  his  rights  against  the  drawer  or  en- 
dorsers who,  after  the  expiration  of  said  periods,  have 

1"  Art.  152.  "2  Art.  535.  i»  Art.  439. 

"^  Spain,  524;  Argentina,  677;  Costa  Rica,  153;  Honduras,  509;  Mexico, 
536;  Uruguay,  871. 


BILLS    OF    EXCHANGE  551 

received  from  the  drawee  the  amount  of  the  bill  or  have 
balanced  such  amount  in  their  accounts  with  the 
debtor.  ^^^ 

Second  system.  The  holder  loses  all  his  rights  against 
the  endorsers,  but  the  drawer  is  bound  to  pay  up  to 
the  amount  by  which  he  has  been  enriched  through 
the  transaction.  ^^^ 

Third  system.     The  holder  who  does  not  make  the 
protest  in  proper  time  and  legal  form  loses  his  right  to 
be  reimbursed  by  the  drawer,  endorsers  and  sureties.  ^^^ 
The  Uniform  Regulation  establishes,  furthermore,  that 
in  such  case  the  rights  of  the  holder  against  the  acceptor 
are  reserv^ed;  and  when  the  drawer  has  provided  for  a  fixed 
period  to  present  the  bill  for  acceptance  and  the  holder  fails 
to  present  it  within  that  period,  he  loses  his  rights  of  action, 
whether  originating  in  non-acceptance  or  in  non-payment 
of  the  instrument,  unless  by  the  terms  of  the  stipulation  it 
is  clearly  apparent  that  the  drawer  desired  to  be  exonerated 
only  of  his  warrant  of  acceptance.    If  the  period  for  presenta- 
tion of  .a  bill  is  contained  in  an  endorsement,  only  the  en- 
dorser can  take  advantage  of  such  stipulation.  ^^^ 

REDRAFT   AND   RE-EXCHANGE 

Redraft. 

The  holder  of  a  protested  bill  of  exchange,  besides  his 
privilege  of  bringing  an  action  against  the  drawer,  endorsers 
or  acceptor,  can  recover  the  amount  of  the  bill  and  the  ex- 
penses of  protest  and  re-exchange  by  drawing  a  new  bill  of 
exchange  against  the  drawer  or  any  of  the  endorsers,  accom- 
panying the  draft  by  the  original  bill,  a  certified  copy  of  the 
protest  and  the  redraft  account.  ^^'^     In  practically  all  the 

1"  Spain,  525;  Argentina,  672;  Chile,  702;  Colombia,  829;  Costa  Rica,  137; 
Ecuador,  459;  Mexico,  533;  Haiti,  166,  167,  168;  San  Salvador,  455;  Uruguay, 
867. 

"*  Peru,  511;  Venezuela,  441. 

^"  Brazil,  32;  and  Uniform  Regulation,  52. 

"«Art.  52. 

"» Spain,  527;  Argentina,  726  to  729;  Bolivia,  445  to  447;  Brazil,  37;  Chile, 


552  LATIN-AMERICAN    COMMERCIAL    LAW 

countries  except  Brazil,  an  affidavit  of  a  broker  or  in  default, 
of  two  merchants,  certifying  the  rate  of  exchange  between  the 
place  of  issue  of  the  redraft  and  of  the  original  bill,  must 
accompany  the  redraft. 

Items  of  a  redraft  account. 

The  redraft  account  must  contain,  in  such  case,  the  follow- 
ing items: 

(a)  the  amount  of  the  original  bill  of  exchange; 

(b)  the  expenses  of  protest; 

(c)  the  stamp  tax  for  the  redraft ; 

(d)  the  commission  for  drawing,  according  to  local 
usage; 

(e)  broker's  fees; 

(/)  postage  expenses; 

(g)  exchange  for  the  redraft. 
The  account  must  state  the  name  of  the  person  on  whom 
the  redraft  is  drawn.    Argentina,  Costa  Rica  and  the  Uni- 
form Regulation  do  not  mention  stamp  taxes  among  the 
items  to  be  included. 

Interest  on  a  bill  of  exchange. 

Although  only  Chile,  Colombia,  Costa  Rica,  Ecuador, 
Mexico,  Peru,  San  Salvador  and  Uruguay  enumerate,  among 
the  items  of  a  redraft  account,  the  interest  due  on  the  amount 
of  an  unpaid  bill  of  exchange,  it  is  believed  that  this  item  can 
be  included  even  in  countries  where  the  law  is  silent,  be- 
cause they  all  provide  that  interest  is  payable  on  obligations 
in  case  of  default.  There  are,  however,  two  systems  in 
regard  to  the  time  from  which  interest  runs : 

First  system.     Interest  runs   from  the  date  of  the 
protest.  ^^° 

749  to  754;  Colombia,  882  to  887;  Costa  Rica,  138  to  141;  Ecuador,  462  to  467; 
Haiti,  175  to  178;  Honduras,  512;  Mexico,  537,  539;  Peru,  498,  499;  San 
Salvador,  449,  450;  Santo  Domingo,  181;  Uniform  Regulation,  51;  Uruguay, 
919  to  922;  Venezuela,  420  to  424. 

120  Spain,  526;  Argentina,  737;  Bolivia,  428;  Ecuador,  471;  Haiti,  181; 
Honduras,  511;  Nicaragua,  306;  Santo  Domingo,  184;  Uruguay,  930;  Vene- 
zuela, 438. 


BILLS    OF    EXCHANGE  553 

Second  system.  Interest  runs  from  the  date  of  matu- 
rity. ^-^ 
In  Mexico,  there  are  two  conflicting  provisions:  article 
527  prescribes  that  interest  runs  from  the  first  working  day 
available  for  the  protest  of  the  bill,  whereas  article  539  allows 
the  creditor  to  demand  interest  from  the  day  the  bill  became 
due.    It  is  believed  that  the  second  rule  prevails,  because  it 

is  in  accordance  with  the  general  rules  governing  mercantile 
default.  122 

Interest  on  expenses. 

Regarding  the  interest  due  on  the  expenses  of  protest, 
etc.,  Argentina,  1-^  BraziV""*  Costa  Rica,^^^  and  Uruguay  ^-^ 
provide  that  it  runs  from  the  date  on  which  these  expenses 
were  incurred;  whereas  Ecuador, ^^  Haiti, ^^^  Santo  Do- 
mingo 1-^  and  Venezuela  ^^^  provide  that  it  runs  from  the  day 
action  is  brought. 

Number  of  redraft  accounts. 

As  a  rule  the  codes  provide  that  only  one  redraft  account 
can  be  made,  and  the  ultimate  debtor,  the  drawer,  is  obliged 
to  pay  it.  1^1  Costa  Rica,^^^  however,  authorizes  any  of  the 
persons  who  are  obliged  to  pay  to  draw  a  new  redraft  ac- 
count. 

Re-exchange  accounts. 

What  has  been  said  concerning  the  redraft  account  also 
applies  to  the  re-exchange,  the  amount  of  which  must  be 
graduated  by  increasing  or  diminishing  the  part  which 
affects  each  purchaser  according  as  the  draft  was  negotiated 

"1  Brazil,  38;  Costa  Rica,  140;  Peru,  449;  Uniform  Regulation,  47. 

^'^^  See  chapters  on  Commercial  Contracts. 

123  Art.  737.  124  Art.  38.  i"  Art.  140. 

128  Art.  930.  1"  Art.  471.  i^s  Art.  182. 

129  Art.  185.  ""  Art.  428. 

"1  Spain,  529;  Bolivia,  450;  Chile,    758;   Haiti,  891;  Ecuador,  469;  Hon- 
duras, 514;  Mexico,  542;  Nicaragua,  309;  Santo  Domingo,  182. 
'"Arts.  142,  143. 


554  LATIN- AMERICAN    COMMERCIAL   LAW 

with  a  premium  or  at  a  discount,  each  obKgor  being  obUged  to 
pay  only  his  own  re-exchange  account. ^^^ 

Interest  on  the  amount  of  a  redraft. 

The  holder  of  a  redraft  is  subject  to  the  same  rules  as  the 
holder  of  a  regular  bill  of  exchange,  for  the  redraft  is  nothing 
more  than  that;  the  interest  on  such  redraft  runs  in  the  same 
manner  and  time  as  on  the  original  bill.  The  rule,  however, 
varies  in  different  systems  as  follows: 

(a)  Interest  runs  from  the  day  the  holder  requests 
payment  in  legal  form.^^"* 

(b)  Interest  runs  from  the  day  the  action  is  brought. ^^^ 

(c)  Interest  runs  from  the  day  of  protest.  ^^'^ 

(d)  Interest  runs  from  the  day  the  original  bill  became 
due  and  the  expenses  were  incurred.  ^^^ 

Period  for  issuing  redraft. 

In  Argentina  ^^^  and  Uruguay  ^^^  the  holder  of  a  protested 
bill  of  exchange  can  issue  a  redraft,  also  known  as  a  cross 
bill,  only  when  he  does  so  at  the  first  opportunity  and  not 
later  than  by  the  second  regular  mail  for  the  place  on  which 
the  redraft  is  drawn. 

In  Peru  ^^'*  the  period  for  redraft  is  fifteen  days  from  the 
protest. 

CONFLICT   OF   LAWS 

No  other  mercantile  transaction  so  frequently  gives  rise  to 
the  application  of  principles  of  the  conflict  of  laws  as  bills 
of  exchange,  which,  by  their  nature,  are  created  to  settle 

"3  Spain,  529;  Argentina,  731;  Bolivia,  451;  Brazil,  38;  Chile,  757;  Colom- 
bia, 890;  Costa  Rica,  142,  143;  Ecuador,  469;  Haiti,  180;  Honduras,  514; 
Mexico,  543;  Peru,  500;  San  Salvador,  451;  Santo  Domingo,  183;  Uniform 
Regulation,  51;  Uruguay,  924;  Venezuela,  452. 

"4  Spain,  530;  Honduras,  515. 

135  Bolivia,  452;  Mexico,  544;  Ecuador,  471;  Haiti,  181;  Santo  Domingo, 
185;  Venezuela,  482. 

138  CMe,  760;  Colombia,  893. 

1"  Costa  Rica,  140. 

138  Art.  733.  139  Art.  926.  i«  Art.  510. 


BILLS   OF   EXCHANGE  555 

obligations  between  parties  often  residing  in  different 
countries. 

Aside  from  the  general  rules  presented  in  the  chapter  on 
the  Conflict  of  Laws,  certain  countries  make  special  pro- 
\'ision  for  the  adjustment  of  conflicts  arising  from  bills  of 
exchange. 

The  codes  may  be  divided  into  two  groups:  (1)  those 
which  provide  for  a  general  system  of  settling  conflicts 
arising  from  bills  of  exchange;  (2)  those  which,  abiding 
by  the  general  rules,  pro\'ide  only  for  conflicts  arising  from 
the  presentation  of  bills  of  exchange.  The  first  group  com- 
prises Argentina,  Brazil,  Costa  Rica,  the  countries  that 
follow  the  Uniform  Regulation,  and  Uruguay. 

General  rules. 

In  Argentina  ^^^  and  Uruguay  ^^-  all  questions  in  regard  to 
the  essential  requisites  of  bills  of  exchange,  their  presenta- 
tion, acceptance,  payment,  protest  and  notifications  must 
be  decided  according  to  the  law  of  the  place  where  those 
acts  are  performed;  nevertheless,  if  the  statements  made 
in  a  foreign  bill  are  sufficient  according  to  the  laws  of  Argen- 
tina or  Uruguay,  respectively,  the  circumstance  that  they 
are  defective  according  to  foreign  laws  cannot  give  rise  to 
defenses  against  endorsements  subsequently  added  in  those 
countries. 

In  Brazil  ^^^  the  substance,  the  effects,  the  extrinsic  form 
and  the  means  of  evidence  of  an  obligation  arising  out  of  a 
bill  of  exchange  are  regulated  by  the  law  of  the  place  where 
the  obligation  was  created. 

Costa  Rica  ^"^^  provides  that  in  regard  to  the  form  of  a 
bill,  the  law  of  the  place  where  the  instrument  was  created 
governs;  and  in  regard  to  the  supervening  contracts,  such 
as  endorsements,  suretyship,  and  acceptance,  the  law  of  the 
place  where  each  of  these  was  entered  into  governs.  Never- 
theless, if  one  of  the  contracts  contained  in  a  bill  of  ex- 
change or  even  the  bill  itself,  is  void  by  reason  of  defects  in 

1"  Art.  738.  i«  Art.  931.  "»  Art.  47. 

i"Arts.  159,  160. 


556  LATIN-AMERICAN   COMMERCIAL   LAW 

form  or  for  fiscal  reasons,  according  to  the  law  of  the  place 
where  such  contract  was  entered  into,  a  subsequent  con- 
tract entered  into  within  the  Republic  is  vahd. 

Each  of  the  obhgations  contained  in  a  bill  of  exchange  is 
governed  as  to  its  content  by  the  law  of  the  place  where  it 
was  contracted.  In  the  matter  of  the  performance  of  the 
contract  (maturity,  method  of  making  or  failure  to  make 
payment,  etc.),  the  law  of  the  place  of  performance  governs. 
The  limitation  of  actions  is  governed  by  the  law  of  the  place 
where  the  contract  was  entered  into. 

According  to  the  Uniform  Regulation  ^"^'^  the  form  of  a  bill 
of  exchange  is  governed  by  the  law  of  the  country  where  the 
bill  was  created. 

The  form  and  periods  of  protest,  as  well  as  of  all  other  acts 
looking  to  the  enforcement  and  preservation  of  rights  in 
matters  of  bills  of  exchange  are  governed  by  the  law  of  the 
country  where  each  of  these  acts  takes  place. 

The  second  group  of  countries  above  mentioned  com- 
prises the  rest  of  Latin-America;  but  as  they  are  not  in- 
spired by  a  common  idea,  we  find  the  following  systems 
prevailing: 

First  system.  This  system  provides  that  the  law  of 
the  place  where  a  bill  payable  at  sight  or  at  a  certain 
period  from  sight  is  to  be  presented  or  cashed,  must 
govern.  ^'*^ 

Bolivia, ^^'^  however,  with,  reference  to  the  "usance,'^ 
provides  that  it  constitutes  a  period  of  thirty  days,  when 
the  bill  is  drawn  from  one  place  on  another  within  the 
Republic  or  on  another  country;  whereas  the  "usance'' 
of  a  draft  from  abroad  drawn  on  a  place  in  the  Republic, 
must  be  reckoned  in  accordance  with  the  law  of  the 
place  where  the  draft  was  created. 

Second  system.  Under  this  system  the  law  of  the 
country  governs  bills  of  exchange  payable  at  sight 
or  at  a  certain  period  from  sight,  whether  they  are 

"B  Arts.  75,  76. 

i«  Spain,  474,  475;  Bolivia,  377  to  379. 

i«  Art.  374. 


BILLS   OF   EXCHANGE  557 

drawn  upon  the  country,  or  from  it  upon  a  foreign 
country.  ^^^ 

Third  system.  This  refers  only  to  bills  of  exchange 
drawn  from  abroad  on  places  w  ithin  the  national  terri- 
tory, the  law  of  which  must  be  apphed.^''^ 

Fourth  system.  This  provides  for  the  presentation  of 
bills  of  exchange  at  sight  or  at  a  period  after  sight, 
drawn  in  the  Republic  on  another  country;  to  these  the 
national  law  applies.  ^^^ 

148  Chile,  685;  Colombia,  812;  and  508  of  the  National  Code  of  Commerce 
of  1870;  Ecuador,  411;  Peru,  447;  San  Salvador,  402;  Santo  Domingo,  160; 
Venezuela,   377. 

i«  Haiti,  157;  Mexico,  485. 

"»  Honduras,  460. 


CHAPTER  XXXII 

LOCAL   BILLS   OF   EXCHANGE,  PROMISSORY   NOTES, 
CHECKS,    ETC. 

A  bill  of  exchange  payable  at  the  place  where  issued  is 
called  a  libranza  or  local  bill  of  exchange.  When  the  bill  of 
exchange  was  the  instrument  of  the  contract  of  exchange,  the 
distinction  between  drafts  payable  at  home  and  those 
payable  abroad  was  very  substantial;  but  with  the  growth 
of  modern  ideas  in  regard  to  bills  of  exchange  the  importance 
of  the  distinction  has  disappeared,  at  least  in  countries  which 
have  accepted  the  new  views.  The  other  countries  preserve 
a  distinction,  often  subtle,  between  local  bills  of  exchange 
and  those  payable  at  a  place  different  from  that  of  issue. 

The  countries  which  mention  the  libranza  are:  Spain, ^ 
Bolivia, 2  Chile, ^  Colombia,^  Ecuador,^  Guatemala,®  Hon- 
duras,^ Mexico,^  and  Venezuela.^  Costa  Rica  also  refers  to 
libranzas,  but  only  to  declare  that  they  are  subject  to  the 
same  rules  as  other  bills  of  exchange. 

lArt.  531. 

An  inland  bill  of  exchange  requires  that  the  name  "libranza^'  be  written 
upon  it,  according  to  article  531  of  the  code  of  commerce.  Cuba,  Sup.  Trib., 
Sept.  12,  1903,  F.  Aguirregoviria  e  Ebargiien  v.  C.  Baro,  Jurisp.  del  Trib.  Sup. 
en  Mat.  Civil,  vol.  19,  p.  49. 

The  difference  between  a  bill  of  exchange  and  a  libranza  is  that  the  latter 
is  not  drawn  from  one  place  upon  another,  inasmuch  as  there  is  no  exchange 
of  money.  Mexico,  Segunda  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  Jan.  6,  1910, 
L.  G.  Labastida  v.  W.  C.  On,  Diar.  de  Jurisp.  vol.  19,  p.  705. 

A  libranza  must  contain  the  statement  of  the  place  of  pajTnent,  the  manner 
in  which  its  amount  was  received  and  the  mercantile  transaction  from  which 
it  originated,  when  it  is  not  made  between  merchants.  Mexico,  Tercera 
Sala  del  Trib.  Sup.,  Dec.  13,  1909,  A.  Carballo  v.  M.  Najera  Luzuriaga,  Diar. 
de  Jurisp.  vol.  19,  p.  497. 

A  bill  of  exchange  which  is  not  drawn  from  one  place  upon  another  is  con- 
sidered a  libranza.  Mexico,  Juzgado  5°  de  lo  Civil  del  Dist.  Fed.,  Feb.  2,  1904, 
E.  Martinez  v.  J.  Berlon,  Diar.  de  Jurisp.,  vol.  1,  No.  48,  p.  6. 

2  Art.  460.  3  Art.  765.  *  Art.  898. 

s  Art.  475.  «  Art.  647.  '  Art.  516. 

8  Art.  545.  3  Art.  446. 

558 


LOCAL   BILLS   OF   EXCHANGE,    ETC.  559 

Among  the  countries  named,  Spain,  Bolivia,  Chile, 
Colombia  and  Haiti  require  that  the  lihranza  bear  that 
literal    designation. 

Other  requisites  of  the  libranza. 
Other  requisites  of  the  libranza  are: 
(a)  the  date  of  issue; 
(6)  the  amount  drawn; 
(c)  the  period  for  payment; 
{d)  the  name  of  the  payee  and  of  the  payer; 
(e)  the  method  in  which  the  amount  was  received  by 
the  drawer;  and 

(/)  the  signature  of  the  latter. 
Spain,  Bolivia,  Chile,  Colombia  and  Honduras  also  re- 
quire the  statement  of  the  place  at  which  payment  is  to  be 
made.  ^° 

Rules  applicable  to  the  libranza. 

The  rules  of  bills  of  exchange  apply  to  the  libranza  payable 
to  order  or  originating  in  a  mercantile  transaction.^^ 

In  Spain  ^^  and  Honduras  ^^  an  exception  is  made  of 
matters  relating  to  acceptance,  because  the  libranza  is  not 
subject  to  it. 

PROMISSORY   NOTES 

Whether  a  promissory  note  is  commercial  or  not  is  deter- 
mined according  to  the  following  systems: 

•"Spain,  531;  Bolivia,  463;  Chile,  771;  Colombia,  904;  Ecuador,  475; 
Guatemala,  651;  Honduras,  516;  Mexico,  546;  Venezuela,  446. 

"  Chile,  768,  769;  Colombia,  901,  902;  Ecuador,  476;  Mexico,  549;  Vene- 
zuela, 447. 

The  clause  "value  understood,"  or  "value  on  account"  indicates  that  the 
endorser  has  not  been  paid  the  price  of  the  draft.  This  is  also  api)licable  to 
promissory  notes  and  inland  bills  of  exchange  {libranzas).  Ecuador,  Corte 
Suprema  de  Justicia,  Jan.  20,  1908,  F.  G.  Martinez  v.  D.  Capuli;  Gacela  Judi- 
cial, 1908,  No.  33,  p.  206. 

Local  bills  of  exchange  (libranzas)  are  subject  with  respect  to  their  accept- 
ance, to  the  general  rules  of  bills  of  exchange.  Mexico,  Juzgado  7°  menor 
del  D.  F.,  July  22,  1892,  F.  de  S.  Puron  v.  R.  Arguero  y  Cia.,  Anuario  de  Legis- 
Uicidn  y  Jurisp.  Seccidn  de  Jurisprudencia,  vol.  9,  p.  149. 

12  Art.  532.  "  Art.  517. 


560  LATIN-AMERICAN    COMMERCIAL    LAW 

First  system.  It  is  or  is  not  commercial  according  to 
the  nature  of  the  act  out  of  which  it  originates.  ^^ 

Second  system.  It  is  commercial  if  made  ''to  order," 
otherwise  it  is  subject  to  civil  law.^^ 

Third  system.  It  is  not  commercial  when  not  payable 
to  order.  The  actions  arising  therefrom  depend  on  the 
nature  of  the  transactions  in  which  the  obhgation 
originated.  ^^ 

Fourth  system.  Brazil,  ^^  Costa  Rica,^^  and  the 
Uniform  Regulation  ^^  do  not  attempt  to  characterize 
the  promissory  note  as  mercantile  or  not;  they  merely 
state  the  requisites  of  a  promissory  note  under  their 
special  law.  Those  requisites  are:  That  a  promissory 
note  must  contain  (a),  a  promise  to  pay.  In  Costa 
Rica  and  according  to  the  Uniform  Regulation  this 
promise  must  be  unconditional;  (b),  the  amount  to  be 
paid;  (c),  the  signature  of  the  promisor;  (d),  in  Brazil 
and  in  countries  governed  by  the  Uniform  Regulation, 
the  word  "pagare  "  or  its  equivalent  in  the  language  of 
the  country;  (e),  Brazil  ^^  also  requires  that  the  date  of 
payment  be  precise  and  single  for  the  full  amount  due; 
(/),  the  Uniform  Regulation  requires  the  name  of  the 
person  to  whom  or  to  whose  order  payment  must  be 
made. 

"Spain,  532;  Chile,  767;  Colombia,  900;  Honduras,  517;  Venezuela,  446. 

1^  Argentina,  740;  Bolivia,  461;  Costa  Rica,  177;  Haiti,  184;  San  Salvador, 
463;  Santo  Domingo,  187;  Uruguay,  933. 

A  promissory  note  need  not  be  executed  with  the  legal  formalities  required 
for  the  contract  in  which  it  originated,  lq  order  to  produce  all  its  legal  effects. 
Colombia,  Trib.  Sup.  del  Dist.  del  Cauca,  Oct.  12,  1891;  Gacela  Judic.  del 
Cauca,  vol.  2,  p.  683. 

The  administrator  (curador  de  bienes)  of  a  person  whose  death  is  presimied 
(ausente)  has  no  power  to  endorse  a  promissory  note  belonging  to  that  person; 
he  must  collect  it  personally.  Colombia,  Trib.  Sup.  del  Dist,  de  Cundina- 
marca,  Sept.  15,  1896,  Reg.  Jud.  de  Cundinamarca,  vol.  9,  p.  1899. 

When  a  person  signs  a  promissory  note,  believing  in  the  existence  of  a 
"cause"  for  so  doing,  but  that  belief  proves  to  have  been  erroneous,  he  can- 
not be  compelled  to  pay  the  instrument.  Colombia,  Sup.  Trib.  del  Dist.  del 
Sur  del  Tolima,  Nov.  25,  1898,  Cronica  Judicial,  vol.  10,  p.  5144. 

i«  Mexico,  547.  "  Art.  54.  >8  Art.  177. 

19  Arts.  77,  78.  2»  Art.  55. 


LOCAL   BILLS    OF    EXCHANGE,    ETC.  561 

In  the  absence  of  special  indication  the  place  of 
payment  in  Brazil  is  deemed  to  be  the  domicil  of  the 
maker,  and  according  to  the  Uniform  Regulation  the 
place  where  the  note  was  issued;  but  if  no  mention  is 
made  of  the  place  where  the  note  was  issued,  it  is 
presumed  to  have  been  issued  at  the  place  indicated 
beside  the  name  of  the  maker.  In  Brazil,  an  alternative 
indication  of  the  place  of  payment  is  allowed,  the 
election  lying  with  the  holder. 

Maturity  of  promissory  notes  without  stated  term. 

Some  of  the  codes  provide  specially  that  a  promissory 
note  payable  to  order  without  indication  of  the  time  of 
payment,  shall  become  due  ten  days  from  the  day  following 
its  date.  2^ 

Brazil  ^^  and  the  Uniform  Regulation  ^^  provide  that  when 
no  indication  is  made  of  the  date  of  payment,  the  promissory 
note  is  payable  at  sight.  In  Brazil,  furthermore,  when  the 
promissory  note  does  not  state  the  date  and  place  of  pay- 
ment, the  holder  may  insert  these  items. 

The  maturity  of  promissory  notes  in  the  other  countries  is 
governed  by  the  general  rules  relating  to  obligations  already 
discussed. 

Notes  payable  to  bearer. 

Inasmuch  as  no  principle  of  public  policy  is  involved  in 
drawing  a  note  to  bearer,  we  must  assume  that  such  a  note 
is  lawful  whenever  the  law  does  not  provide  otherwise. 
Spain,  2"*  and  Uruguay  ^^  expressly  recognize  the  validity  of 
such  notes.  Bolivia  ^^  and  Ecuador,-^  on  the  contrary, 
provide  that  such  instruments  give  rise  to  no  judicial  action. 

Mexico  2^  provides  that  promissory  notes  cannot  be  issued 
at  sight  or  to  bearer,  except  as  provided  in  the  law  of  credit 
institutions;  and,  as  already  observed,  promissory  notes  not 

"  Bolivia,  471;  Chile,  778;  Colombia,  911;  Costa  Rica,  180;  Guatemala,  661. 
"  Art.  54.  23  Art.  78.  "  Art.  544. 

"  Art.  933.  20  Art.  473.  ^  Art.  479. 

28  Art.  551. 


562  LATIN-AMERICAN    COMMERCIAL   LAW 

made  *'to  order  "  are  not  of  themselves  mercantile  instru- 
ments. 

The  Uniform  Regulation  requires  as  an  essential  formality 
of  a  promissory  note  the  statement  of  the  name  of  the  person 
to  whom  or  to  whose  order  payment  is  to  be  made,  and 
provides  further  ^^  that  the  instrument  lacking  such  requisite 
is  not  valid  as  a  promissory  note. 

CHECKS 

Many  persons,  merchants  and  others,  used  to  deposit  in 
the  house  of  a  banker,  all  money,  valuables  and  securities, 
in  order  to  save  the  expenses  of  a  private  cashier  and  to 
avoid  the  risks  of  theft  and  fire.  They  used  also  to  dispose 
of  the  funds  so  deposited  by  means  of  drafts  payable  at  sight, 
called  checks.  This  usage  has  met  with  very  wide  accept- 
ance, and  the  more  advanced  the  commercial  methods  and 
the  quicker  the  circulation,  the  more  frequent  is  the  use  of 
checks. 

Spain, ^°  Brazil,^^  Honduras,^^  Mexico, ^^  Peru,^^  San 
Salvador  ^^  and  Venezuela  ^^  allow  the  check  to  be  drawn 
upon  the  depositary  whether  he  is  a  merchant  or  not. 

Argentina  ^''  prohibits  the  drawing  of  checks  on  any 
depositaries  except  banks. 

Costa  Rica  ^^  provides  for  checks  drawn  on  bankers  only. 

In  Brazil,  the  matter  of  checks  is  governed  by  special  law 
No.  2591,  of  August  7,  1912,  to  which  reference  i§  made  in 
this  respect.  Article  1  of  that  law  provides  that  every  person 
who  has  funds  at  his  disposal  at  a  bank  or  at  a  merchant's 
can  draw  checks  or  orders  of  payment  at  sight  for  all  or  part 
of  the  funds,  in  his  own  favor  or  in  favor  of  someone  else. 
By  the  words  ''funds  at  his  disposal  "  is  understood,  (a),  the 
liquid  credit  amount  in  an  account  current  with  a  bank* 
(b),  the  demandable  balance  in  contracts  of  current  account; 

29  Art.  78.  »"  Art.  534. 

"  Law  No.  2591  of  August  7,  1912,  Art.  1. 

32  Art.  519.  »'  Art.  552.  ^4  Art.  523. 

36  Art.  456.  36  Art.  450.  ^  Art.  798. 

38  Art.  162. 


LOCAL    BILLS    OF   EXCHANGE,    ETC.  563 

or  (c),  the  amount  of  an  open  credit.  In  the  second  and 
third  of  these  cases  it  is  necessary  to  have  the  previous 
consent  of  the  payer. 

The  Hague  Conference  for  the  unification  of  the  law 
relating  to  checks  also  drew  a  Resolution  of  thirty  articles 
regulating  the  matter,  hereafter  cited  under  the  term  Hague 
Resolution.  This  resolution  seems  to  have  been  adopted  by 
Guatemala  and  Nicaragua,  and  it  has  been  incorporated  in 
the  code  of  Panama  from  art.  919  to  art.  943.  Article  3 
authorizes  the  drawing  of  a  check  on  any  person  who  has 
funds  at  the  disposal  of  the  drawer,  provided  there  is  between 
the  parties  an  express  or  tacit  agreement  to  draw  in  that  form. 

Requisites  of  checks. 

The  formal  requisites  of  checks  are  as  follows:  ^^ 
(a)  the  name  and  signature  of  the  drawer; 
(&)  the  name  of  the  drawee.     Spain,  Honduras  and 
San  Salvador  also  require  his  domicil; 

(c)  the  amount  drawn  and  the  date,  in  figures  and 
words.  Argentina  requires  that  the  amount  be  written 
by  hand,  without  using  any  means  of  printing  or  any 
other  mechanical  device  and  also  without  erasures, 
and  expressing  the  kind  of  money  to  be  paid.  In  Pern 
the  check  must  also  bear  a  serial  number; 

(d)  a  statement  whether  it  is  payable  to  a  specific 
person,  to  order  or  to  bearer.  In  Mexico,  only  checks 
drawn  in  favor  of  a  specific  person  and  to  bearer  are 
mentioned.  In  the  Hague  Resolution  the  order  of  pay- 
ment must  be  unconditional. 

In  Brazil  and  in  the  countries  that  have  adopted 
the  Hague  Resolution  a  check  must  also  contain: 

(e)  the  word  "check"  written  in  the  instrument; 

(/)  an  indication  of  the  place  where  the  check  was 
issued; 

(g)  an  indication  of  the  place  of  payment. 

'9  Spain,  535;  Brazil,  art.  2  of  law  No.  2591;  Argentina,  800;  Honduras, 
.520;  Mexico,  55:j;  Peru,  524,  525;  Hague  Resolution,  1,  4;  San  Salvador,  457; 
Venezuela,   45  L 


564  LATIN-AMERICAN    COMMERCIAL   LAW 

In  Brazil,  the  amount  of  the  check  must  be  written  in 
words  and  in  figures,  and  the  day  and  month  must  also  be 
written  out.  In  case  no  indication  is  made  of  the  place  of 
issue,  it  is  assumed  that  the  check  was  drawn  at  the  place 
where  it  must  be  paid. 

The  Hague  Resolution  provides  that  a  document  lacking 
some  of  the  requirements  above  mentioned  is  not  a  check 
except  in  the  following  cases :  (a)  when  no  indication  is  made 
of  the  place  of  payment  it  is  understood  that  the  place 
mentioned  beside  the  name  of  the  drawee  is  the  place  of 
payment  and  the  drawee's  domicil  as  well;  (6)  when  there  is 
no  indication  of  the  place  of  payment,  it  is  payable  at  the 
place  of  issue;  (c)  when  no  mention  is  made  of  the  place  of 
issue,  it  is  assumed  to  have  been  drawn  at  the  place  stated 
beside  the  name  of  the  drawee. 

Places  on  which  checks  can  be  drawn. 

Checks  may  be  drawn  at  the  place  where  they  must  be 
paid  or  at  other  places.  ^° 

In  Brazil  and  Peru  there  is  no  provision  against  drawing 
a  check  at  a  place  different  from  that  of  payment,  but  from 
the  context  of  article  526  of  Peru  we  infer  that  in  that 
country  a  check  can  never  be  drawn  at  a  place  so  distant 
that  the  mail  requires  more  than  eight  days  to  bring  it  to 
the  place  of  payment.  The  same  is  true  for  Venezuela,'*^  ex- 
cept that  the  period  is  fifteen  days. 

Period  in  which  a  check  must  be  presented. 

The  holder  of  a  check  must  present  it  for  collection 
within  the  following  mentioned  periods  after  the  date  of 
issue: 

(a)  In  Spain  ^^  and  Honduras  ^^  five  days,  if  issued 
at  the  place  of  payment;  eight  days,  if  issued  at  an- 
other place  within  the  country,  and  fifteen  days,  if 
issued  in  a  foreign  country. 

*"  Spain,  536;  Brazil,  2;  Costa  Rica,  167;  Honduras,  521;  Mexico,  558;  San 
Salvador,  458;  Hague  Resolution,  1,  2. 

"  Art.  453.  «  Arts.  537,  538.  «  Arts.  522,  523. 


LOCAL   BILLS   OF   EXCHANGE,    ETC.  565 

(6)  In  Argentina,  fifteen  days,  if  drawn  at  the  place 
of  payment  and  one  month  if  at  other  places." 

(c)  In  Costa  Rica,  the  periods  are  eight,  fifteen  and 
thirty  days,  respectively,  for  checks  drawn  at  the  place 
of  pajTuent,  at  other  places  within  the  country  or  in  a 
foreign  countr}'-,^^  The  days  when  the  office  of  the 
drawee  is  closed  are  not  comited. 

{d)  In  Mexico,  eight  days  is  the  period  for  local 
checks,  and  one  day  for  every  100  kilometers  of  dis- 
tance in  other  cases.  ^^ 

(e)  In  Peru,  eight  days  is  the  invariable  period. 

(J)  In  Brazil  ^"^  and  San  Salvador  ^^  five  days  is  the 
period  for  domestic  checks  and  eight  days  for  any  other. 

The  Hague  Resolution  ^^  establishes  ten  days  as  the 
period  for  collecting  a  check  payable  at  the  place  of 
issue;  fifteen  daj^s,  if  drawn  at  other  places  in  the 
country,  and  the  period  extended  according  to  the  dis- 
tance and  the  means  of  communication,  if  drawn 
abroad.  The  presentation  of  the  check  to  a  clearing 
house  is  considered  a  proper  presentation. 

(g)  In  Venezuela,  the  periods  are  eight  days  if  the 
check  is  payable  at  the  place  of  issue  and  fifteen  days 
otherwise.  ^° 

Penalty  for  failure  to  present  check  in  proper  time. 

The  holder  of  a  check  who  fails  to  present  it  within  the 
periods  above  mentioned  loses  his  right  of  action  against 
endorsers,  and  may  also  lose  it  against  the  drawer  if  the 
funds  with  which  the  drawee  was  supplied  for  making  pay- 
ment are  dissipated  by  reason  of  his  suspension  of  payments 
or  his  bankruptcy.''^ 

In  Brazil  ^-  and  according  to  the  Hague  Resolution  -'^ 
the  holder  who  does  not  present  a  check  for  collection  within 


"Arts 

.813, 

815. 

«  Art. 

167. 

«Art. 

558. 

«Art. 

4. 

«  Art. 

459. 

«Art. 

14. 

«»Art. 

454. 

"  Spain,  537 

;  Argentina, 

,813; 

1  Honduras, 

522; 

Mexico, 

559 

;  Peru, 

526; 

San 

Salvador 

,  459; 

Venezuela, 

454. 

«  Art. 

5. 

"  Art. 

14. 

566  LATIN-AMERICAN    COMMERCIAL   LAW 

the  period  provided  for  by  the  law,  or  who  fails  to  protest 
it  in  case  of  non-payment,  loses  his  rights  against  the  en- 
dorsers and  their  sureties,  and  also  against  the  drawer  if 
funds  were  supplied  by  him  and  they  are  dissipated  with- 
out the  drawer's  fault. 

Argentina  provides  that  banks  can  pay  checks  presented 
after  the  legal  period,  if  no  more  than  double  the  period 
has  elapsed.  ^^ 

Payment  must  be  at  sight. 

The  payment  of  a  check  must  be  made  at  sight.  ^^  Vene- 
zuela, however,  provides  that  a  check  can  be  drawn  at  sight 
or  at  a  period  no  greater  than  six  days  after  sight.  ^® 

Receipt. 

As  an  application  of  the  general  rule  that  the  creditor 
must  furnish  a  document  to  prove  that  the  obligation  has 
been  fulfilled,  Spain,  ^^  the  Hague  Resolution,  ^^  Honduras,  ^^ 
Mexico  ^°  and  San  Salvador  "  provide  that  the  person  to 
whom  the  check  is  paid  must  acknowledge  the  receipt  thereof 
by  signing  his  name  thereon. 

Spain,  Honduras  and  San  Salvador  also  require  the  date 
of  the  receipt. 

Duplicate  checks. 

No  dupUcate  of  a  check  can  be  issued  without  previously 
cancelling  or  nullifying  the  original,  after  the  lapse  of  the 
legal  period  for  presentation  and  with  the  consent  of  the 
drawee.^^ 

Crossed  checks. 

With  a  view  to  avoiding  the  misuse  and  false  endorsement 

"  Art.  815. 

"Spain,  539;  Argentina,  804;  Brazil,  10;  Costa  Rica,  163;  Hague  Resolu- 
tion, 13;  Honduras,  524;  Mexico,  562;  Peru,  525;  San  Salvador,  460. 
^  Art.  451.  "  Art.  539.  ^  Art.  18. 

59  Art.  524.  «"  Art.  560.  "  Art.  460. 

82  Spain,  540;  Honduras,  525;  San  Salvador,  461. 


LOCAL   BILLS    OF    EXCHANGE,    ETC.  567 

of  checks  a  custom  has  arisen,  which  has  been  incorporated 
in  the  law  of  some  countries,  of  crossing  the  check  with  the 
words  ''and  company,"  in  which  case  the  check  is  said  to 
be  crossed  in  general,  or  with  the  specific  name  of  a  banker 
or  commercial  house,  in  which  case  the  check  is  said  to  be 
crossed  specially.  These  words  can  be  written  in  the  check 
either  by  the  drawer  or  by  any  of  the  endorsers.  The  pay- 
ment must  then  be  made  to  some  commercial  house,  in  the 
first  case;  or  to  the  banker  or  commercial  house  individually 
designated,  in  the  second.  Any  payment  made  otherwise 
does  not  release  the  payer.^^ 

In  Costa  Rica  the  law  provides  for  the  use  of  the  word 
"banco,"  when  the  check  is  said  to  be  crossed  in  general,  and 
the  same  word  followed  by  the  specific  name  of  some  bank 
when  the  check  is  said  to  be  specially  crossed.^* 

General  provisions. 

The  rules  governing  the  joint  and  several  guaranty  of 
drawers  and  endorsers,  endorsement,  protest  and  the  special 
actions  established  for  bills  of  exchange,  are  equally  appli- 
cable to  checks,^^ 

In  Argentina,  the  holder  of  a  check  not  paid  must  notify 
the  drawer  thereof  on  the  same  day,  if  the  latter  lives  at  the 
same  place,  or  by  the  second  mail,  if  he  lives  elsewhere. 
Payment  must  be  made  by  the  drawer,  in  that  case,  within 
twenty-four  hours  if  at  the  same  place,  and  by  the  second 
mail  otherwise.  After  these  periods  the  holder  can  protest 
the  check  for  non-payment. 

The  Hague  Resolution  provides  ^^  that  the  presentation 
and  lack  of  payment  must  be  proved: 

(a)  by  an  authentic  act  (protest); 
(6)  by  a  declaration  of  the  drawee,  dated  and  signed 
on  the  check  itself,  indicating  the  day  of  presentation; 

•2  Spain,  541;  Argentina,  819  to  830;  Honduras,  526;  San  Salvador,  532. 
"*  Arts.  169,  170. 

85  Spain,  542;  Argentina,  836;  Hague  Resolution,  22,  24,  30;  Honduras,  527; 
San  Salvador,  530;  Venezuela,  452. 
69  Art.  22. 


568  LATIN-AMERICAN   COMMERCIAL   LAW 

(c)  by  the  declaration  of  a  clearing-house  attesting 

that  the  check  was  presented  in  proper  time  and  not 

paid. 

The  protest  ^^  for  non-payment  must  take  place  before  the 

end  of  the  period  fixed  for  presentation.    Within  that  period 

the  protest  must  be  made  at  the  latest  on  the  first  working 

day  after  presentation. 

In  Mexico  a  check  is  not  subject  to  endorsement  or  pro- 
test.«8 

In  Venezuela  a  check  can  be  protested  for  non-acceptance.®^ 

Cases  in  which  payment  of  checks  may  be  refused. 

There  are  certain  cases  in  which  payment  of  checks  may 
be  suspended  or  refused.  Notwithstanding  the  intention 
of  the  law  to  provide  the  check  with  an  independent  exist- 
ence entirely  detached  from  the  circumstances  or  trans- 
actions in  which  it  arose  and  the  personal  qualifications 
of  the  holder,  there  are  cases  in  which  it  is  necessary  to 
suspend  or  refuse  payment  of  a  check  in  order  to  avoid  pal- 
pable frauds  and  encourage  the  lawful  use  of  these  instru- 
ments of  circulation.    The  cases  are  as  follows: 

In  Spain/*^  Honduras/^  San  Salvador  ^^  and  Venezuela,^^ 
the  payment  of  checks  can  be  refused  only  in  the  same  cases 
as  apply  to  bills  of  exchange. 

In  Argentina  ^^  a  bank  must  refuse  payment  of  checks 
in  the  following  cases: 

(a)  when  it  has  knowledge  of  the  bankruptcy  of  the 
drawer  or  holder  of  a  check  which  has  been  issued  to 
order  or  to  a  certain  person,  unless  a  judicial  decree  to 
the  contrary  is  produced; 

(6)  when  it  has  notice  of  the  death,  flight  or  legally 
declared  incapacity  of  the  drawer; 

(c)  when  the  check  appears  to  be  forged,  altered, 
erased,  interlined  or  scratched  in  respect  to  its  date, 
serial  number,  amount,  kind  of  money,  name  of  the 


6'  Art.  23. 

6  Arts.  556,  557. 

89  Art.  453. 

™  Art.  542. 

"  Art.  527. 

"  Art.  530. 

"  Art.  452. 

"  Arts.  804,  808. 

LOCAL   BILLS    OF    EXCHANGE,    ETC.  569 

holder,  signature  of  the  drawer,  or  if  it  lacks  any  of  the 
essential  requisites; 

(d)  when  the  drawer  or  holder  has  requested  the 
bank  in  wTiting  not  to  make  payment  and  this  request 
is  received  before  the  presentation  of  the  check. 

A  banker  can  also  retain  a  check  and  suspend  pay- 
ment thereon  when  he  notices  any  errors  or  suspects 
fraud  or  forgery,  in  which  event  he  must  immediately 
notify  the  drawer. 
According  to  the  Hague  Resolution,^^  neither  the  death 
nor  the  legal  incapacity  of  the  drawer,  occurring  after  the 
check  was  issued,  modifies  its  effects.     The  revocation  of 
the  order  to  pay  contained  in  a  check  is  effective  only  after 
the  period  for  presentation  has  expired.     If  there  is  no  rev- 
ocation the  drawee    is    privileged   to  pay  the  check  even 
after  the  expiration  of  the  period.     If  the  drawer  or  the 
holder  notifies  the  drawee  that  the  check  has  been  lost  or 
that  a  third  party  acquired  it  through  fraud,  the  drawee 
who  pays  it  is  exonerated  from  his  obligation  only  if  the 
holder  of  the  check  proves  that  he  is  a  holder  in  due  course. 
In  Mexico  ^^  the  payment  of  a  check  cannot  be  suspended 
except  by  judicial  order  or  when  the  check  lacks  some  of  the 
essential  requisites  of  the  law. 

Peru  has  no  provision  of  any  kind  with  respect  to  this 
matter. 

In  San  Salvador  "^  besides  the  cases  mentioned  above,  the 
drawee  must  refuse  payment  of  the  check  on  the  drawer's 
request. 

Check  books. 

The  codes  of  Argentina  ^^  and  Mexico  ^^  contain  certain 
rules  relative  to  check  books  as  follows: 

In  Argentina  the  banks  are  obliged  to  have  printed  stub 
books  with  checks  attached  and  corresponding  numbers 
printed  in  the  body  of  the  check  and  in  the  stub,  and  to 
dehver  these  books  to  the  depositors  under  receipt.     The 

"  Arts.  16,  17.  '9  Arts.  561,  563.  "     Art.  528. 

78  Arts.  801,  802.  '»  Art.  555. 


570  LATIN- AMEBIC  AN    COMMERCIAL    LAW 

receipt  must  show  the  number  of  the  book  and  the  individual 
serial  numeration  of  the  blank  checks  contained  therein. 

In  case  a  book  is  lost  or  stolen,  the  owner  must  at  once 
notify  the  bank;  the  latter  thereupon  must  refuse  to  pay 
any  checks  issued  on  the  blanks  thus  lost  or  stolen.^" 

Mexico  prescribes  that  the  only  checks  valid  are  those 
detached  from  stub  books  that  merchants  or  banks  give  to 
their  depositors  or  creditors  in  current  account  in  order  that 
they  may  draw  by  means  of  checks.^^ 

Liability  in  case  of  misuse  of  checks. 

Argentina  provides  that  in  case  a  check  is  forged,  the 
consequences  are  to  be  borne  by  the  bank: 

(a)  when  it  is  apparent  that  the  signature  of  the 
drawer  is  forged; 

(6)  when  the  check  shows  any  forgery,  alterations, 
erasures  in  its  date,  serial  number,  amount,  kind  of 
money,  name  of  the  bearer,  signature  of  the  drawer, 
or  lacks  any  of  the  essential  requisites. 

(c)  when  the  check  is  not  one  of  those  delivered  to  the 
drawer  in  the  check  book  given  to  him  by  the  drawee. 
When  the  signature  of  an  endorser  is  forged  the  bank  is 
not  responsible.     The  drawer  is  responsible  for  the  conse- 
quences of  a  forgery  in  the  following  cases: 

(a)  when  his  signature  is  forged  in  one  or  more  checks 
of  those  given  him  by  the  bank  and  the  forgery  is  not 
manifest  and  palpable; 

(6)  when  it  is  signed  by  a  clerk  or  person  who  signs 

lawful  checks  in  his  name.^^    The  comparison  between 

the  stub  in  the  check  book  and  the  check  itself  produces 

full  evidence  when  the  purpose  is  to  prove  that  the 

form  used  by  the  forger  corresponds  to  the  check  book 

given  to  the  drawer.^^ 

In  Mexico,  the  drawee  is  not  responsible  for  the  misuse  of 

checks  given  to  a  creditor,  if  the  check  paid  is  one  of  those 

given  by  the  drawee  to  the  drawer.^^ 

^  Arts.  801,  802.  ^i  Art.  555.  s^  Arts.  809,  810,  812. 

83  Art.  811.  8*  Art.  561. 


LOCAL    BILLS    OF    EXCHANGE,    ETC.  571 

PEESCRIPTION    OR    LIMITATION    OF    ACTIONS   ARISING    OUT    OF 
NEGOTIABLE    INSTRUMENTS 

There  are  so  many  different  systems  in  regard  to  the 
limitation  of  actions  on  or  prescription  of  negotiable  instru- 
ments, that  the  only  feasible  method  of  discussion  is  to 
present  the  details  at  length. 

In  Spain,^'^  Honduras  ^^  and  Mexico, ^^  actions  arising  out 
of  negotiable  instruments  are  barred  three  years  after  their 
maturity  whether  or  not  they  have  been  protested. 

In  Argentina  ^^  and  Uruguay  ^^  the  holder  of  a  bill  of  ex- 
change duly  protested  for  non-payment,  who  does  not 
demand  payment  thereof  within  one  year  after  protest  in  the 
case  of  an  inland  bill,  or  within  two  years  otherwise,  loses  all 
his  rights  against  the  endorsers. 

In  Argentina  actions  arising  out  of  any  kind  of  negotiable 
instrument,  except  bank-notes,  lapse  in  three  years,  unless 
otherwise  provided  for  by  the  law.  The  period  of  limitation 
runs  from  the  date  of  maturity;  but  when  four  years  have 
elapsed  since  the  issuance,  endorsement  or  acceptance  of  the 
instrument,  all  actions  are  barred  by  limitation.  This 
provision,  however,  does  not  apply  to  cases  where  the  debt 
is  acknowledged  in  a  separate  document  with  a  view  to 
creating  a  new  evidence  of  debt.  Acts  which  by  law  inter- 
rupt the  running  of  the  prescriptive  period  against  one  of  the 
co-obligors  do  not  produce  that  effect  with  respect  to  the 
others.  ^° 

In  Uruguay  ^^  actions  arising  out  of  bills  of  exchange  or 
any  other  endorseable  instrument,  if  no  judicial  decision 
has  been  rendered  thereon,  nor  the  debt  been  acknowledged 
in  a  separate  document,  are  barred  by  limitation  after  four 
years.    This  period  runs  from  the  date  of  protest,  or  from 

86  Art.  950.  89  Art.  936.  «>  Art.  1044. 

88  Art.  667.  89  Art.  862. 

90  Art.  848. 

Actions  arising  out  of  a  hill  of  exchange  are  barred  by  limitation  three 
years  after  it  is  due.  Argentina,  Cam.  Fed.  de  Apel.,  Parana,  April  ',i,  1914,  J. 
Martinez  v.  H.  Salazar,  Jurisp.  de  los  Tribs.  Noes.,  April,  1914. 

»i  Art.  1019. 


572  LATIN-AMERICAN    COMMERCIAL   LAW 

maturity  if  there  was  no  protest,  or  from  the  date  of  judicial 
decision  if  there  was  one.^^ 

In  Brazil  ^^  actions  arising  out  of  bills  of  exchange  against 
the  drawer,  acceptors,  or  their  sureties  are  barred  after  five 
years;  but  against  the  endorsers  and  their  sureties,  after  one 
year.  These  periods  run  from  the  day  the  action  might 
have  been  brought;  and  in  the  case  of  an  endorser  who  pays, 
from  the  day  on  which  he  made  payment.  This  rule  also 
applies  to  promissory  notes  ^^  and  to  checks.^^ 

In  Chile  ^^  and  Colombia  ^^  actions  against  the  principal 
debtor  or  his  sureties  are  barred  by  limitation  after  three 
years  from  the  maturity  of  a  bill,  without  prejudice  to  the 
instrument's  being  impaired  for  other  valid  reasons.  A 
judicial  complaint  against  the  principal  debtors  interrupts 
the  four-year  period  of  limitation;  but  the  period  begins  to 
run  again  if  the  plaintiff  stops  the  proceedings.  When  the 
bill  of  exchange  is  paid  by  one  of  the  endorsers  the  period 
runs  against  him  from  the  date  of  payment. 

Actions  of  the  acceptor  who  paid  without  being  supplied 
with  funds  by  the  drawer  or  by  the  person  who  ordered  the 
issuance  of  the  bill  are  barred  after  five  years.  A  like  rule 
governs  actions  of  the  drawer  against  the  acceptor  supplied 
by  him  with  funds,  or  of  the  payer  for  honor  against  the 
person  for  whose  honor  he  paid. 

The  holder  of  a  libranza  or  promissory  note,  arising  from 
a  mercantile  transaction,  payable  to  order,  which  has  been 
protested  for  non-payment,  must  demand  payment  from  the 
maker  or  endorsers  at  his  discretion,  within  three  months 
from  the  date  of  protest,  if  the  instrument  is  payable  within 
the  Republics  of  Chile  or  Colombia,  respectively;  otherwise 
the  request  of  payment  must  be  made  within  the  period 
necessary  for  the  arrival  of  the  mail  at  the  place  of  residence 
of  the  obligor.  When  the  periods  have  elapsed  without 
any  claim  being  made,  the  liability  of  the  endorsers  ceases, 

92  Art.  1559.  9*  Arts.  52,  53.  "  Art.  56. 

95  Art.  15  of  law  No.  2591  of  August  7,  1912. 
M  Arts.  761  to  764,  774,  779. 
9'  Arts.  894  to  897,  907,  912. 


LOCAL   BILLS    OF   EXCHANGE,    ETC.  573 

as  does  that  of  the  drawer  who  supplied  the  drawee  with 
funds.^^ 

In  Costa  Rica  ^^  actions  arising  directly  from  bills  of  ex- 
change lapse  after  four  years  from  their  maturity  or  from  the 
act  which  legally  interrupts  the  period  of  limitation.  In 
bills  of  exchange  payable  at  sight  or  at  a  period  from  sight 
the  limitation  period  runs  from  the  last  day  for  presentation, 
unless  it  is  proved  that  the  presentation  took  place  prior 
thereto.  These  rules  also  apply  to  promissory  notes  payable 
to  order.  ^°° 

In  Ecuador  ^°^  and  Venezuela  ^"^  actions  originating  in 
bills  of  exchange  are  barred  by  limitation  five  years  from  the 
day  following  their  maturity.  If,  during  the  running  of  that 
period,  the  debtor  makes  a  partial  payment  or  gets  an  ex- 
tension of  time,  or  it  appears  from  his  correspondence  that 
he  considered  the  debt  outstanding,  the  period  begins  to  run 
again  from  the  date  of  those  acts. 

A  judicial  demand  interrupts  the  running  of  the  period  of 
limitation  against  the  defendants  only,  but  the  period  begins 
to  run  again  from  the  day  after  the  proceedings  are  dis- 
continued. When  there  has  been  a  judicial  decision  or  the 
obligation  has  been  changed  into  a  new  one,  the  regular 
periods  of  limitation  are  applicable. 

Even  though  the  period  of  five  years  has  elapsed,  the 
plaintiff  can  ask  and  the  defendant  must  render  a  sworn 
statement,  whether  or  not  he  is  a  debtor  of  the  amount 
claimed.  If  the  defendant  refuses  to  make  such  statement  or 
if  by  it  he  admits  that  the  debt  is  outstanding,  the  right  of 
action  of  the  creditor  is  re-established. 

These  rules  apply  also  to  promissory  notes  and  Ubranzas 
payable  to  order,  ^°^  but  a  libranza  to  order  must  be  cashed  at 
once  if  it  is  at  sight,  or  upon  maturity  when  it  runs  for  a  term. 
If  it  is  not  paid,  the  holder  must  return  it  to  the  person 
who  delivered  it  to  him  within  three  days;  otherwise  the 
former  loses  his  rights  of  action  if  the  latter  had  supplied 
funds. 

9»  Chile,  769;  Colombia,  902.        »»  Art.  L54.  "^  Art.  18L 

""  Arts.  473,  474,  478.  '"^  Arts.  444,  445,  449.  »"••'  Art.  476. 


574  LATIN-AMERICAN    COMMERCIAL    LAW 

In  Haiti  ^^^  and  Santo  Domingo  ^^'^  when  the  holder 
brings  his  action  individually  against  his  transferer  he  must 
do  so  in  Haiti,  within  a  period  of  ten  days,  and  in  Santo 
Domingo,  within  fifteen  days  after  the  date  of  protest,  if  he 
resides  in  a  place  no  farther  distant  than  ten  leagues  in 
Haiti,  and  three  in  Santo  Domingo,  with  one  additional  day 
for  every  five  leagues,  in  Haiti,  and  two  and  a  half  leagues  in 
Santo  Domingo,  if  the  transferer  resides  at  a  greater  distance 
than  ten  or  three  leagues  respectively. 

If  bills  of  exchange  drawn  from  Haiti  or  Santo  Domingo, 
respectively,  are  to  be  paid  and  have  been  protested  outside 
the  territory  of  those  countries,  the  drawers  and  endorsers 
residing  in  Haiti  must  be  requested  to  make  payment  within 
the  following  periods:  within  six  months,  if  the  bills  are 
payable  in  the  West  Indies,  eight  months,  if  on  the  American 
continent,  the  Bermudas  and  Newfoundland,  and  one  year 
if  in  Europe. 

In  Santo  Domingo  the  time  for  demand  is  three  months,  if 
the  drawers  or  indorsers  reside  in  Haiti,  the  West  Indies  or 
the  United  States;  four  months,  if  they  reside  in  the  Repub- 
Hcs  along  the  coast  of  the  Atlantic  from  the  Rio  Grande  to 
the  Orinoco;  five  months,  if  they  reside  in  any  of  the  other 
American  Republics,  and  six  months,  if  the  bill  is  payable  in 
Europe  or  in  any  other  part  of  the  world.  These  periods  are 
doubled  in  case  of  maritime  war. 

If  the  holder  brings  his  action  jointly  against  the  endorser 
and  the  drawer,  the  periods  above  stated  apply  \sdth  respect 
to  each  of  them.  Every  endorser  has  the  benefit  of  the  same 
period  running  from  the  day  of  the  judicial  demand. 

After  those  periods  have  elapsed  the  holder  loses  all  his 
rights  against  the  endorsers  as  well  as  against  the  drawer,  if 
the  latter  had  supplied  the  drawee  with  funds  when  the  bill 
matured;  in  that  case  the  only  action  reserved  to  the  holder  is 
against  the  drawee. 

The  limitation  above  referred  to  is  without  effect  in  favor 
of  the  drawer  or  endorser  who,  after  the  lapse  of  those 
periods,  has  received  the  funds  destined  for  the  pajnnent  of 

i«4  Arts.  162  to  168.  '"^  Arts.  164,  171. 


LOCAL    BILLS    OF    EXCHANGE,    ETC.  575 

the  bill  whether  in  account  current,  in  set-off  or  in  any- 
other  way. 

In  Peru  ^°^  the  special  action  arising  from  a  bill  of  ex- 
change to  recover  its  amount  can  only  be  brought  within 
fifteen  days  from  the  date  of  protest,  a  period  which  must 
be  extended  according  to  the  distance;  if  the  holder  brings 
his  action  jointly  against  the  endorsers  and  the  drawer  the 
periods  above  established  are  applied  to  each  of  them.  They 
also  apply  in  favor  of  the  endorsers  from  the  date  on  which 
they  paid  or  on  which  notice  of  the  judicial  decree  ordering 
payment  was  served  on  them. 

After  the  expiration  of  these  periods  the  actions  of  the 
holder  and  of  the  endorser  against  prior  obligors  are  barred. 
The  judicial  demand  suspends  the  running  of  the  periods  of 
Umitation  even  though  brought  before  a  judge  without 
proper  jurisdiction.  Notwithstanding  the  fact  that  the 
action  has  lapsed,  the  drawer  is  still  bound  in  regard  to  the 
holder  for  any  amount  by  which  the  former  enriched  him- 
self to  the  prejudice  of  the  latter.  These  rules  apply  to 
drafts  and  promissory  notes  to  order.  ^°^  With  regard  to 
checks,  the  holder  must  present  them  for  payment  within 
eight  days  from  their  date;  if  he  does  not  comply  with  this 
rule  he  loses  his  right  of  action  against  the  drawer  if,  after  the 
expiration  of  the  period  the  funds  disappear  through  an  act 
of  the  drawee.  He  likewise  loses  his  rights  of  action  against 
the  endorsers  of  checks  payable  to  order.  ^"^ 

In  all  other  cases  not  provided  for  above,  actions  arising 
from  bills  of  exchange  are  barred  after  three  years  from  their 
maturity,  whether  protest  was  made  or  not.^°^ 

The  Uniform  Regulation  ^^°  prescribes  that  actions  arising 
from  a  bill  of  exchange  against  the  acceptor  thereof  are 
barred  after  three  years  from  maturity.  Actions  of  the  holder 
against  the  endorsers  or  drawer  lapse  after  one  year  from 
protest  made  in  proper  time  or  from  maturity  in  case  the 
clause  ''return  without  expenses"  has  been  placed  in  the  in- 
strument.     Actions  of  endorsers  against  prior  endorsers  or 

I*  Art.  507.  1""  Art.  521.  i""  Art.  526. 

lo^Art.  96L  ""  Arts.  70,  71. 


576  LATIN-AMERICAN    COMMERCIAL   LAW 

against  the  drawer  are  barred  six  months  from  the  day  on 
which  the  endorser  paid  the  bill  or  from  the  day  on  which  he  is 
sued  by  another  endorser.  Acts  which  interrupt  the  running 
of  the  period  of  limitation  operate  only  with  respect  to  the 
person  directly  concerned  in  the  act. 

With  reference  to  checks,  the  Hague  Resolution  "^  pro- 
vides that  actions  of  the  holder  against  an  endorser  or  drawer 
are  barred  six  months  after  the  expiration  of  the  period  for  the 
presentation  of  the  check,  and  actions  of  an  endorser  against 
other  endorsers  or  the  drawer  are  barred  six  months  from  the 
date  on  which  the  endorser  paid  or  was  sued. 

"1  Art.  29. 


CHAPTER  XXXIII 

NEGOTIABLE    INSTRUMENTS    PAYABLE    TO    BEARER 

The  law  in  Latin-America  does  not  make  any  definition  of 
instruments  payable  to  bearer  because  it  always  implies 
that  the  words  ''to  bearer  "  are  therein  inscribed. 

Nature  of  an  instrument  payable  to  bearer. 

In  instruments  payable  to  bearer  the  obligor  (person  or 
association)  assumes  the  obligation  to  pay  a  certain  sum  to 
the  possessor  of  the  document,  whoever  he  may  be.  The 
Costa  Rican  law  of  November  25,  1902,  on  negotiable 
instruments,  states  in  article  183  that  in  an  instrument  to 
bearer  the  obligation  derives,  not  from  a  contract,  but  from 
the  subscription  of  the  document.  The  meaning  of  this  is 
that  it  overlooks  entirely  the  contract  in  which  the  bill  of 
exchange  originated,  but  that  any  prospective  holder  of  the 
instrument  bases  his  rights  solely  on  the  signature  of  the 
subscriber. 

Only  the  commercial  codes  of  Spain,  Argentina,  Mexico 
and  Peru,  decrees  No.  149  of  July  28,  1893,  in  Bolivia,  and 
No.  177  of  September  15,  1893,  in  Brazil,  as  well  as  the  above 
mentioned  law  of  Costa  Rica  contain  any  special  regulations 
governing  instruments  to  bearer. 

General  characteristics  of  instruments  to  bearer. 

In  each  of  these  countries  we  find  that  an  instrument  to 
bearer  can  be  transferred  by  mere  delivery.^ 

Another  feature  of  these  instruments  is  that  they  cannot 
be  replevined  {i.  e.,  subjected  to  reivindicatio)  after  they  have 
been  negotiated,  even  though  the  seller  had  no  right  to 
disp>ose  of  them.    In  this  matter,  we  may  note  three  systems: 

1  Spain,  545;  Costa  Rica,  1S4;  Mexico,  617;  Peru,  535. 
577 


578  LATIN- AMERICAN    COMMERCIAL    LAW 

System  of  Spain.  The  instrument  cannot  be  replev- 
ined  if  it  has  been  negotiated  on  the  exchange  through 
collegiate  brokers  or  agents,  or,  in  places  where  there  is 
no  exchange,  through  a  notary  or  commercial  broker.^ 
System  of  Mexico.  It  cannot  be  replevined  when  it 
has  been  negotiated  on  the  exchange.^ 

System  of  Costa  Rica.  The  instrument  is  valid  and 
effective  after  it  has  been  subscribed,  notwithstanding 
that  it  may  have  been  lost  or  stolen  before  it  has  been 
put  in  circulation.  The  obligor  must  pay  the  amount 
thereof  without  power  to  demand  of  the  bearer  any 
other  evidence  of  his  right  than  possession.  His  only 
defenses  are: 

(a)  lack  of  formal  requisites  in  the  instrument, 
incapacity  of  the  subscriber  or  duress  used  in  obtain- 
ing the  signature  of  the  instrument; 

(h)  defenses  disclosed  by  the  instrument  itself; 
(c)  defenses  based  on  legal  relations  of  a  personal 
character  existing  between  the  subscriber  and  the 
bearer; 

{d)  the  fact  that  the  bearer  came  into  possession 

of  the  instrument  through   a  crime  of  which   the 

obligor  has  direct  and  personal  knowledge.^ 

Besides  these  general  features  of  instruments  to  bearer  in 

the  above  mentioned  laws,  there  is  another  feature  common 

to  these  instruments  although  it  is  not  specified  in  the  law  of 

2  Spain,  545;  Peru,  535. 

Negotiable  instruments  to  bearer  bought  through  exchange  agents  cannot 
be  recovered  by  the  lawful  owner  thereof,  unless  he  proves  that  the  purchaser 
acted  in  bad  faith  in  coimivance  with  the  agent.  Spain,  Trib.  Sup.,  April  22, 
24,  1912;  Gaceta  of  June  3,  1913,  p.  358. 

The  purchase  of  negotiable  instruments  to  bearer  can  lawfully  be  effected 
without  the  assistance  of  an  exchange  agent,  and  instruments  so  acquired 
cannot  be  recovered  by  a  previous  lawful  owner,  when  such  purchaser  resells 
the  instrument  through  an  exchange  agent.  Spain,  Trib.  Sup.,  May  11,  1909; 
Gaceta  of  Jan.  4,  1910,  p.  346. 

The  provisions  of  the  code  of  commerce  specially  referring  to  the  loss  of 
instruments  to  bearer  are  also  applicable  to  the  loss  of  coupons  of  public 
securities,  when  issued  in  a  different  sheet  from  the  principal  document. 
Spain,  Trib.  Sup.,  Oct.  9,  1906;  Gaceta  of  Oct.  12,  1907. 

3  Art.  617.  *  Costa  Rica,  183,  185. 


NEGOTIABLE    INSTRUMENTS    PAYABLE    TO    BEARER      579 

Costa  Rica,  namely — that  these  instruments  give  the 
bearer  on  their  maturity  and  non-payment  the  power  to 
institute  an  ''executive"  action  attaching  property  of  the 
subscriber,  without  any  other  requisite  than  a  previous 
acknowledgment  of  the  signature  of  the  obligor.^ 

Persons  who  can  create  an  instrument  to  bearer. 

Every  instrument  which  can  be  made  payable  to  order, 
can  be  made  payable  to  bearer  and  every  person  who  can 
subscribe  an  instrument  payable  to  order,  or  in  other  words, 
who  enjoys  commercial  capacity,  can  issue  an  instrument  to 
bearer.^ 

Mexico,  however,  does  not  favor  the  creation  of  instru- 
ments of  this  kind;  a  bill  of  exchange,  a  libranza,  or  a  promis- 
sory note  cannot  be  issued  to  bearer;  ^  but  only  checks  and 
the  instruments  mentioned  below. 

Costa  Rica  ^  provides  that  when  instruments  to  bearer  are 
issued  in  series  it  is  necessary  that  the  fact  of  issue  be  first 
published  in  the  official  government  paper  and  then  inscribed 
in  the  Commercial  Registry.  "Without  these  requisites  the 
instrument  is  void,  the  liability  of  the  subscriber  being 
reserved. 

Instruments  covered  by  the  provisions  of  this  section. 

In  Spain,^  Mexico  ^°  and  Peru,^^  the  following  are  consid- 
ered instruments  to  bearer  for  the  purpose  of  this  section: 

5  Spain,  544;  Costa  Rica,  150;  Mexico,  617;  Peru,  534. 
The  "executive  "  or  "executory"  action  is  discussed,  infra,  p.  000. 
« Spain,  544;  Costa  Rica,  200;  Peru,  534. 
■>  Arts.  461,  546,  549,  556,  619. 

8  Art.  201.  «  Art.  547.  i«  Art.  619. 

11  Art.  537. 

Under  the  Uniform  Negotial:)Ie  Instruments  Law  of  the  United  States,  an 
instrument  is  payable  to  bearer: 

1.  when  it  is  expressed  to  be  so  payable; 

2.  when  it  is  payable  to  a  person  named  therein  or  bearer; 

3.  when  it  is  payable  to  the  order  of  a  fictitious  or  non-existing  person, 
and  such  fact  was  known  to  the  p(!rson  making  it  so  payable; 

4.  when  the  name  of  the  payee  does  not  purjiort  to  be  the  name  of  any 
person; 

5.  when  the  only  or  last  endorsement  is  an  endorsement  in  blank 


580  LATIN-AMERICAN    COMMERCIAL   LAW 

(a)  instruments  of  credit  against  the  state,  province 
or  municipality  when  legally  issued; 

(6)  those  issued  by  a  foreign  nation,  the  quotation  of 
which  is  authorized  by  the  Government; 

(c)  instruments  of  credit  to  bearer  issued  by  foreign 
associations  organized  in  accordance  with  the  law  of  the 
state  of  their  domicil; 

(d)  instruments  of  credit  to  bearer  issued  by  home 
enterprises  or  corporations,  in  accordance  with  the 
national  law; 

(e)  in  Spain  and  Peru,  in  addition,  instruments  issued 
by  individuals,  provided  they  are  sufficiently  secured 
by  a  mortgage. 

In  Argentina  and  Costa  Rica,  the  provisions  are  appUcable 
to  every  instrument  to  bearer  without  limitation.  The  law 
in  Costa  Rica  excepts  railway  tickets  and  other  similar 
instruments.  ^- 

Measures  to  be  taken  in  case  of  loss  of  instruments  to 
bearer. 

The  measures  to  be  taken  in  case  of  loss  of  instruments 
payable  to  bearer  may  be  classified  in  the  following  systems : 

System  of  Spain.  A  dispossessed  owner  of  an  instru- 
ment to  bearer  may  apply  to  the  competent  judge  or 
court  either  to  prevent  payment  to  a  third  person  of 
principal,  interest  or  dividends  due  or  to  become  due,  or 
to  prevent  the  instrument  from  being  transferred  to 
another,  or  lastly,  to  request  a  duplicate  of  the  instru- 
ment.^^ 

System  of  Costa  Rica.    In  Costa  Rica  it  is  not  neces- 

12  Arts.  199,  203. 

"  Spain,  548;  Mexico,  620;  Peru,  538. 

The  owner  of  an  instrument  to  bearer  is  entitled  to  request  that  the  debtor 
be  directed  to  retain  payment  of  principal  and  dividends  thereof,  that  its 
alienation  be  forbidden  and  that  the  person  who  tries  to  cash  it  be  arrested. 
Opposition  to  this  request  produces  the  effect  of  suspending  all  the  proceed- 
ings; but  it  does  not  imply  that  what  has  been  done  must  be  revoked,  except 
when  a  final  judgment  has  been  recovered  by  the  opposing  party.  Mexico, 
Trib.  Sup.  del  Dist.  Fed.,  2a  Sala,  July  15,  1912,  Diar.  de  Jur.,  v.  XXVI, 
p.  735. 


NEGOTIABLE    INSTRUMENTS    PAYABLE    TO    BEARER      581 

sary  to  make  special  application  to  prevent  transfer  of 
the  instrument,  because  application  for  relief  of  one 
kind  or  another  above  mentioned  automatically  pro- 
duces the  effect  of  preventing  the  negotiation  of  the 
instrument. 

Rules  applicable  to  these  two  systems. 

In  the  petition  or  application  made  to  the  judge  or  court, 
the  dispossessed  owner  must  indicate  the  name,  nature,  face 
value,  number,  if  any,  and  the  series  of  the  securities;  and, 
if  possible,  the  time  and  place  at  which  he  became  the  owner, 
the  mode  of  acquisition,  the  time  and  place  at  which  he 
received  the  last  dividend  or  interest,  and  the  circumstances 
of  the  dispossession;  he  must  also  designate  a  residence, 
within  the  judicial  district,  where  he  may  be  served  with 
notices.  ^^ 

If  the  purpose  of  the  application  is  merely  to  obtain 
payment  of  principal,  dividends  or  interest  due  or  to  become 
due,  the  judge  or  court,  after  the  lawful  acquisition  of  the 
security  is  proved,  must  order: 

(a)  the  immediate  publication  of  the  petition  in  the 
papers  of  the  general,  provincial  and  local  govern- 
ments; 

(6)  notification   to   the   directing   board   which   has 

issued  the  security,   or  to  the  issuing  corporation  or 

individual,    ordering    them    to    withhold    payment    of 

principal  and  interest. 

The  petition  must  be  substantiated  by  hearing  the  public 

provsecutor  in  a  summary  form.^-^ 

If  the  purpose  of  the  petition  is  to  prevent  the  negotiation 
or  transfer  of  quotable  securities,  the  dispossessed  owner 
may  apply  to  the  governing  board  of  the  college  of  brokers  or 
stock  exchange,  informing  them  of  the  theft  or  loss  of  the 
instrument,  with  an  accompanying  note  stating  the  series 
and  nimibers  of  the  missing  securities,  the  time  of  their 
acquisition  and  the  title  by  which  they  were  acquired.    On 

^*  Spain,  549;  Costa  Rica,  190,  191;  Mexico,  021;  Peru,  539. 

"Spain,  550,  551;  Costa  Rica,  191,  192;  Mexico,  022,  023;  Peru,  540,  541. 


582  LATIN-AMERICAN    COMMERCIAL    LAW 

the  same  exchange  day  or  the  following,  the  governing 
board  must  post  a  notice  in  the  proper  place;  and  at  the 
opening  of  the  exchange,  must  announce  the  information  of 
loss  and  advise  the  other  boards  over  the  nation  thereof.  A 
similar  announcement  must  be  published  in  the  papers  of 
the  general,  provincial  and  local  governments.^^ 

System  of  Argentina.     There  are  two  different  pro- 
ceedings in  Argentina:  one  when  the  amount  claimed  is 
less  than  one  thousand  pesos,  national  currency,  and 
the  other  when  it  is  one  thousand  or  more. 
In  the  first  case  the  dispossessed  owner  must  present  to  the 
appropriate  public  office  or  to  the  issuing  body  or  corporation 
a  written  notification  of  the  loss  with  all  necessary  details 
for  the  identification  of  the  securities.     The  fact  must  be 
also  notified  to  all  the  exchanges  and  markets  of  the  country, 
which  shall  cause  it  to  be  published  in  their  local  papers  for 
one  month.  ^^ 

In  the  second  case,  that  is,  when  the  securities  or  coupons 
are  worth  one  thousand  pesos  or  more,  the  interested  party 
must  appear  before  a  public  notary  and  draw  up  a  formal 
statement  containing: 

(a)  the  name,  nature,  nominal  value,  numbers  and 
series  of  the  securities,  if  they  have  any,  or  the  distin- 
guishing characteristic  in  other  cases; 

(6)  the  mode,  and  if  possible,  the  date  or  time  of 
acquisition; 

(c)  the  time  when  he  received  the  last  dividend  or 
interest; 

(d)  the  manner  in  which  the  dispossession  took  place ; 

(e)  the  designation  of  a  legal  address,  if  the  applicant's 
is  not  w^ell  known.  ^^ 

Within  twenty-four  hours  after  this  instrument  is  signed, 
notice  thereof  must  be  served  on  the  Public  Office  interested 

"  Spain,  559;  Mexico,  631;  Peru,  549.  Judicial  decisions  rendered  in  regard 
to  robbery,  theft  or  loss  of  instruments  of  credit,  whether  payable  to  a  certain 
person  or  to  bearer  as  well  as  public  securities,  do  not  constitute  res  judicata, 
because  such  decisions  are  not  rendered  in  a  litigated  action.  Spain,  Trib. 
Sup.,  Jan.  13,  1913;  Gaceta  of  Nov.  14,  1913,  p.  41. 

"  Art.  748.  18  Art.  752. 


NEGOTIABLE    INSTRUMENTS    PAYABLE    TO    BEARER      583 

and  on  the  issuing  body,  and  a  certified  copy  there  must  be 
given  to  the  apphcant  on  request.  ^^ 

Effects  of  the  publication  of  the  petition. 

The  effect  of  the  petition,  when  granted  by  the  judge, 
court  or  issuing  authority,  as  the  case  may  be,  and  after 
publication,  is: 

(a)  to  suspend  all  the  regular  rights  of  the  new  holder 
of  the  security,  if  any;  ^'^ 

(6)  to  entitle  the  dispossessed  owner,  after  the  lapse 
of  one  year  without  any  opposition  to  the  petition,  to 
ask  the  judge  or  court  for  an  authorization  not  only 
to  collect  the  interest  or  dividends  due  or  to  become 
due,  in  the  proper  proportion,  but  likewise  the  prin- 
cipal, provided  two  or  more  dividends  have  been  paid 
or  the  principal  has  become  payable.-^ 

When  said  authorization  has  been  granted  by  the 
judge  or  court  the  dispossessed  owner,  before  collecting 
the  dividends,  interest  or  principal,  must  give  security 
covering  the  amount  due  and  double  the  amount  of 
the  last  yearly  payment.  If  the  applicant  does  not 
wish  to  or  cannot  give  the  security,  he  may  require  the 
debtor  company  or  individual  to  deposit  the  interest, 
dividends  or  principal  due;  and  if  two  years  have  elapsed 
without  any  opposition  to  his  petition,  he  may  receive 
the  amounts  thus  deposited;  ^^ 

(c)  to  entitle  the  claimant  to  recover  the  principal 
due  subsequent  to  the  court's  authorization,  if  he  gives 
a  bond  therefor,  or  else  to  request  the  deposit  of  said 
principal.  He  can  also  obtain  delivery  of  the  amount 
so  deposited  five  years  after  the  above  mentioned 
authorization  or  ten  years  after  the  principal  is  due 
(in  Costa  Rica  two  years  only  in  both  cases),  if  no  one 
has  opposed  his  petition;  ^^ 

»» Art.  753. 

^  Spain,  550;  Argentina,  749;  Costa  Rica,  192;  Mexico,  622;  Peru,  540. 

"  Spain,  552;  Costa  Rica,  193;  Mexico,  624;  Peru,  542. 

"Spain,  553;  Costa  Rica,  193,  194;  Mexico,  625;  Peru,  543. 

23  Spain,  554;  Costa  Rica,  197;  Mexico,  626;  Peru,  544. 


584  LATIN-AMERICAN    COMMERCIAL    LAW 

(d)  to  prevent  all  negotiation  of  the  stolen  or  lost 
securities  after  the  publication  of  the  advertisement 
by  the  Board  of  Exchange  Brokers  above  referred  to. 
The  person  who  may  have  acquired  the  securities  or 
negotiable  instruments  after  said  pubHcation  has  not 
the  immunity  from  disturbance  of  his  possession  by 
judicial  decision  that  a  holder  in  due  course  enjoys. 
The  rights  of  such  person  against  the  seller  and  the 
agent  through  whom  the  transaction  was  effected,  are 
reserved.  ^^  This  effect,  however,  does  not  subsist  if 
within  the  period  of  nine  days  the  petitioner  has  not 
obtained  a  judicial  decree  ratifying  the  injunction  to 
negotiate  or  sell  the  lost  securities,  or  if  notice  of  said 
decree  is  not  given  to  the  Governing  Board  within  that 
period;  ^^ 

(e)  to  entitle  the  petitioner  to  obtain  from  the  corre- 
sponding judge  or  court  a  decision  declaring  the  nullity 
of  the  stolen  or  lost  instrument,  and  a  duplicate  of  the 
same  after  the  lapse  of  five  years  (two  years  in  Costa 
Rica)  from  the  publications  above  referred  to,  or  from 
the  judicial  ratification  mentioned  in  the  previous  para- 
graph; ^^ 

(/)  to  recover  the  amount  of  the  coupons  to  bearer, 
detached  from  the  main  instrument,  three  years  after 
the  judicial  acceptance  of  the  petition,  the  object  of 
which  was  to  obtain  payment  of  such  coupons;  " 

(g)  to  release  from  any  liability  the  debtor  who  has 
paid  the  dispossessed  owner  in  accordance  with  the 
foregoing  provisions,  the  rights  of  a  third  party  who 
may  suffer  damages  thereby  against  an  unlawful  claim- 
ant being  reserved. ^^ 

The  issuance  of  new  instruments  payable  to  bearer,  to  replace  those  lost 
by  the  owner,  is  proper  when  five  years  have  elapsed  after  the  fact  of  the  loss 
was  legally  published.  Spain,  Trib.  Sup.,  March  18,  1910;  Gaceta  of  June  22, 
1910,  p.  156. 

24  Spain,  560;  Argentina,  760,  761;  Mexico,  632;  Peru,  550. 

'^^  Spain,  561;  Peru,  551. 

»  Spain,  562;  Costa  Rica,  197;  Mexico,  633;  Peru,  552. 

27  Spain,  556;  Mexico,  628;  Peru,  546. 

28  Spain,  557;  Argentina,  758;  Costa  Rica,  195;  Mexico,  629;  Peru,  547. 


NEGOTIABLE    INSTRUMENTS   PAYABLE   TO   BEARER      585 

Opposition  of  a  third  party. 

If  before  payment  is  made  to  the  claimant,  a  third  party 
presents  himself  with  the  missing  securities,  the  debtor 
must  retain  them  and  give  notice  thereof  to  the  judge  or 
court  and  the  claimant,  stating  the  name,  residence  and 
other  circumstances  which  may  serve  to  identify  the  third 
party  holder.  The  presentation  of  the  security  by  the  latter 
suspends  the  effects  of  the  petition  until  a  judicial  decision 
is  rendered  thereon.-^ 

29  Spain,  558;  Argentina,  759;  Costa  Rica,  196;  Mexico,  630;  Peru,  548. 


CHAPTER  XXXIV 

LETTERS  OF  CREDIT 

Character  of  a  letter  of  credit. 

The  business  relations  of  a  merchant  make  it  necessary 
for  him  to  give  letters  of  introduction  and  recommendation, 
and  in  some  cases  genuine  letters  of  credit  to  persons  more 
or  less  closely  connected  with  his  affairs;  but  it  is  very  im- 
portant to  distinguish  those  letters  the  purpose  of  which 
is  only  to  satisfy  commercial  courtesy,  to  promote  acquaint- 
ance between  men  who  carry  on  similar  or  different  lines  of 
business  and  afford  mutual  help  and  assistance,  from  those 
intended  to  create  a  legal  liability.  The  law,  in  order  to 
avoid  any  misunderstanding  in  this  respect,  has  provided 
for  certain  requisites  which  must  be  compUed  with  in  the 
latter  case,  giving  rise  to  a  legal  action  against  the  person 
issuing  an  actual  letter  of  credit.  The  character  of  persons 
connected  with  a  letter  of  credit  and  the  legal  acts  as- 
sociated with  it,  are  not  the  same  in  the  various  codes 
of  Latin  America.  We  find  in  this  respect  the  following 
systems: 

System  of  Spain.  The  letter  of  credit  is  sent  from 
one  merchant  to  another,  or  it  must  be  connected  with 
a  mercantile  transaction.^ 

System  of  Argentina.  As  the  letter  of  credit  is  a 
commercial  act,  the  general  rules  which  serve  to  classify 
a  transaction  as  mercantile  or  civil  are  applicable.  The 
special  section  of  the  code  dealing  with  letters  of  credit 
omits,  therefore,  any  reference  to  the  character  of  the 
parties  or  to  their  purpose.  This  system  is  also  followed 
by  Brazil  and  Uruguay. 
System  of  Chile.    Chile, ^  Colombia,^  Ecuador,^  Guate- 

1  Spain,  567;  Honduras,  529;  Peru,  557. 

2  Art.  782.  '  Art.  915.  *  Art.  480. 

586 


LETTERS    OF    CREDIT  587 

mala  ^  and  Venezuela  ^  provide  that  a  letter  of  credit 
involves  a  conditional  contract  of  exchange  between 
the  giver  and  the  receiver,  the  performance  of  which 
depends  upon  the  fact  that  the  receiver  avails  himself 
of  the  credit.  The  legal  character  of  the  parties  is  the 
same  as  that  of  the  drawer  and  the  payee  of  a  bill  of 
exchange. 

System  of  Bolivia.  The  person  who  gives  the  letter 
and  the  one  to  whom  it  is  addressed  must  be  merchants, 
and  the  transaction  which  the  letter  is  intended  to 
facilitate  must  be  mercantile.'' 

System  of  Mexico.  The  giver  of  a  letter  of  credit  and 
the  person  to  whom  it  is  addressed  must  be  merchants, 
regardless  of  the  character  of  the  transaction  to  be 
undertaken.^ 

Requisites  of  a  letter  of  credit. 

A  letter  of  credit  must  satisfy  the  following  requirements: 
(a)  it  must  be  issued  in  behalf  of  a  named  person, 
not  to  his  order;  ^ 

In  Chile,  ^°  Colombia  ^^  and  Guatemala,  ^^  this  essen- 
tial is  supplemented  by  the  provision  that  it  is  not 
endorseable  even  though  issued  to  order. 

Ecuador  ^^  and  Venezuela,  ^^  however,  provide  that 
a  letter  of  credit  may  authorize  the  beneficiary  to  draw 
in  favor  of  another  person  or  to  his  order  up  to  the 
amount  indicated  therein,  but  the  bill  of  exchange  must 
be  attached  to  the  letter  of  credit; 

6  Art.  666.  8  Art.  456. 

'  Bolivia,  474;  Costa  Rica,  519. 

*  Mexico,  564;  Nicaragua,  318;  San  Salvador,  464. 

'Spain,  568;  Argentina,  485;  Bolivia,  475;  Brazil,  264;  Costa  Rica,  520; 
Honduras,  530;  Mexico,  565;  Nicaragua,  319;  Peru,  558;  San  Salvador,  465; 
Uruguay,  626. 

The  essential  requisites  of  a  letter  of  credit  are:  (a)  the  designation  of  the 
person  in  whose  favor  it  is  issued;  (b)  the  limitation  of  the  amount  covered; 
and  (c)  the  mercantile  capacity  of  the  parties.  Brazil,  Cam.  Reun.  da  Corte  de 
Apel.,  Nov.  24,  1909,  Rev.  de  Direilo,  v.  14,  p.  553. 

1"  Art.  783.  "  Art.  916.  "  Arts.  667,  668,  669. 

"  Art.  481.  "  Art.  457. 


588  LATIN-AMERICAN   COMMERCIAL   LAW 

(b)  it  must  state  a  certain  amount  or  may  refer  to 
one  or  more  sums  of  money,  provided  they  are  limited 
within  a  certain  and  fixed  maximum.  Otherwise  the 
document  is  not  a  letter  of  credit  but  a  recommendation 
only,  which  does  not  create  any  legal  liabihty  on  the 
part  of  the  person  issuing  it;  ^^ 

(c)  it  must  state  the  period  within  which  it  can  be- 
utilized.  ^^ 

Life  of  a  letter  of  credit. 

In  case  no  period  is  fixed  for  the  utilization  of  a  letter  of 
credit,  two  systems  are  followed: 

1.  The  law  fixes  a  limit,  which  in  Spain  -^  is  six  months, 
for  letters  issued  on  Europe  and  twelve  months  for 
those  issued  on  other  places.  ^^  In  Peru  ^^  the  period 
is  twelve  months  and  in  San  Salvador  ^°  and  Honduras  ^^ 
six  months,  wherever  the  letter  is  issued. 

2.  The  tribunal  of  commerce  or  the  judge  of  appro- 
priate jurisdiction  fixes  the  period  within  a  reasonable 
time.^^ 

Revocability  of  letters  of  credit. 

A  point  respecting  which  the  codes  are  not  uniform  relates 

18  Spain,  568;  Argentina,  484;  Bolivia,  475;  Brazil,  264;  Chile,  784,  794; 
Colombia,  917,  927;  Costa  Rica,  521;  Ecuador,  482;  Guatemala,  672,  673; 
Honduras,  530;  Mexico,  564;  Nicaragua,  318;  Peru,  558;  San  Salvador,  465; 
Uruguay,  525;  Venezuela,  458. 

"Spain,  572;  Argentina,  490;  Bolivia,  481;  Chile,  784;  Colombia,  917; 
Costa  Rica,  526;  Guatemala,  670;  Honduras,  534;  Mexico,  564;  Peru,  562;  San 
Salvador,  469;  Uruguay,  631;  Veneauela,  458. 

"  Art.  572. 

18  No  reference  is  made  in  the  code  of  Spain  to  any  special  way  to  reckon 
the  period  for  using  a  letter  of  credit  issued  in  Cuba.  Betancourt  (loc.  cU., 
p.  209),  referring  to  article  572  above,  says:  "As  long  as  this  article  subsists 
the  interested  parties  should  make  certain  to  fix  the  period  lest  they  run  the 
risk  of  having  the  rule  contained  in  it  applied  verbatim,  so  that  letters  of  credit 
issued  upon  America  may  live  one  year,  while  those  on  Europe  may  live  only 
six  months,  notwithstanding  that  the  purpose  of  the  law  makers  was  perhaps 
otherwise. 

"  Art.  562.  20  Art.  469.  "  Art.  534. 

22  Argentina,  490;  Chile,  784;  Colombia,  917;  Costa  Rica,  526;  Guatemala, 
671;  Uruguay,  631. 


LETTERS    OF   CREDIT  589 

to  the  revocability  of  letters  of  credit.  Some  of  them,  con- 
sidering that  the  fundamental  element  of  such  letters  is 
commercial  courtesy  rather  than  a  real  purpose  to  create 
obligations,  grant  to  the  issuing  person  the  privilege  of  revok- 
ing the  letter  at  any  time  at  will,  thus  avoiding,  on  the  one 
hand,  the  necessaity  of  proving  judicially  that  the  benefi- 
ciary no  longer  warrants  the  credit  gi-anted,  a  matter  gen- 
erally difficult  of  proof,  and  on  the  other  hand,  immediately 
terminating  the  period  which  the  beneficiary  might  utilize 
with  great  detriment  to  the  person  issuing  the  letter.-^ 

Other  codes,  accepting  expressly  the  rule  of  the  Spanish 
code  just  mentioned,  except  from  its  operation  the  cases 
where  the  beneficiary  of  the  letter  leaves  in  the  hands  of 
the  subscriber  thereof  the  amount  of  credit  authorized,  and 
where  the  person  issuing  the  letter  revokes  it  fraudulently. 
This  system  may  be  regarded  as  practically  the  same  as  the 
former,  because  both  exceptions  may  be  considered  as  im- 
plied in  it,  the  first,  because  in  receiving  the  amount  of  the 
letter  as  a  guaranty  of  the  credit  opened  a  contract  has  been 
concluded  and  an  obligation  created  binding  the  giver  of  the 
letter;  and  the  second,  because  everyone  is  responsible  for 
his  own  fraud.  The  system  referred  to  is  that  of  Argentina  -^ 
and  Mexico.-^ 

Other  codes,  considering  that  the  act  of  issuing  a  letter  of 
credit  creates  an  obligation  depending  upon  the  will  of  the 
beneficiary  only,  declare  that  the  giver  cannot  revoke  the 
letter  unless  something  happens  which  diminishes  the  credit 
of  the  beneficiary;  that  an  untimely  revocation  not  based  on 
a  reasonable  and  well-proven  cause  makes  the  subscriber 
liable  in  damages.-^ 

Lastly,  the  codes  of  Bolivia  ^^  and  Costa  Rica  -^  provide 
that  the  beneficiary  of  a  letter  of  credit  has  no  action  what- 
ever against  the  giver;  although  if  the  latter  makes  an 
untimely  revocation  damaging  the  beneficiary,  the  giver  is 

"  Spain,  570;  Honduras,  532;  Peru,  560;  San  Salvador,  467. 
2*  Art.  488.  "Art.  571. 

28  Chile,  786;  Colombia,  919;  Ecuador,  483;  Guatemala,  675,  676;  Nicaragua, 
319;  Uruguay,  629;  Venezuela,  459. 

"  Arts.  478,  479.  ^  Arts.  523,  524. 


590  LATIN-AMERICAN    COMMERCIAL   LAW 

liable.  In  this  system  the  burden  of  proving  the  circum- 
stances which  create  the  liability  of  the  giver  is  upon  the 
beneficiary. 

Protest  of  letters  of  credit. 

As  a  rule  the  codes  provide  that  letters  of  credit  are  not 
subject  to  acceptance  and  cannot  be  protested. ^^  In  making 
this  pro\'ision  some  of  the  codes  are  not  consistent  with  the 
definition  they  adopt  for  the  letter  of  credit  as  an  instrument 
of  exchange.  This  is  the  case  in  the  code  of  Chile  and  those 
which  follow  it. 

Ecuador  ^^  and  Venezuela  ^^  provide,  on  the  contrary, 
that  the  letter  of  credit  which  is  not  paid  must  be  protested 
with  the  formalities  required  for  a  bill  of  exchange. 

Obligation  of  the  giver  of  a  letter  of  credit. 

The  giver  of  a  letter  of  credit  is  bound  to  refund  to  the 
payer  the  amount  paid  to  the  beneficiary  within  the  limits 
established  in  the  letter. ^^ 

Obligations  of  the  beneficiary. 

The  obligations  of  the  beneficiary  of  a  letter  of  credit  are: 
(a)  to  pay  the  giver  without  delay  the  amount  he 
received  from  the  payer;  ^^ 

Nicaragua  ^^  grants  a  period  of  ten  days  from  the 

23  Spain,  569;  Argentina,  487;  Bolivia,  478;  Chile,  788;  Colombia,  921; 
Costa  Rica,  523;  Guatemala,  678,  679;  Honduras,  531;  Mexico,  567;  Peru,  559; 
San  Salvador,  466;  Uruguaj',  628. 

30  Art.  486.  "  Art.  462. 

32  Spain,  569;  Argentina,  486;  Bolivia,  476;  Brazil,  264;  Chile,  787;  Colom- 
bia, 920;  Costa  Rica,  522;  Ecuador,  484;  Guatemala,  677;  Honduras,  531; 
Mexico,  570;  Peru,  559;  San  Salvador,  466;  Uruguay,  627;  Venezuela,  460. 

The  liability  of  the  person  who  issues  a  letter  of  credit  is  joint  with  that  of 
the  beneficiary,  when  such  person  did  not  make  clear  his  purpose  of  being  a 
mere  sm-ety  and  he  states  in  his  letter  of  credit  that  "he  will  answer  for  the 
amounts  which  would  be  taken  untU  the  final  liquidation."  There  is  no 
question  in  the  case  of  guaranteeing  a  certain  amount  given  as  a  loan.  It  is 
really  a  contract  of  opening  a  credit.  Brazil,  Trib.  de  Just,  de  S.  Paulo,  May  18, 
1901,  and  Feb.  11,  1902,  S.  Paulo  Judiciario,  v.  1,  p.  47.    Cf.  art.  246. 

"Spain,  571;  Argentina,  489;  Chile,  791;  Colombia,  924;  Costa  Rica,  525; 
Guatemala,  682;  Honduras,  533;  Mexico,  572;  Peru,  561;  San  Salvador,  468; 
Uruguay,  630.  "  Art.  320. 


LETTERS   OF   CREDIT  591 

date  of  payment,  for  refunding  the  amount  received. 
The  other  codes  do  not  provide  for  a  period  within 
which  the  beneficiary  must  refund  the  amount  received ; 
therefore  the  general  rules  of  mercantile  obUgations  are 
applicable; 

(6)  to  identify  himself  if  the  payer  so  requires;  ^^ 

(c)  to  sign  the  letter  or  to  give  a  specimen  of  his 
signature  to  the  subscriber  of  the  letter,  in  Chile,  ^^ 
Colombia, ^^  Ecuador, ^^  Guatemala  ^^  and  Venezuela;  '^'^ 

(d)  to  state  in  the  letter  the  amounts  received;  and  in 
case  he  receives  only  part  of  the  credit  covered  by  it,  he 
can,  in  Ecuador  '*^  and  Venezuela  "^^  request  from  the 
payer  an  authorized  copy  of  the  letter  and  receipts. 

Legal  relations  between  the  beneficiary  and  the  payer  of  a 
letter  of  credit. 

The  person  who  complies  with  the  request  contained  in  a 
letter  of  credit  has  no  action  whatever  against  the  beneficiary 
for  the  reimbursement  of  the  amount  paid,  unless  it  appears 
in  the  terms  of  the  letter  that  the  subscriber  was  only  a 
surety  in  the  transaction/^ 

Letters  addressed  to  different  correspondents. 

A  letter  of  credit  may  be  addressed  to  several  correspond- 
ents residing  at  different  places,  requesting  their  compliance 
with  it  up  to  the  maximum  of  credit  designated  therein.  In 
such  case  the  correspondent  who  pays  a  part  of  the  amount 
must  state  that  fact  in  the  letter  itself,  under  penalty  of 
damages.  ^^ 

"Spain,  569;  Argentina,  485;  Bolivia,  477;  Chile,  789;  Colombia,  922; 
Costa  Rica,  520;  Ecuador,  488;  Guatemala,  680;  Honduras,  531;  Mexico,  565; 
Nicaragua,  321;  Peru,  559;  Uruguay,  626. 

"8  Art.  785.  ="  Art.  918.  sa  Art.  482. 

39  Art.  674.  «  Art.  458.  "  Art.  485. 

«  Art.  461. 

"Chile,  792;  Colombia,  925;  Ecuador,  484;  Guatemala,  684;  Nicaragua, 
321;  Venezuela,  460. 

"Chile,  793;  Colombia,  926;  Ecuador,  487;  Guatemala,  685,  636;  Vene- 
zuela, 463. 


592  LATIN-AMERICAN    COMMERCIAL   LAW 

Banker's  letter  of  credit. 

A  letter  of  credit  directed  by  a  banker  to  his  correspond- 
ents in  favor  of  a  named  beneficiary  affords  the  basis  for  a 
sight  bill  of  exchange  drawn  by  the  beneficiary  upon  the 
banker,  with  the  correspondent  as  payee.  The  usual  rules 
of  bills  of  exchange  are  applicable  to  such  instruments  in  the 
United  States. 


CHAPTER  XXXV 

CURRENT   ACCOUNT 

Spain. — Estasen,  Pedro:  De  las  cuentas  corrientes  y  de  los  contratos  de 
cuentas  corrientes  segiin  el  derecho  espaiiol.    Madrid,  1910. 

Valles  y  Pujals,  Jose:  El  contrato  de  la  cuenta  corriente.    Barcelona,  1906. 

Brazil. — Lacerda  Paulo  de:  .  .  .  Do  contrato  de  abertura  de  credito. 
S5o  Paulo  (1904). 

Same:  Estudos  sobre  o  contrato  de  conta-corrente.    Sao  Paulo,  1901. 

Silva  Costa,  Jose  da:  Contrato  de  conta-corrente.    Rio  de  Janeiro  (1883). 

Mexico. — Pallares,  Jacinto:  Naturaleza  del  contrato  de  cuenta  corriente. 
Mexico,  Rev.  de  Legislacion  Jurisprudencia,  1896,  1st  sems.,  p.  201. 

Verdugo,  Agustin:  La  cuenta  corriente.    El  Derecho.    Mexico,  1895,  p.  65. 

Definition. 

Current  account  is  a  contract  by  which  the  parties  agree 
to  send  to  and  to  receive  from  each  other  money  or  any  other 
thing  of  value,  the  title  or  ownership  of  which  is  transferred 
automatically  to  the  receiver,  without  specification  or  any 
obhgation  to  keep  at  the  disposal  of  the  sender  any  equiva- 
lent amount;  but  only  to  place  to  his  credit  the  amounts 
received  and  make  liquidation  at  stated  periods  agreed  upon, 
setting  off  credits  and  debts  and  paying  the  balance.^ 

1  Argentina,  771;  Chile,  602;  Colombia,  730;  Ecuador,  489;  Guatemala,  488; 
Honduras,  416;  Peru,  563;  San  Salvador,  383;  Venezuela,  464. 

Current  account  is  a  contract  between  merchants  who  reciprocally  debit 
and  credit  their  respective  accounts.  So  long  as  it  is  not  closed  there  is  no 
creditor  or  debtor.  Its  closing  does  not  imply  its  liquidation.  The  final 
balance  cannot  be  taken  from  the  account  kept  by  one  of  the  parties,  but  only 
by  mutual  agreement  or  judicial  decision.  Mexico,  3a  Sala  del  Trib.  Sup.  del 
Dist.  Fed.,  May  30,  1908,  Miguel  Haro  S.  en  C.  v.  M.  C.  Viuda  de  Maqueo  e 
Hijos,  Diario  de  Jur.,  v.  XV,  p.  301. 

Remittances  of  merchandise  and  money  as  the  price  thereof  made  to  each 
other  by  two  persons  residing  in  different  countries  constitute  between  them  a 
current  account,  the  balance  of  which  can  be  demanded  any  time  when  no 
period  for  Uquidation  has  been  stipulated;  interest  begins  to  accrue  from  the 
date  of  the  judicial  demand.  Mexico,  Juzgado,  3a  de  lo  Civil  del  Dist.  Fed., 
Feb.  12,  1903,  M.  Santeliz  v.  M.  P6rez  Fernandez,  Diario  de  Jur.,  v.  I,  No.  7, 
p.  5. 

There  are  three  elements  in  a  contract  of  current  account,  namely :  (a)  that 

593 


594  LATIN-AMERICAN    COMMERCIAL   LAW 

The  subject-matter  of  a  current  account. 

All  transactions  between  merchants,  whether  or  not 
residing  at  the  same  place,  or  between  a  merchant  and  a 
non-merchant,  and  every  kind  of  valuable  thing  the  owner- 
ship of  which  can  be  conveyed,  may  be  the  subject-matter  of 
a  current  account.^ 

Natural  effects  of  a  current  account. 

The  following  are  deemed  natural  effects  of  a  current 
account:  ^ 

(a)  that  the  title  to  the  money  or  other  thing  of  value 
received  passes  from  the  sender  to  the  receiver; 

(6)  that  the  entry  made  in  the  account  of  the  receiver 
crediting  negotiable  paper,  is  conditional  upon  its  being 
paid; 

(c)  that  between  both  parties  the  setting  off  of  the 
entries  on  either  side  of  the  account  is  obligatory; 
consequently  every  transaction  is  a  novation,  so  that 
neither  party  has  a  right  to  demand  payment  of  any 
remittance,  whatever  its  value,  but  only  the  balance  of 
the  account  at  the  time  stipulated,  subject  to  agreement 
to  the  contrary; 

(d)  that  the  balances  draw  legal  or  contractual 
interest ; 

(e)  that  the  final  balance,  when  acknowledged,  is  de- 
mandable,  unless  further  remittances  have  been  made 
or  it  is  agreed  to  bring  the  balance  to  a  new  account."* 

mutual  remittances  between  the  contracting  parties  be  made,  so  that  debit 
and  credit  entries  are  made,  with  interest  thereon ;  (b)  that  money  or  valuables 
are  remitted  transferring  title  thereto  to  the  other  party;  (c)  that  liquidation 
of  the  account  be  made  at  fixed  periods.  Colombia,  Casaci6n,  May  31,  1911; 
Gaceta  Jud.,  v.  XIX,  p.  330. 

A  person  who  demands  payment  of  the  balance  of  a  current  account  must 
prove  the  existence  of  the  special  contract  of  current  account.  Argentina 
Camara  de  Apel.  Fed.  La  Plata,  Dec.  10,  1913,  Jur.  de  los  Tribs.  Noes.,  Dec. 
1913,  p.  58.   . 

2  Argentina,  773;  Chile,  604;  Colombia,  732;  Ecuador,  491;  Honduras,  418 
Peru,  564;  San  Salvador,  384;  Venezuela,  466. 

^  Argentina,  777;  Chile,  606;  Colombia,  734;  Guatemala,  493;  Honduras,  420 
Peru,  567;  San  Salvador,  385;  Venezuela,  468. 

*  The  "Banco  Nacional  en  Liquidaci6n"  cannot  bring    an  "executive' 


CUERENT   ACCOUNT  595 

Commission  and  current  account. 

The  existence  of  a  contract  of  current  account  does  not 
prevent  the  parties  from  charging  a  commission  fee  and 
asking  for  the  reimbursement  of  expenses  incurred.'' 

Transactions  not  affected  by  the  current  accoimt. 

Money  and  effects  sent  for  specific  purposes  to  be  pre- 
served at  the  disposal  of  the  sender,  are  not  comprised  in  the 
current  account,  and  hence  are  not  subject  to  a  mercantile 
set-off.^ 

Rights  of  creditors. 

Attachment  of  goods  or  credits  entered  in  a  current 
account  cannot  take  place;  only  the  balance,  if  any,  in  favor 
of  the  debtor  at  the  end  of  the  account,  is  subject  to  attach- 
ment.^ 

action  against  the  debtor  for  payment  of  the  balance  of  a  current  account 
unless  such  balance  was  acknowledged  by  the  debtor,  even  though  he  be  absent 
and  his  domicil  unknown.  Argentina,  Cam.  Fed.  de  Ap.  Cordoba,  April  8, 
1913,  Jur.  de  los  Tribs.  Macs.  April,  1913,  p.  91. 

Copies  of  a  current  account  which  have  not  been  acknowledged  by  the 
debtor,  cannot  be  the  basis  of  an  "executive  "  proceeding.  Peru,  Corte  Sup., 
Comp.  Hipotecaria  v.  L.  Le6n,  May  29,  1906,  Anales  Jud.,  v.  II,  p.  373. 

When  a  debtor  has  acknowledged  and  accepted  the  balance  of  a  current 
account,  a  writ  of  attachment  in  "executive  "  proceedings  can  be  issued. 
Mexico,  Trib.  Sup.  del  Dist.  Fed.,  Aug.  16,  1912,  S.  Sanchez  Gil  v.  S.  Najera, 
Diar.  de  Jur.,  vol.  XXVIII,  p.  265. 

In  order  that  the  balance  of  a  current  account  be  demandable,  it  is  necessary 
to  have  the  account  closed,  and  in  the  absence  of  agreement  on  that  point  any 
of  the  parties,  at  his  option,  can  close  the  account.  Mexico,  Terc.  Sala  del 
Trib.  Sup.  Del.  Dist.  Fed.,  May  27,  1913,  Bemejillo  y  Cia,  S.  en  C.  en  liquida- 
ci6n  V.  C.  A.  Malan,  Dinrio  de  Jurisp.,  v.  XXXI,  p.  225. 

*  Argentina,  778;  Chile,  606;  Colombia,  734;  Ecuador,  493;  Guatemala,  491 
Honduras,  420;  Peru,  569;  San  Salvador,  386;  Venezuela,  468. 

« Argentina,  780;  Chile,  609;  Colombia,  737;  Ecuador,  496;  Guatemala,  494 
Honduras,  423;  Peru,  570;  Venezuela,  471. 

7  Argentina,  781;  Chile,  610;  Colombia,  738;  Ecuador,  497;  Guatemala,  495 
Honduras,  424;  Peru,  571;  Venezuela,  472. 

When  in  a  contract  a  bank  binds  itself  to  open  a  current  account  for  a 
person  who  grants  the  Ijank  a  preference  to  buy  securities  he  may  subsequently 
issue,  reserving  to  himself  the  privilege  to  pay  the  balance  of  the  account  and 
cancel  it;  once  he  does  cancel  the  account,  he  is  not  bound  to  give  the  prefer- 
ence above  referred  to.  Spain,  Trib.  Sup.,  Jan.  11,  1911;  Gacetas  of  Oct.  23, 
26,  28,  1911,  pp.  39  to  46. 


596  LATIN-AMERICAN    COMMERCIAL   LAW 

Termination  of  a  current  account. 

The  termination  of  a  current  account  takes  place: 

(a)  by  consent  of  the  parties  thereto; 

(6)  by  the  end  of  the  stipulated  period; 

(c)  by  death,  insanity,  bankruptcy  or  any  other  event 
which  deprives  either  of  the  parties  of  the  management 
of  his  property.^ 

Effects  of  the  termination  of  a  current  account. 

The  termination  of  a  current  account  fixes  the  legal 
relations  between  the  parties;  by  operation  of  law,  it  produces 
a  set-off  between  the  credit  and  the  debit  of  the  account  and 
thus  establishes  in  a  definite  way  which  of  the  parties  is  the 
creditor.^ 

Periodical  balances. 

The  parties  can  provide  for  periodical  balances  of  the 
account,  for  the  rate  of  interest  and  commissions  and  for  any 
other  matter  of  mutual  agreement.  The  balance  of  the 
a.ccount,  whether  provisional  or  definite,  is  considered  as 
capital  and  draws  interest.  ^° 

In  Argentina  the  minimum  period  which  the  parties  can 
establish  for  balancing  the  account  is  three  months.  San 
Salvador  does  not  establish  any  minimum,  and  the  other 
above-mentioned  countries  establish  six  months. 

San  Salvador  provides  ^^  that  the  ciurent  account  must  be 

8  Argentina,  782;  Chile,  611;  Colombia,  739;  Ecuador,  498;  Guatemala,  496 
Honduras,  425;  Peru,  576;  San  Salvador,  388;  Venezuela,  473. 

9  Argentina,  784;  Chile,  613;  Colombia,  741;  Ecuador,  500;  Guatemala,  498 
Honduras,  427;  Peru,  577;  San  Salvador,  389;  Venezuela,  475. 

"  Argentina,  788;  Chile,  617;  Colombia,  743;  Ecuador,  504;  Guatemala,  502 
Honduras,  431;  Peru,  574;  Venezuela,  479. 

Interest  on  the  balance  of  a  current  account  is  due  from  the  date  on  which  a 
summons  was  served  upon  the  defendant.  Mexico,  Tercera  Sala  del  Trib. 
Sup.  del  Dist.  Fed.,  May  27,  1913,  Diario  de  Jurisp.,  vol.  XXXI,  p.  223. 

From  the  moment  a  liquid  balance  of  an  account  is  ordered  to  be  paid  by  a 
final  judgment  and  the  debtor  fails  to  pay,  he  is  in  default  and  interest  upon 
that  balance  begins  to  accrue.  Colombia,  Corte  Sup.,  Dec.  11,  1895;  Gaceta 
Jud.,  V.  XI,  p.  223. 

11  Art.  387. 


CURRENT   ACCOUNT  597 

closed  and  the  balance  paid  at  the  end  of  the  period  provided 
for  in  the  contract;  should  there  not  be  any  provision  the 
liquidation  must  be  made  in  December  of  every  year. 

Proof  of  the  contract  of  current  account. 

The  contract  of  account  current  can  be  proved  by  all 
means  of  evidence,  including  the  testimony  of  witnesses,  in 
Argentina  ^-  and  Colombia. ^^  In  Chile, ^"^  Ecuador, ^^ 
Guatemala,^®  Honduras, ^^  Peru,^^  and  Venezuela,"  it  can  be 
proved  by  the  means  estabhshed  in  the  code  of  commerce, 
except  by  the  testimony  of  witnesses. 

Statute  of  limitations. 

Actions  demanding  the  settlement  of  an  account  current, 
payment  of  its  balance,  the  redress  of  mistakes  in  computa- 
tion, omissions,  or  items  wrongly  entered  in  the  account,  are 
barred  by  limitation  after  the  lapse  of  five  years.  The  same 
period  limits  actions  for  collecting  interest  on  the  balance 
which  is  due  every  year  or  an  agreed  part  thereof. -° 

12 Art.  789.  I'Art.  744.  "Art.  618. 

"  Art.  505.  i«  Art.  503.  "  .\rt.  432. 

18 Art.  575.  "Art.  480. 

The  contract  of  current  account  is  proved  when  the  defendant  admits  that 
even  though  no  express  agreement  was  made,  the  account  was  actually  opened. 
Mexico,  Tercera  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  May  27,  1913,  Bermejillo  y 
Cia.  S.  en  C.  en  Liquidaci6n  v.  C.  Malan,  Diario  de  Jurisp.  v.  XXXI,  p.  225. 

The  contract  of  current  account  is  evidenced  by  letters  and  by  the  fact  that 
merchants  draw  upon  each  other.  Mexico,  Tercera  Sala  del  Trib.  Sup.  del 
Dist.  Fed.,  April  9,  1913,  Rodriguez,  v.  Acibal,  Diar.  de  Jur.,  v.  XXX,  p.  738. 

The  action  for  payment  of  the  balance  of  an  account  current  between 
merchants  is  governed  by  the  code  of  commerce;  therefore  the  existence  of  the 
contract  from  which  such  action  may  be  derived  cannot  be  proved  by  the 
testimony  of  witnesses.  Chile,  Corte  de  Apel.  de  la  Serena,  April  7,  1896; 
Gaceta  de  los  Tribs.,  1896,  v.  I,  p.  233. 

The  proof  that  a  current  account  existed  and  that  a  mortgage  was  given  to 
guarantee  the  balance  thereof,  which  mortgage  was  afterwards  cancelled,  is 
also  evidence  that  documents  and  receipts  in  the  hands  of  the  creditor  corre- 
sponding to  the  period  in  which  the  current  account  was  in  force,  are  also  to  be 
cancelled.  Argentina,  Cam.  La  de  Ap.  Civ.  Buenos  Aires,  July  17,  1913, 
Jur.  de  los  Tribs.  Macs.,  July,  1913,  p.  116. 

2"  Argentina,  790;  Chile,  619;  Colombia,  745;  Ecuador,  506;  Guatemala,  504; 
Honduras,  433;  Peru,  578;  Vonrauela,  481. 

For  current  accounts  which  have  not  a  mercantile  character  the  period  of  the 


598  LATIN-AMERICAN    COMMERCIAL   LAW 

In  Peru,  the  period  of  five  years  is  calculated  from  the 
date  on  which  a  copy  of  the  account  was  served  on  the  debtor 
or  on  which  the  balance  was  acknowledged. 

In  San  Salvador  a  claim  for  the  rectification  of  an  arith- 
metical mistake  is  only  admissible  within  four  years  from 
the  day  on  which  a  copy  of  the  erroneous  account  was  drawn 
up  or  received.  ^^ 

statute  of  limitations  is  two  years  accordiag  to  article  849  of  the  code  of  com- 
merce.   Argentina,  Cam.  2a  de  Ap.  CivU,  Buenos  Aires,  Nov.  19,  1912,  Jut  de 
los  THbs  Noes.,  Nov.,  1912,  p.  214, 
"  Art.  391. 


CHAPTER  XXXVI 

BANKRUPTCY   IN   GENERAL   AND    PREVENTIVE   SETTLEMENT 
WITH   CREDITORS 

Akgbntina. — Armengol,  Manuel  F.:  Fundamentos  y  critica  de  la  ley  de 
quiebras  ...  2d  ed.,  aumentada  notablemente  en  la  parte  critica.  Buenos 
Aires,  1914. 

Bunge  Guierrico,  Hugo:  Interpretaci6n  de  la  ley  de  quiebras.  Buenos  Aires, 
1915. 

CastUlo,  Ramon  S.:  Ley  de  quiebras.  I.  De  las  quiebras  en  general.  II. 
Precedimiento  de  nuestros  tribunales  en  los  juicios  de  concurso.  Disertaci6n 
leida  en  la  Academia  te6rico-prActica  de  jurisprudencia.    Buenos  Aires,  1864. 

Obarrio,  Manuel:  Estudios  sobre  las  quiebras.    Buenos  Aires,  1895. 

Rodriguez,  Arist6bulo:  Quiebras  en  derecho  internacional  privado.  Buenos 
Aires,  1907. 

Ruiz  Guinazu,  Enrique:  De  las  quiebras.  Concordato  preventive.  Buenos 
Aires,  1911. 

Brazil. — Alencastro  Autran,  Manoel  Godofredo  de:  Das  fallencias  segundo 
a  lei  n.  2024  de  17  de  dezembro  de  1908  accompanhada  de  seu  formulario  e 
seguida  de  um  indice  alfabetico.    Rio  de  Janeiro,  1912. 

Bento  de  Faria,  Antonio:  Das  fallencias,  5th  ed.    Rio  Janeiro,  1913. 

CarvaUio  de  Mendonga,  J.  X.:  Das  fallencias  e  dos  meios  preventives  de  su 
declaragao  .  .  .  Estudo  theorico  pratico.    Sao  Paulo,  1899.    2  v. 

Sa  Vianna,  Manoel  Alvaro  de  Souza:  Das  fallencias.  .  .  .  Rio  de  Janeiro, 
1907. 

Chile. — Barcel6,  Luis:  Prontuario  del  juicio  de  quiebra.  Santiago  de  Chile, 
1904. 

Quijada  B,  Aureliano:  Quiebras.  EI  libro  IV  del  c6digo  de  comercio  cora- 
plementado  con  lo  pertinente  del  c6digo  de  procedimiento  civil.  Santiago, 
190.3. 

Valdes  Riesco,  Alejandro:  Quiebras.  Comontario  al  libro  IV  del  c6digo  de 
comercio  .  .  .  Tomo  I.    Santiago,  1897. 

Cuba. — Betancourt,  Angel  C:  Suspensi6n  de  pagos:  Ley  de  24  de  Junio  de 
1911.    (Of  Cuba)  Habana,  1912. 

Peru. — Lama,  Miguel  Antonio  de  la:  C6digo  de  comercio  y  ley  proccsal  de 
quiebras  y  suspension  de  pagos,  con  notas  crlticas  explicativas  y  do  concor- 
dancia.    Lima,  1902-1905.    2  v. 

Spain. — Esta.sen,  Pedro:  Tratado  de  la  suspensi6n  de  pagos  y  de  las  quiebras. 
Estudio  te6rico-prdctico.     2d  ed.,  1909. 

Lastr&s,  Francisco :  Dictamen  de  la  comisi6n  nombrada  por  el  congrcso  para 
informar  la  proposici6n  de  ley  relativa  a  suspensi6n  do  pagos  y  quiebras. 
Madrid,  1893. 

Nogu^s,  Emilio  Jos6  Maria,  and  Martorell  y  Rovira  de  Casellas,  Luis: 

599 


600  LATIN-AMERICAN    COMMERCIAL   LAW 

Quiebras  y  suspensiones  de  pagos.  Comentarios  al  libro  del  codigo  de  comercio 
comentado  y  comparado  .  .  .  Iegislaci6n  .  .  .  de  Europa,  3d  ed.,  corregida 
con  arreglo  a  la  ley  de  10  de  junio  de  1897.    Madrid,  1897. 

Redondo,  Remigio  Ant6n:  Quiebras.  Manuel  sobre  el  procedimiento  en  los 
juicios  universales  de  quiebras.    Madrid,  1896. 

Rives  y  Marti,  Francisco  de  P.:  Teoria  y  prdctica  de  kctuaciones  judiciales  en 
materia  de  concursoede  acreedores  y  quiebras,  con  sus  preliminares  quita  y 
espera  y  suspensi6n  de  pagos.     2d  ed.    Madrid,  1904.    2  v. 

Uruguay. — Cibilis,  Larravide:  Comentarios  al  titulo  8  del  libro  4  del  co 
digo  de  comercio.    Montevideo,  1895. 

Ferres,  B.:  Concordato  preventivo.    Montevideo,  1906. 

Guillot,  A. :  Declaraci6n  de  quiebras.    Montevideo,  1901. 

General  principles. 

The  bankruptcy  of  a  merchant  is  different  in  character 
from  the  failure  of  a  non-merchant  to  pay  his  obligations. 
The  latter  is  not  an  organ  charged  with  the  function  of 
circulating  wealth;  nor  has  he  secured  the  social  benefit  which 
the  former  enjoys  from  many  connections  and  wide  inter- 
course in  different  parts  of  the  country  and  abroad.  The 
failure  of  a  non-merchant  cannot  as  a  rule  affect  many  other 
persons,  while  that  of  a  merchant  may  involve  persons  and 
associations  scattered  in  different  places  and  countries. 
From  a  merely  economic  viewpoint  bankruptcy  is  a  process 
of  selection,  separating  from  the  important  function  of 
commerce  those  who  have  proved  unfit. 

From  a  legal  viewpoint  bankruptcy,  terminating  pro\a- 
sionally  the  relations  of  the  common  debtor  with  his  credit- 
ors, creates  among  the  latter  a  direct  relation  which  calls  for 
an  adjustment  in  accordance  with  their  respective  claims 
and  the  economic  situation  of  the  debtor's  estate,  and, 
making  the  behavior  of  the  debtor  the  subject-matter  of 
investigation,  provides  either  for  his  punishment  in  case  he 
is  found  guilty  of  negligence  or  crime,  or  for  his  rehabilitation 
as  a  merchant,  when  proper. 

The  law  of  bankruptcy  is  special  to  merchants. 

A  state  of  bankruptcy  in  all  Latin- American  countries  is, 
therefore,  special  to  merchants.^ 

1  Spain,  874;  Argentina,  1379;  Bolivia,  502;  Brazil,  law  of  bankruptcy  of 
December  17,  1908;  Chile,  1325;  Colombia,  121;  Costa  Rica,  3  of  law  of  Octo- 


BANKRUPTCY    IN    GENERAL  601 

An  exception  to  this  general  rule  is  found  in  Brazil,  where 
article  3  of  the  law  of  bankruptcy  -  provides  that  corpora- 
tions {sodedades  anonimas)  are  subject  to  bankruptcy  even 
though  they  are  not  commercial,  when  they  fail,  without 
good  reason,  to  meet  their  obligations  or  when  their  capital 
is  reduced  to  one-fourth  or  less  of  the  original  amount. 

Articles  1125  to  1215  of  the  code  of  civil  procedure  of 
Colombia,  amended  by  law  No.  40  of  1907,  provide  for  rules 
applicable  to  legal  procedure  in  insolvency  irrespective  of 
the  person's  character  as  a  trader,  but  the  classification  of 
bankruptcy  refers  to  merchants  only. 

On  the  other  hand,  Costa  Rica  ^  and  Panama  ^  embody  in 
the  same  proceedings  all  persons,  whether  merchants  or  not, 
who  fail  to  pay  their  debts;  and  in  all  cases  insolvency  is 
classified  either  as  fortuitous,  culpable  or  fraudulent. 

Public  interest  is  at  stake  in  bankruptcy  proceedings 
owing  to  the  interruption  in  the  regular  fulfillment  of 
obligations  which  have  a  bearing  on  credit  and  the  circula- 
tion of  wealth.  This  explains  the  fact  that  the  public 
prosecutor  is  a  party  to  legal  proceedings  in  bankruptcy. 

Preventive  composition  with  creditors. 

One  of  the  greatest  dangers,  when  a  merchant  realizes  his 
inability  to  pay  his  creditors,  is  that  he  may  embark  upon 
ruinous  ventures  in  order  to  conceal  his  real  situation,  with 

ber  15,  1901;  Ecuador,  917;  Guatemala,  1196;  Haiti,  434;  Honduras,  86; 
Mexico,  945;  Panama,  1534;  Peru,  886;  San  Salvador,  770;  Santo  Domingo, 
437;  Uruguay,  1546,  1870. 

A  merchant  cannot  make  an  assignment  of  his  whole  property  (cesion  de 
bienes)  to  his  creditors  for  that  is  a  privilege  of  non-merchants;  he  has  to  apply 
instead  for  a  declaration  of  bankruptcy.  Lima,  Corte  Sup.  de  Just.,  June  5, 
1907,  Anales  Jvd.  de  la  Corle  Sup.,  vol.  3,  p.  100. 

The  law  of  bankruptcy  is  applied  to  merchants  whether  they  are  registered 
in  the  commercial  registry  or  not.  Lima,  June  10,  1907,  Corte  Sup.  de  Just. 
Anales  Jud.,  vol.  3,  p.  125. 

A  person  who  does  not  possess  the  character  of  a  merchant  is  not  subject 
to  bankruptcy  proceedings.  Spain,  Trib.  Sup.,  June  21,  1878;  Gaccta  of 
Aug.  12,  1878. 

2  Law  No.  2024  of  December  17,  1908,  to  which  reference  is  hereafter  made 
in  citing  articles  of  the  Brazilian  law. 

2  Art.  870.  ■»  Art.  858. 


602  LATIN-AMERICAN    COMMERCIAL   LAW 

the  hope  that  something  may  develop  to  allow  him  to  im- 
prove his  financial  position;  or  else  he  may  yield  to  the 
suggestions  of  some  of  his  creditors  by  paying  them  in  ad- 
vance or  by  giving  them  guaranties  or  preferences,  thus 
prejudicing  the  other  creditors;  or,  even  worse,  he  may  try 
to  secrete  a  part  of  his  assets.  In  order  to  prevent  these  evils 
and  at  the  same  time  to  afford  an  unsuccessful  debtor  in  good 
faith  a  way  to  escape  bankruptcy  and  continue  doing 
business,  two  systems  have  been  adopted:  one  consists  in 
giving  the  debtor  an  opportunity  to  secure  from  his  creditors 
a  moratorium  (suspension  de  pagos) ;  and  the  other,  more  lib- 
eral, consists  in  giving  him  an  opportunity  to  arrange  with 
his  creditors  not  merely  a  moratorium  but  an  abatement  of 
their  claims,  a  so-called  preventive  settlement  (concordato 
preventivo) . 

The  first  system  has  been  adopted  by  the  codes  of  Spain,  ^ 
Honduras  ^  and  Peru  J 

The  second  system  has  been  adopted  by  the  laws  of 
Argentina,^  Brazil,^  the  Republic  of  Cuba,  which  by  law  of 
June  24,  1911,  amended  articles  870  to  873  of  the  Spanish 
Commercial  Code,^"  Uruguay  ^^  and  Venezuela.  ^^" 

The  codes  of  Bolivia  ^-  and  of  Colombia, ^^^  though  they 
classify  as  bankruptcy,  the  suspension  of  payments  when 
the  debtor  has  property  enough  to  pay  his  debts,  neverthe- 
less do  not  deprive  the  debtor  in  case  of  a  mere  suspension 
of  payments  of  the  management  of  his  property,  nor  is  it 
divided  among  the  creditors;  thus,  these  codes  practically 
admit  the  status  of  suspension  of  payments. 

Prerequisites    for    obtaining    moratorium    or    preventive 
composition. 

In  countries  where  the  debtor's  only  relief  is  by  morato- 
rium, it  is  necessary  that  the  debtor  possess  property  enough 
to  pay  his  liabilities  in  full.^^    Venezuela  also  establishes  this 

B  Art.  885.  «  Art.   1384.  ^  Art.  149. 

8  Arts.  1384  to  1411.  ^  Art.   1523.  "Art.  855. 

"  Art.  1523.  1^"  Arts.  855,  860.  i^  Arts.  488,  489. 

i2«  Arts.  122,  123.  "  Spain,  870;  Honduras,  858;  Peru,  883. 


BANKRUPTCY    IN    GENERAL  603 

requisite,  though  the  debtor  may  during  the  moratorium 
obtain  partial  releases.  ^^ 

The  debtor,  according  to  both  systems,  can  request  a 
moratorium  or  a  preventive  composition  under  two  circum- 
stances: (a)  before  the  maturity  and  demand  for  payment 
of  any  obligation;  or  (6)  after  maturity  and  non-payment  of 
such  obligation,  within  a  period  of  forty-eight  hours  in  Spain, 
Honduras  and  Peru,  or  three  days  in  Argentina.  ^^ 

In  Brazil  ^^  the  application  must  contain  an  affidavit  that 
within  the  last  eight  days  no  negotiable  instrument  has  been 
protested. 

In  Cuba,^^  furthermore,  when  the  debtor  asks  for  a  pre- 
ventive composition  because  his  assets  have  decreased  owing 
to  circumstances  beyond  his  control,  he  must  guarantee, 
with  a  mortgage,  pledge,  deposit  in  cash  or  guaranty  of  a 
merchant  possessing  a  commercial  house  or  realty  inscribed 
in  the  registry,  that  he  will  pay  at  least  fifty  per  cent  of  his 
unsecured  liabilities. 

In  Uruguay  and  Venezuela  no  period  is  established;  the 
debtor  may  demand  the  privilege  any  time. 

Besides  these  requisites  the  debtor  must  comply  with  the 
following  obligations,  although  not  all  of  them  are  necessary 
everywhere,  as  indicated: 

"  Arts.  855,  863. 

15  Spain,  871;  Argentina,  1384;  Cuba,  871;  Honduras,  859;  Peru,  884. 

18  Art.  149. 

The  period  of  forty-eight  hours  for  a  debtor  to  apply  for  a  declaration  of 
suspension  of  payments,  after  an  obhgation  is  due  and  unsatisfied,  must  be 
reckoned  not  from  the  date  of  the  maturity  of  the  obligation  but  from  the 
formal  demand  of  payment  by  the  creditor.  Spain,  Trib.  Sup.,  Feb.  11,  1895; 
Gaceta  of  May  3,  1895. 

The  privilege  of  suspension  of  payments  only  requires  the  application  of  the 
debtor,  and  the  law,  in  order  to  minimize  the  danger  which  such  a  situation 
might  create  for  the  creditors,  has  provided  for  terms  and  periods  which  must 
be  strictly  observed,  not  as  a  matter  of  mere  procedure,  but  as  a  necessary 
and  substantial  requisite  of  the  law,  lest  the  debtor  or  the  judge  might  pro- 
long a  dangerous  situation;  for  that  reason  the  provisions  of  articles  871  of 
the  code  of  commerce  and  1131  and  1132  of  the  code  of  civil  procedure 
must  be  strictly  applied.  Spain,  Trib.  Sup.,  May  3,  1897;  Gaceta  of  May  18, 
1897. 

"Art.  870. 


604  LATIN-AMERICAN    COMMERCIAL    LAW 

(a)  to  apply  in  writing  to  the  judge  of  proper  jurisdic- 
tion asking  for  a  declaration  of  '^suspension  of  pay- 
ments," in  Spain/^  Cuba,^^  Honduras  -°  and  Peru,^^ 
or  for  a  meeting  of  his  creditors,  in  Argentina,  ^^  Brazil,  ^^ 
Uruguay  -^  and  Venezuela.-^  In  Cuba  the  application 
must  be  countersigned  by  a  lawyer; 

(&)  to  state  the  reasons  why  he  must  suspend  pay- 
ments or  request  a  composition;  ^^ 

(c)  to  give  a  surety  bond  or  guaranty  for  half  the 
entire  amount  of  his  debts;  ^^ 

{d)  to  present  an  inventory  of  his  property;  ^^ 

(e)  to  present  also  a  detailed  statement  of  his  assets 
and  liabilities  and  a  complete  list  of  his  creditors, 
showing  their  residences,  the  amount  due  to  each  and  the 
date  of  maturity  of  each  obligation;  ^^ 

(/)  to  prove  that  his  name  is  inscribed  in  the  commer- 
cial registry.^" 

In  Peru  ^^  the  certificate  of  inscription  in  the  Mercan- 
tile Registry  must  state  that  such  inscription  was  made 
six  months  at  least  before  the  application; 

{g)  to  produce,  in  case  the  applicant  is  a  commercial 
association,  a  resolution  by  the  plurality  of  its  members, 
properly  cited  for  that  purpose.  ^^  In  Argentina  any  of 
the  members,  unlimitedly  liable,  of  a  partnership  or  any 
member  who  can  sign  the  firm  name  can  make  the 
application,  and  in  a  corporation  the  president  or 
manager  thereof.  In  Brazil  ^^  and  Uruguay  ^^  corpora- 
tions cannot  enjoy  the  privilege  of  a  composition.     In 

i»  Arts.  870,  872.  i^  Art.  872.  "o  Art.  860. 

21  Art.  885.  22  Art.  1384.  23  Art.  149. 

24  Art.  1530.  25  Art.   857. 

28  Argentina,  1386;  Cuba,  872;  Uruguay,  1524. 

27  Cuba,  872;  Brazil,  149. 

28  Cuba,  872;  Peru,  885  c.  p.;  Venezuela,  856. 

29  Argentina,  1386;  Brazil,  149;  Cuba,  872;  Peru,  885;  Venezuela,  855. 
'"Argentina,  1384,  1387;  Brazil,  article  2,  code  of  com.;  Cuba,  872. 

51  Ajt.  900  c.  p. 

32  Spain  873;  Argentina,   1385;  Brazil,   160;  Cuba,  873;    Honduras,  861; 
Peru,  885;  Uruguay,  1523. 

33  Art.  160.  34  Art.  13,  law  of  June  2,  1893. 


BANKRUPTCY    IN    GENERAL  605 

Venezuela  any  debtor  can  apply  for  it,  including 
partnerships  and  corporations; 

(h)  to  present  a  proposition  for  a  moratorium  to  his 
creditors,  to  extend  not  longer  than  three  years.  ^^ 
In  Spain,  Honduras  and  Peru  no  reduction  of  the 
amount  of  the  liabiUties  can  be  demanded;  if  it  is,  the 
judge  must  deny  the  application. 

In  Argentina  ^^  the  debtor  can  in  writing  present  his 
offer  of  settlement  five  days  at  least  before  the  day  fixed 
for  the  meeting  of  the  creditors. 

In  Brazil  ^"  the  offer  is  submitted  at  the  same  time  as 
the  application,  and  it  cannot  amount  to  less  than  a 
20%  payment  of  the  total  liabilities  not  secured  by 
mortgage  or  pledge. 

In  Uruguay  no  time  is  fixed  in  which  the  offer  of 
settlement  may  be  judicially  submitted,  but  the  debtor 
can  secure  a  settlement  extrajudicially,^^  in  which  case 
he  must  request  judicial  authorization  of  the  settlement 
(homologacion)  arrived  at  before  it  is  enforcible.  It 
must  be  accepted  and  signed  by  the  majority  of  the 
creditors  representing  at  least  three-fourths  of  the 
amount  of  the  liabilities,  excluding  privileged  creditors 
and  those  secured  by  mortgage  or  pledge. 

In  Venezuela  ^^  the  merchant  debtor  can  merely 
request  of  the  judge  an  authorization  to  liquidate  his 
commercial  house  in  a  friendly  way  within  a  period  no 
longer  than  one  year,  obligating  himself  not  to  under- 
take any  wholesale  transaction  so  long  as  his  application 
is  not  passed  upon.  During  the  period  of  one  year  al- 
lowed for  liquidation,  he  may  arrange  a  settlement  with 
his  creditors,  if  they  unanimously,  or  at  least  a  majority 
representing  three-quarters  of  the  liabilities,  accept  it, 
provided  that  they  guarantee  to  satisfy  the  dissenting 
creditors  in  such  manner  that  the  latter  will  obtain  what 
reasonably  can  be  realized  through  the  liquidation. ''^ 

"  Spain,  872;  Cuba,  872;  Honduras,  860;  Peru,  885. 

^  Art.  1392.  "  Art.  149.  ^  Art.  1524. 

»9  Art.  855.  *°  Art.  863. 


606  LATIN-AMERICAN    COMMERCIAL    LAW 

In  Peru  "'^  the  debtor  must  present  a  certificate  of 
deposit  of  an  amount  sufficient  to  pay  the  expenses  of 
the  proceedings;  such  amount  must  be  ten  per  cent  or 
more  of  the  estimated  expenses. 

(i)  to  produce  his  commercial  books  and  papers;  ^^ 

(j)  in  Cuba  "^^  he  must  appoint  a  merchant  who  will 
represent  him  at  the  meeting  of  the  committee  of 
creditors  appointed  to  report  on  the  accuracy  of  the 
balance  sheet,  the  correctness  of  the  mercantile  books  of 
the  bankrupt  and  on  the  causes  of  the  bankruptcy,  and 
to  deliver  to  the  clerk  of  the  court  the  sum  of  money 
necessary  to  issue  letters  rogatory,  and  publish  notices 
for  the  citation  of  creditors,  plus  10%  of  such  sum; 

(k)  in  Venezuela  ^^  the  debtor  must  also  present  an 
approval  of  his  petition,  signed  by  three  of  his  creditors. 

Effects  of  the  petition. 

WTien  the  application  or  petition  is  submitted  with  all 
the  requisites  provided  by  the  law,  it  has  the  effect  of  a 
moratorium.  In  Cuba  this  is  the  direct  result  of  the  presen- 
tation of  the  application  to  the  judge, ^^  while  in  the  other 
countries  such  result  is  produced  by  the  judicial  decree 
granting  the  petition.  ^^ 

Other  effects  of  the  petition,  when  granted  by  the  judge, 
are: 

(a)  The  judge  must  appoint  a  supervisor  (intervenor) 
whose  functions  are  to  supervise  the  transactions  and 
conduct  of  the  merchant  and  to  examine  his  commercial 
books  and  papers,  while  the  creditors  themselves 
appoint  another  person  satisfactory  to  them."*^ 

(b)  The  judge  orders  the  publication  of  the  petition 
and  calls  the  creditors  to  a  meeting  to  discuss  the 

«i  Art.  900  c.  p. 

«  Argentina,  1386;  Brazil,  149;  Peru,  900;  Venezuela,  856. 
"  Art.  872  and  article  8  of  the  law  of  June  24,  1911. 
"Art.   856.  "Art.   2. 

« Spain,  870;  Argentina,  1388;  Brazil,  149;  Honduras,  858;  Peru,  883; 
Uruguay,   1525;  Venezuela,  860. 

^'  Argentina,  1388;  Brazil,  149;  Uruguay,  1525;  Venezuela,  860. 


BANKRUPTCY   IN   GENERAL  607 

proposition  submitted  by  the  debtor.'**  In  Peru  "^^  the 
petition  must  be  entered  in  the  commercial  registry. 

(c)  The  debtor's  management  of  his  own  affairs  is  not 
suspended.^" 

{d)  The  debtor  is  forbidden  to  enter  into  arrange- 
ments of  settlement  with  any  of  his  creditors  sep- 
arately.^^ 

Notwithstanding  that  Mexico  has  not  adopted  the 
institution  of  "suspension  of  payments,"  article  988  of 
its  Code  of  Commerce  provides  that  a  debtor  can  enter 
into  an  agreement  with  his  creditors  before  his  petition 
for  a  declaration  of  bankruptcy  or  before  such  declaration 
is  made;  but  this  privilege  cannot  be  enjoyed  by  a  fraud- 
ulent bankrupt.  As  there  is  no  way  of  determining 
whether  a  bankruptcy  is  fraudulent  or  not,  except 
through  bankruptcy  proceedings,  this  provision  implies 
of  necessity  that  the  bankruptcy  proceedings  must  be 
carried  out,  whereupon  the  character  of  the  bankruptcy 
will  be  determined.  Only  then  can  it  be  known  whether 
the  settlement  of  the  debtor  with  his  creditors  is  lawful 
or  not.  The  debtor,  of  course,  can  avoid  bankruptcy 
by  entering  into  a  settlement  with  his  creditors,  but 
only  extrajudicially,  so  that  the  composition  requires 
the  unanimous  consent  of  the  creditors,  who  are  not 
obliged  to  attend  the  meetings  until  the  extrajudicial 
settlement  has  proved  unpracticable. 

The  composition. 

On  the  day  appointed  by  the  judge  the  creditors,  the 
supervisors  and  the  debtor  must  discuss  the  propositions  of 
settlement  submitted  by  the  latter,  taking  into  consideration 
the  reports  of  the  supervisor  in  regard  to  the  causes  of  the 
insolvency  and  of  the  liabilities.    The  creditors  can  accept 

«  Argentina,  1388;  Brazil,  151;  Uruguay,  1529,  1530;  Venezuela,' 857. 
"Art.  901  c.  p. 

«>  Argentina,  1389;  Brazil,  157;  Cnil)a,  4;  Uruguay,  1540;  Vonozuela,  855. 
"Spain,  899;  Argentina,  1409;  Cuba,  3;  Honduras,  887;  Peru,  911;  Viuuv 
zucla,    863. 


608  LATIN-AMEEICAN    COMMERCIAL    LAW 

the  proposition  by  majority  of  two-thirds  of  the  creditors 
present  representing  at  least  three-fourths  of  the  non- 
privileged  claims;  or  vice  versa  in  Argentina ;^^  and  in  Brazil  ^^ 
by  creditors  who  represent  three-fifths  of  the  whole  habihties 
if  the  debtor  proposes  to  pay  over  sixty  per  cent  of  his  debts, 
and  by  those  representing  two-thirds  of  the  liabilities  if  the 
promised  settlement  is  not  over  forty  per  cent.  If  an  ex- 
tension of  time  for  payment  is  asked  the  period  cannot  be 
longer  than  two  years,  and  the  proposition  may  be  accepted 
by  creditors  who  represent  three-fourths  of  the  amount  of  the 
liabilities ;  in  Peru  ^^  by  half  plus  one  of  the  creditors,  repre- 
senting three-fifths  of  the  amount  of  the  non-privileged 
claims ;  and  inUruguay  ^^  by  those  representing  three-quarters 
of  the  amount  of  the  liabilities.  In  Venezuela  ^^  even 
though  the  judge,  in  granting  the  debtor  the  privilege  of  a 
settlement  with  his  creditors  must  take  into  consideration 
their  opinion  and  vote,  he  is  not  bound  by  them  but  may 
grant  the  debtor  a  period  not  exceeding  twelve  months  during 
which  he  may  attempt  to  reach  a  settlement  with  his  credi- 
tors. These  creditors  cannot  judicially  sue  the  debtor  in  the 
meantime,  except  for  debts  due  the  State  or  those  guaranteed 
by  pledge  or  mortgage  or  those  specially  privileged.  ^^  The 
debtor  may  obtain  from  his  creditors  a  longer  period  for 
settling  his  liabilities  or  reducing  them,  provided  unanimous 
consent  is  given  to  the  proposition.  A  settlement  can  also 
be  secured  from  creditors  who  represent  at  least  three- 
quarters  of  the  amount  of  the  debts,  provided  they  guarantee 
to  the  dissenting  creditors  such  a  dividend  as  they  could 
reasonably  obtain  in  a  liquidation  of  the  business.^  When- 
ever a  concession  is  made  to  a  debtor  to  settle  amicably 
with  his  creditors,  the  judge  can  grant  the  debtor  an  exten- 

62  Arts.  1398,   1399. 

There  is  no  legal  remedy  against  a  judicial  decision  which  refused  the 
debtor  an  extension  of  a  period  for  paying  his  debts  or  an  abatement  in  the 
amount  thereof  on  the  ground  that  the  majority  required  by  the  law  was  not 
obtained.  Spain,  Trib.  Sup.,  Dec.  10,  1888.  Col.  Leg.  de  Espana,  Materia 
Civil,  1888,  p.  916. 

"  Arts.  106,  155.  "  Art.  901  c.  p.  "  Art.  1537. 

M  Arts.  859,  860.  "  Art.  862.  ^  Art.   863. 


BANKRUPTCY    IN    GENERAL  609 

sion  of  the  period  fixed  for  that  purpose,  provided  he  has 
paid  a  considerable  amount  of  his  obKgation,  or  any  other 
circumstance  has  arisen  which  makes  it  proper  to  give  such 
extension,  and  the  creditors  who  represent  at  least  half  the 
remaining  creditors  have  agreed  to  it.^^ 

Creditors  entitled  to  vote  for  the  acceptance  of  the  proposi- 
tions of  settlement. 
Creditors  who  have  no  special  privilege,  lien  or  mortgage 
on  the  debtor's  property  are  called  to  vote  on  the  question 
of  acceptance;  under  certain  circumstances,  even  creditors 
thus  privileged  may  vote,  the  effect  of  their  participation 
in  the  meeting  of  creditors  and  in  the  decision  of  the  creditors 
on  the  debtor's  offer  varying  as  follows: 

(a)  in  Argentina  ^^  they  lose  their  security  or  privi- 
lege, even  though  the  propositions  are  not  accepted; 
they  can,  however,  waive  merely  a  part  of  their  privi- 
lege, voting  with  respect  to  such  part  as  common  credi- 
tors, without  losing  their  security  or  privilege  as  to 
the  rest  of  their  claim; 

(6)  in  Brazil  ^^  mortgage  creditors  are  forbidden  to 
vote; 

(c)  in  Peru  ^^  they  are  subject  to  reduction  in  amount 
or  to  extension  of  time  granted  by  the  meeting  of  credi- 
tors, but  they  do  not  lose  their  privilege  or  mortgage; 

(d)  in  Uruguay  ^^  they  cannot  vote  unless  they  waive 
their  right  to  be  preferred,  but  if  the  settlement  is  not 
approved  such  waiver  has  no  effect; 

(e)  in  Venezuela  no  distinction  is  made  between 
privileged  and  ordinary  creditors  in  regard  to  this 
matter. 

Effect  of  the  settlement  on  the  debtor. 

By  virtue  of   a  preventive   composition   the  unsecured 
creditors  and  the  debtor  are  bound  according  to  the  terms 

69  Art.  865.  8"  Art.  1398.  "  Art.  107. 

«2  Art.  912  c.  p.  "'•  Art.  1541. 


610  LATIN-AMERICAN   COMMERCIAL   LAW 

thereof,  and  no  action  lies  by  the  former  against  the  latter 
for  payment  of  the  balance  of  their  claims.^^ 

Effect  in  regard  to  third  parties. 

The  composition  of  a  debtor  with  his  creditors  does  not 
alter  the  obligations  of  co-debtors  or  sureties.^^  In  Argen- 
tina ^^  creditors  who  present  themselves  after  the  settlement 
is  approved  cannot  demand  from  the  other  creditors  divi- 
dends which  the  latter  may  have  received  in  accordance 
with  the  agreement;  they  are  only  entitled  to  share  in  futm-e 
dividends,  their  right  being  reserved  to  demand  from  the 
debtor  payment  of  past  dividends  which  should  have  come 
to  them,  after  the  fulfillment  of  the  composition.  Creditors 
of  a  partnership  do  not  preserve  any  right  of  action  against 
the  individual  partners  jointly  liable,  unless  expressly  so 
stipulated  in  the  composition  agreement. 

When  composition  void. 

Creditors  may  oppose  the  approval  of  the  preventive  com- 
position in  Spain, ^^  Argentina, '^^  Brazil,^^  Honduras  ^°  and 
Peru,^^  on  account  of  non-fulfillment  of  legal  formalities, 

"Spain,  904;  Argentina,  1411;  Brazil,  113;  Peru,  916;  Uruguay,  1544. 

A  settlement  made  between  the  debtor  and  his  creditors  is  not  binding  upon 
a  foreigner  who  has  not  been  notified  of  such  settlement.  Spain,  Trib.  Sup., 
March  28,  1895;  Gaceta  of  Aug.  3,  1895. 

The  fact  that  a  merchant  asked  for  a  judicial  suspension  of  payments  can- 
not be  the  basis  for  his  creditors  to  compel  him  to  present  a  plan  of  settle- 
ment of  all  his  business,  if  the  merchant  dropped  his  application  and  continued 
paying  his  liabilities,  inasmuch  as  the  suspension  of  payments  is  as  to  him  a 
privilege  and  not  an  obligation.  Spain,  Trib.  Sup.,  April,  1,  1895;  Gaceta  of 
Aug.  5,   1895. 

^*  Argentina,  1404;  Brazil,  114. 

«9  Art.  1410.  «^  Arts.  902  to  904. 

The  fact  that  between  the  assets  and  liabilities  noted  in  the  balance  sheet 
produced  with  an  application  for  suspension  of  payments  and  in  that  produced 
at  the  meeting  of  creditors,  there  is  a  substantial  difference,  and  that  not  all 
the  creditors  were  cited  because  the  corresponding  list  produced  by  the  debtor 
was  not  complete,  is  sufficient  ground  for  opposing  the  acceptance  of  sus- 
pension of  payments  asked  by  the  debtor.  Spain,  Trib.  Sup.,  March  28,  1899, 
Col.  Leg.  de  Espaiia,  Materia  Civil,  1899,  vol.  1,  p.  552. 

88  Art.  1401.  «9  Art.  108.  ^o  Arts.  890  to  892. 

"  Arts.  914  to  916  c.  p. 


BANKRUPTCY   IN   GENERAL  611 

fraudulent  connivance  between  the  debtor  and  one  or  more 
creditors,  inaccuracy  in  the  financial  statements  and  balance 
sheet  of  the  business,  or  in  the  reports  of  the  supervisors 
in  order  to  secure  acceptance  of  the  propositions  of  the 
debtor.  In  Brazil,  a  further  valid  ground  for  opposing  the 
composition  is  the  fact  that  it  involves  a  greater  sacrifice 
from  the  creditors  than  the  winding  up  of  the  business. 

Argentina "-  and  Uruguay  '^^  provide  that  any  creditor, 
within  one  year  after  the  approval  of  the  settlement  can 
demand  that  it  be  set  aside  if  he  proves  any  fraud  on  the 
part  of  the  debtor,  whether  prior  to  the  settlement  or  during 
the  proceedings  relating  to  it,  or  after  it  was  effected,  pro- 
vided the  fraud  consists  in  concealing  a  part  of  the  assets  or 
in  exaggerating  the  liabilities.  The  declaration  of  nullity 
only  prejudices  the  debtor  and  the  creditors  favored  by  the 
fraud.  Acts  carried  out  in  good  faith  according  to  the 
agreement,  before  the  fraud  is  made  known,  are  valid  as  to 
good  faith  creditors.  In  case  the  agreement  is  nullified  the 
creditors  who  in  accepting  it  renounced  their  mortgage  or 
security,  recover  such  security.^'* 

Rescission  of  the  composition. 

The  codes  of  Spain,^^  Argentina,"^  Brazil,"^  Honduras,"^ 
Peru  ^^  and  Venezuela  ^  provide  that  the  agreement  can  be 
rescinded  when  the  debtor  fails  to  comply  with  the  obliga- 
tions therein  contracted.  This  provision  is  merely  an 
application  of  the  general  principles  of  contract  and  would  be 
enforced  in  other  countries.  Venezuela,  furthermore,  pre- 
scribes that  the  agreement  is  rescindable  when  the  amount 
left  in  the  hands  of  the  debtor  does  not  indicate  any  hope 
that  at  least  two-thirds  of  the  debts  will  be  paid. 

Taking   over   the    debtor's   property.      (Adjudicacion   de 
bienes.) 
The  code  of  Argentina  ^^  provides  that  when  the  creditors 

»  Arts.  1405,  1407.  "  Art.  1543.  ^*  Art.  1408. 

"Art.  906.  "Art.  1400.  "Art.  115. 

™  Art.  894.  '9  Art.  918  c.  p.  so  Art.  864. 
81  Arts.  1412  to  1420. 


612  LATIN- AMERICAN   COMMERCIAL   LAW 

do  not  accept  the  settlement  proposed  by  the  debtor  they 
may  take  over  his  property,  thereby  accepting  also  his 
liabilities.  This  step  can  be  decided  upon  by  the  same 
plurality  of  votes  necessary  to  accept  the  proposition  of 
settlement,  subject  to  the  approval  of  the  court.  The 
privileged  creditors  preserve  their  security,  but  the  creditors 
who  distribute  among  themselves  the  property  of  the  debtor 
are  only  responsible-up  to  the  amount  of  such  property. 

The  debtor  is  released  when  the  creditors  accept  his 
property,  and  if  its  value  is  greater  than  the  liabilities,  the 
creditors  may  agree  to  allow  him  to  retain  a  part  of  it. 


CHAPTER  XXXVII 

Bankruptcy  (2) 
declaration  of  bankruptcy  and  its  effects 

The  state  of  bankruptcy. 

A  state  of  bankruptcy  is  special  to  merchants,  except,  as 
above  stated,  in  Brazil,^  where  a  corporation  may  be  a 
bankrupt  even  though  organized  for  a  non-commercial 
purpose,  and  in  Colombia,  Costa  Rica,  Panama  and  Peru 
which  provide  for  a  system  of  procedure  comprising  the 
concurso  de  acreedores  or  civil  insolvency  proceedmgs  as  well 
as  the  bankruptcy  of  a  merchant. 

The  object  of  bankruptcy  proceedings  is  to  preserve  the 
property  of  the  bankrupt  in  order  to  safeguard  the  interests 
of  the  creditors;  to  administer  the  property  pending  the 
liquidation  thereof  and  to  gather  all  necessary  information 
in  order  (a)  to  make  a  proper  distribution  of  the  proceeds 
of  the  liquidation  among  creditors,  according  to  their  char- 
acter and  importance,  and  (6)  to  classify  the  bankruptcy 
in  order  to  impose  upon  the  debtor  the  deserved  penalty, 
if  any,  or  to  discharge  and  rehabilitate  him  when  proper. 

The  proceedings  comprise  measures  of  different  kinds, 
namely: 

(a)  the  taking  over  of  the  assets  of  the  debtor,  and 
the  management  and  liquidation  or  disposal  thereof  in 
order  to  wind  up  the  business; 

(&)  the  admission  of  creditor's  claims,  and  their 
classification  and  payment,  in  accordance  with  said 
classification; 

(c)  the  classification  of  the  bankruptcy,  with  the 
purpose  of  determining  the  consequences  of  a  civil  or 

»  Brazil,  art.  3  of  law  of  Dec.  17,  1908;  Colombia,  arts.  1125  to  1215  of  the 
code  of  c.  p.,  amended  by  law  No.  40  of  1907;  Costa  llic!a,  870;  Panama,  858. 

613 


614  LATIN- AMERICAN    COMMERCIAL    LAW 

criminal  nature  which  the  law  attaches  to  such  classi- 
fication, with  respect  to  the  debtor;  and  finally, 

(d)  the  rehabilitation  of  the  debtor,  when  proper. 
Incidentally,  during  the  pendency  of  these  proceedings, 
an  agreement  may  be  reached  between  the  creditors  and 
the  debtor,  and  certain  rules  have  been  established  in  such 
cases  with  a  view  to  preventing  any  collusion  or  illegal  pref- 
erence between  the  debtor  and  one  or  more  creditors  detri- 
mental to  the  others,  as  well  as  to  preventing  the  debtor, 
by  means  of  such  agreement,  to  escape  a  deserved  penalty. 

When  bankruptcy  exists. 

"Wlien  a  merchant  ceases  to  pay  his  liquid  and  demand 
debts  he  is  said  to  be  in  a  state  of  bankruptcy,  whatever 
the  origin  of  said  debts.  ^ 

In  Bolivia,^  Chile, ^  Panama,^  Santo  Domingo  ®  and 
Uruguay,^  the  unpaid  debts  must  be  of  a  commercial  char- 
acter in  order  to  give  rise  to  bankruptcy  proceedings. 

In  Brazil  a  merchant  may  become  a  bankrupt  when  he 

does  not  pay  his  commercial  obligations,  and  furthermore, 

(a)  when  in   ''executory  "   proceedings,   after  being 

requested  to  pay,  he  fails  to  do  so  or  to  deposit  the 

amount  of  the  debt  within  twenty-four  hours  after  such 

request ; 

(6)  when  he  refuses  to  guarantee  the  payment  of  an 
unaccepted  bill  of  exchange,  provided  he  is  the  drawer 
or  the  payee  thereof; 

(c)  when  he  makes  a  quick  liquidation  of  his  business, 
or  has  recourse  to  ruinous  transactions  in  order  to  make 
payments; 

{d)  when  he  summons  his  creditors  and  asks  them 
for  extensions  of  time  for  pajrment,  or  for  a  partial 

-  Spain,  874;  Argentina,  1379;  Colombia,  121;  Costa  Rica  3,  of  law  of  Oct.  15, 
1901;  Ecuador,  917;  Guatemala,  1196;  Haiti,  434;  Honduras,  862;  Peru,  886; 
San  Salvador,  770. 

See  note  48,  decision  3. 

3  Art.  487.  "  Art.  1325.  » Art.  1534. 

«  Art.  437.  '  Art.  1546. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        615 

release  from  his  obligations,  or  offers  them  an  assign- 
ment of  his  property; 

(e)  when  he  disposes  of,  conveys,  assigns  or  donates 
all  or  a  part  of  his  property  to  a  third  party,  whether 
creditor  or  not,  in  order  that  such  party  may  pay  his 
obligations,  or  registers  property  in  the  name  of  an- 
other, contracts  simulated  obligations,  or  in  any  other 
way  attempts  to  secrete  his  property,  or  delay  pay- 
ments or  defraud  his  creditors; 

(/)  when  he  burdens  his  property  with  a  mortgage, 
anticresis,^  pledge  or  lien  in  favor  of  one  creditor  with- 
out retaining  unburdened  property  sufficient  to  pay 
his  debts,  or  attempts  to  do  any  of  these  acts; 

(g)  when  he  absents  himself  from  his  business,  with- 
out leaving  any  one  to  represent  him,  manage  his  affairs 
and  make  payments,  or  conceals  himself  or  attempts 
to  do  so,  abandoning  his  home  surreptitiously. 
It  is  considered  that  an  association  is  chargeable  with 
the  acts  above  mentioned  when  its  managers  commit  them. 
In  Brazil  corporations  are  also  considered  bankrupt  when 
they  fail  to  pay  their  liabilities,  whether  commercial  or  not, 
without  good  reason;  when  they  are  chargeable  with  any 
of  the  acts  above  mentioned,  except  subhead  (g),  and  when 
three-quarters  or  more  of  their  capital  has  been  lost.^ 

Persons  entitled  to  ask  for  a  declaration  of  bankruptcy. 

A  declaration  of  bankruptcy  may  properly  be  requested: 

(a)  by  the  bankrupt  himself; 

(6)  by  a  creditor  who,  having  obtained  a  writ  of 
attachment  upon  the  property  of  the  debtor,  does  not 
find  property  enough  to  satisfy  his  claim;  or  who,  pro- 
ducing a  valid  evidence  of  indebtedness,  proves  that 

*  By  anticresis  is  meant  a  kind  of  mortgage  in  which  the  thing  burdened  is 
given  to  the  creditor  in  order  that  he  may  take  the  rentals  or  fruits  thereof  and 
pay  himself  the  interest  and  amortization. 

^The  provisions  of  paragraph  "d,"  article  1,  of  the  law  of  bankruptcy  are 
special  to  bankruptcies,  and  do  not  constitute  rules  applicable  to  other  com- 
mercial judicial  actions.  Brazil,  Trib.  de  Just,  de  Parahyba.,  Nov.  20,  1905, 
Rev.  do  Para,  n.  1,  p.  109. 


616  LATIN-AMERICAN    COMMERCIAI    LAW 

the  merchant  has,  in  fact,  ceased  to  pay  his  debts  in 
general,  or  in  case  of  suspension  of  payments,  has 
failed  to  present  propositions  for  settlement  within  the 
legal  period,  or  that  the  debtor  has  fled  or  concealed 
himself,  or  has  closed  his  place  of  business  without 
leaving  anybody  to  represent  him  and  pay  his  debts; 

(c)  by  the  judge  of  proper  jurisdiction  acting  ex 
officio,  who,  without  waiting  for  any  request  on  the 
part  of  the  creditors,  must,  when  the  debtor  has  fled 
and  deserted  his  home,  proceed  to  take  possession  of 
his  property  and  provide  for  its  preservation  awaiting 
the  action  of  the  creditors,  who  may  in  turn  ask  for  a 
declaration  of  bankruptcy.  ^° 

In  Brazil  a  creditor  may  demand  a  declaration  of 
the  bankruptcy  of  his  debtor  when  the  latter  fails  to 
pay  him  a  commercial  and  liquid  debt.     Among  the 

10  Spain,  875  to  877;  Argentina,  1379;  Bolivia,  509  to  513,  Chile,  1344, 
1351,  1356;  Colombia,  136,  147;  Ecuador,  929,  935;  Guatemala,  1209  to  1218; 
Haiti,  446;  Honduras,  863  to  865;  Peru,  887  and  889;  Santo  Domingo,  440; 
Uruguay,  1546;  Venezuela,  881,  887,  891. 

The  legal  provisions  applicable  in  Cuba  to  bankruptcy  proceedings  instituted 
in  the  year  1903,  are  those  contained  in  the  Code  of  Commerce  of  1886,  with 
the  amendments  made  by  the  law  of  June  10,  1897,  according  to  which  article 
872  of  that  code  is  no  longer  connected  with  articles  904  and  906  of  the  same 
code.  Cuba,  Trib.  Sup.,  Feb.  8  and  20,  1904;  Gacela  of  July  28,  and  Boletin 
Leg.,  vol.  7,  part  one,  p.  228. 

The  creditors  who  demand  the  declaration  of  bankruptcy  of  their  debtor 
must  prove  the  real  existence  of  their  claims;  the  accounts  opened  in  their 
books  do  not  constitute  evidence  for  the  purpose  of  such  declaration,  unless 
such  accounts  have  been  acknowledged  by  the  debtor.  Cuba,  Trib.  Sup., 
Oct.  15,  1904,  Boletin  Leg.,  vol.  7,  part  two,  p.  594. 

The  fact  that  a  merchant  obtained  a  declaration  of  suspension  of  payments, 
and  afterward.s  withdrew  from  the  proceedings  initiated  as  a  consequence  of 
such  suspension  of  payments,  is  not  conclusive  e\'idence  that  he  is  a  bankrupt. 
Cuba,  Trib.  Sup.,  Jan.  9  and  31,  1908;  Gaceta  of  March  23,  1908. 

A  state  of  bankruptcy  is  determined  by  facts,  such  as  the  liabilities  exceed- 
ing more  than  twenty-five  per  centum  of  the  assets  of  the  merchant,  or  that 
several  drafts  and  promissory  notes  were  protested,  and  that  property  of  the 
debtor  was  attached  for  the  payment  of  his  debts.  Mexico,  Juzgado  Segundo 
de  lo  Civil  del  Dist.  Fed.  May  25,  1905,  Diar.  de  Jur.  vol.  5,  p.  601. 

The  judge  of  the  place  where  a  bankrupt  has  the  main  office  of  his  business 
possesses  the  proper  jurisdiction  to  take  cognizance  of  the  bankruptcj'  pro- 
ceedings. Lima,  Corte  Sup.  de  Just.,  June  30,  1906,  Ajmles  Jud.,  vol.  2,  p. 
180. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        617 

debts  which  the  law  considers  as  Hquid  are  the  accounts 
taken  from  commercial  books,  whether  the  debtor's 
or  the  creditor's,  if  judicially  verified  by  two  experts 
appointed  by  the  judge  of  commerce  on  the  application 
of  the  creditor.  In  case  the  account  is  taken  from  the 
creditor's  books,  the  books  must  comply  with  the  ex- 
ternal and  internal  formalities  of  the  law."  If  compari- 
son is  to  be  made  with  the  books  of  the  debtor,  the 
latter  must  be  cited  to  produce  his  books  in  court,  un- 
der penalty  of  being  considered  a  bankrupt  by  his 
own  confession;  if  his  books  are  not  legally  kept  they 
constitute  conclusive  evidence  against  him. 

In  like  manner  a  merchant  must  be  considered  a 
bankrupt,  even  though  he  has  not  suspended  payments, 
when  by  his  conduct  he  creates  a  presumption  of  a  state 
of  bankruptcy.  Among  the  acts  inducing  such  a  pre- 
sumption are  the  failure  to  pay  or  to  deposit  what  he 
has  been  ordered  to  pay  or  deposit  by  virtue  of  a  final 
judgment  duly  served  on  him;  or  the  refusal  to  give  a 
guaranty  for  a  bill  of  exchange,  when  required  to  do  so 
as  a  debtor,  drawer  or  endorser. 

^1  See  chapter  on  Bookkeeping. 

The  lack  of  the  name  of  the  payee  in  a  bill  of  exchange  causes  it  to  be  con- 
sidered as  a  promissory  note,  and  therefore  it  entitles  its  holder  to  demand  the 
declaration  of  bankruptcy  of  the  promisor  after  proper  protest  is  made. 
Brazil,  Trib.  de  Just,  de  S.  Paulo,  3,  18  and  30  of  May,  1903,  S.  Paulo  Judic- 
iario,  vol.  2,  73  and  143. 

The  inspection  of  the  books  of  the  creditor  is  not  lawful  without  the  debtor's 
being  heard.  Brazil,  Camara  Civ.  da  Corte  de  Apel.  do  Dist.  Fed.,  Oct.  21, 
1897,  and  April  3,  1899,  Rensta  de  Jur.,  vol.  3,  p.  336,  vol.  7,  p.  78,  and  vol.  15, 
p.  56. 

When  the  debtor  was  cited  for  the  inspection  of  the  books  and  failed  to 
appear,  he  cannot  demand  a  new  citation  for  a  second  inspection.  Brazil, 
Trib.  de  Just,  de  8.  Paulo,  June  25,  1893;  Gacela  Juridica  de  S.  Paulo,  vol.  3, 
p.  207. 

A  merchant  debtor  who  produces  his  books  in  blank  is  considered  to  have 
made  a  general  admission  of  the  facts  stated  in  the  petition  for  a  declaration 
of  bankruptcy.    Ih. 

The  liquidator  of  a  commercial  firm  can  demand  the  declaration  of  its  bank- 
ruptcy by  virtue  of  the  powers  granted  him  by  article  345  el  seq.  of  the  commer- 
cial code,  and  may  appear  in  court  as  a  plaintiff  or  defendant  for  the  benefit  of 
the  firm.  Brazil,  Trib.  de  Just,  de  S.  Paulo,  July  12,  1894;  Gacela  Juridica  de 
S.  Paulo,  vol.  5,  p.  308. 


618  LATIN-AMERICAN    COMMERCIAL    LAW 

In  Chile  ^'^  a  declaration  of  bankruptcy  can  also 
be  demanded  by  the  public  prosecutor. 

In  Costa  Rica  ^^  Mexico  ^^  and  Nicaragua/^  a  bank- 
ruptcy can  only  be  declared  at  the  petition  of  the 
debtor  himself  or  of  his  creditors,  but  not  ex  officio  or  at 
the  petition  of  the  public  prosecutor. 

In  Panama  ^^  the  declaration  of  bankruptcy  can  be 
requested:  (a)  by  the  debtor  himself;  (6)  by  any  of  his 
creditors;  (c)  by  the  public  prosecutor  in  case  of  flight 
or  concealment  of  a  debtor  who  has  no  representative 
duly  instructed  and  supplied  with  funds  to  meet  his 
obligations.  In  order  that  a  creditor  may  apply  for  a 
declaration  of  bankruptcy,  it  is  necessary  that  his 
capacity  thereto  be  legally  recognized,  and  that  his 
claim  be  mercantile,  liquid  and  due.  Nevertheless, 
in  case  of  flight  or  concealment  of  the  debtor  who  has  no 
legal  representative  sufficiently  instructed  and  equipped 
to  pay  his  commercial  debts,  a  creditor  may  demand 
a  declaration  of  bankruptcy,  even  though  his  claim  is 
not  yet  due,  provided  he  proves  the  above  mentioned 

12  Arts.  1344  and  1356. 

The  fact  that  there  are  debts  due  does  not  of  itself  prove  the  suspension  of 
payments  when  the  creditor  has  not  been  requested  to  pay,  because  the 
creditors  may  extend  the  period  for  the  maturity  of  a  debt.  Chile,  Corte  de 
Apel.  de  Iquique,  March  26,  1896;  Gaceta  de  los  Tribs.,  1896,  p.  903. 

"  Law  of  Oct.  15,  1901,  arts.  14  to  17. 

"Art.  951. 

The  fact  that  a  debtor  requested  a  judicial  liquidation  with  his  creditors  and 
that  his  liabilities  greatly  exceed  his  assets  is  proof  that  the  debtor  is  a  bank- 
rupt. Mexico,  D.  F.  Juzgado  Tercero  de  lo  Civil,  Oct.  8,  1908,  Diario  de 
Jurisp.,  vol.  27,  p.  552. 

Matured  policies  of  insurance  are  due  and  exigible  and  must  be  entered 
among  the  liabilities  of  a  bankrupt  insurance  company. 

Balanced  life  insurance  policies  contain  obligations  due  at  an  uncertain 
time,  but  which  no  doubt  must  arrive;  therefore  they  must  also  be  included 
among  the  liabilities. 

By  reason  of  the  fact  that  an  insurer  has  asked  for  a  declaration  of  his 
bankruptcy,  he  cannot  demand  further  premiums  from  the  insured.    Ibid. 

A  declaration  of  bankruptcy  can  only  be  made  when  the  bankrupt  himself 
or  one  of  his  creditors  demands  it.  Mexico,  Trib.  Sup.  del  Territorio  de  Tepic, 
Sept.  20,  1905,  Diar.  de  Jurisp.,  vol.  7,  p.  121. 

15  Arts.  542,  543.  "  Art.  1534. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        619 

facts,  or  shows  that  the  debtor  has  ceased  to  pay  his 
obligations  or  has  disposed  in  a  suspicious  manner  of 
the  whole  or  a  considerable  part  of  his  property,  or  has 
encumbered  or  attempted  to  conceal  it.^^  It  is  not 
necessary  that  the  documents  on  which  the  creditor 
bases  his  application  be  previously  acknowledged  by 
the  debtor,  if  the  judge,  using  his  discretion,  considers 
the  signatures  authentic. ^^  A  mortgagee  or  a  secured 
creditor  cannot  demand  the  declaration  of  bankruptcy, 
unless  he  proves  that  the  mortgaged  or  pledged  prop- 
erty was  insufficient  to  pay  his  claim.  ^^ 

Effects  of  the  declaration  of  bankruptcy  on  the  capacity 
of  the  debtor. 

The  effects  produced  by  a  declaration  of  bankruptcy  on 

the  capacity  of  the  debtor,  vary  in  different  codes.    All  of 

them  agree,  however,  in  providing  that  the  bankrupt  is 

incapacitated   to  manage  his  property  and   that  his  acts 

disposing  of  or  dealing  with  it  subsequent  to  the  date  to 

which  the  effects  of  the  bankruptcy  relate  back,  are  void.-'' 

In  other  respects  the  codes  group  into  the  following  systems: 

1st.     The  bankrupt  may  undertake  all  acts  involving 

his  person  or  intended  merely  to  preserve  his  property. 

All  acts  of  agency,  however,  must  cease  and  his  agents 

terminate  their  functions  on  the  day  they  are  notified 

of  the  bankruptcy.     On  that  date  the  accounts  for 

mutual   remittances   are   closed.     The   debtor   is   not 

deprived  of  salaries  or  pensions  paid  by  the  State  nor 

of  property  given  to  him  on  condition  that  it  be  not 

affected  by  his  debts.    He  also  retains  the  management 

of  his  wife's  and  children's  property,  but  rentals  and  the 

fruits   thereof  can  be  attached   by   the  receivers   on 

condition    of    their    compliance    with    the    correlative 

obligations  of  such  rentals.     If  the  bankrupt  declines 

"Art.  1538.  >«Art.  1539.  i^Art.   1540. 

2" Spain,  878;  Argentina,  1449  to  1455;  Bolivia,  514,  515,  516;  ('hile,  1302; 
Colombia,  155,  156;  Ecuador,  939;  Guatemala,  1227;  Haiti,  4;}9;  Honduras, 
866;  Mexico,  962;  Nicaragua,  544;  Panama,  1552,  1553;  Peru,  890;  San  Sal- 
vador, 775;  Santo  Domingo,  443;  Uruguay,  1571;  Venezuela,  895. 


620  LATIN-AMERICAN    COMMERCIAL    LAW 

an  inheritance  or  bequest,  the  receiver,  with  judicial 
authorization,  can  accept  it  for  the  account  of  the 
bankrupt  estate  and  in  the  name  and  stead  of  the 
debtor.-^  In  Brazil,  furthermore,  the  bankruptcy  does 
not  affect  what  the  debtor  earns  by  his  personal  labor 
when  it  is  used  for  the  support  of  his  family.  ^^ 

2d.  The  bankrupt  is  not  deprived  of  his  civil  rights 
except  in  cases  specially  provided  for  by  the  law;  he  can 
manage  property  acquired  by  him  after  the  declaration 
of  bankruptcy,  but  it  may  be  subjected  to  supervision 
and  the  creditors  may  have  the  net  profits  thereof.  He 
retains  the  title  to  his  property,  the  management  of 
such  as  is  not  attachable,  and  that  belonging  to  his 
children  or  to  his  wife,  unless  the  latter  has  obtained  a 
legal  separation  from  him.  Income  of  the  children's  or 
non-separated  wife's  property  which  normally  goes  to 
him,  belong  to  the  creditors,  after  deducting  expenses  for 
the  children's  and  wife's  maintenance,  etc.  The  debtor 
can  undertake  all  acts  purely  personal  or  tending  to 
the  preservation  of  his  property  in  case  of  negligence  on 
the  part  of  the  receivers.-^ 

3d.  The  declaration  of  bankruptcy  does  not  deprive 
the  debtor  of  the  exercise  of  his  civil  rights,  except  when 
expressly  provided  for  by  law.-^ 

4th.  All  contracts  made  by  the  debtor  in  relation  to 
his  property  are  void  from  the  day  of  the  declaration 
of  bankruptcy.--' 

21  Argentina,  1449  to  1453;  Brazil,  45,  46,  48,  52;  Uruguay,  1571  to  1575. 

22  A  bankrupt  can  validly  contract  obligations,  even  in  reference  to  his 
former  business,  whenever  that  does  not  impair  the  property  rights  and 
obligations  of  the  bankrupt  estate  and  the  other  party  is  aware  of  his  being  a 
bankrupt.  The  bankrupt  can  never  take  advantage  of  his  incapacity  as  such, 
as  he  cannot  avail  himself  of  his  own  fraud.  Brazil,  2a  Cam.  da  Corte  de 
Apel.,  Aug.  20,  1907,  Rev.  de  Direito,  vol.  5,  p.  576. 

23  Chile,  1360,  1362  to  1364;  Ecuador,  939,  940. 

A  declaration  of  bankruptcy  brings  about  automatically  the  incapacity  of 
the  debtor  to  dispose  of  and  manage  his  property  but  not  to  dispose  of  and 
manage  the  property  of  his  wife.  Chile,  Corte  de  Apel.  de  Concepci6n, 
March  3,  1896;  Gaceta  de  los  Tnbs,  1896,  p.  1423. 

24  Guatemala,  125,  127;  Panama,  1564,  1565. 

25  Haiti,  439;  Santo  Domingo,  446. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        621 

5th.  All  actions  and  rights  of  the  bankrupt  are 
vested  in  his  creditors,  except  pension  for  maintenance 
(alimentos)  of  any  kind  and  things  given  to  the  debtor 
as  a  voluntary  donation  subject  to  the  condition  that  it 
be  not  alienated.^ 

6th.  The  management  of  property  acquired  by  the 
debtor  subsequent  to  the  bankruptcy  for  a  substantial 
consideration  can  be  supervised  by  the  receivers.  But 
the  creditors  have  a  right  only  to  the  net  profits,  after 
deducting  what  is  necessary  for  the  support  of  the 
debtor.  In  regard  to  the  property  of  the  debtor's  wife 
she  can  exercise  whatever  rights  the  civil  code  may 
establish  in  her  favor.-" 

Effects  of  the  declaration  of  bankruptcy  on  the  person  of 
the  debtor. 

Although  bankruptcy  in  itself  is  not  a  crime,  it  may 
originate  in  a  culpable  or  fraudulent  management  of  com- 
mercial business,  and  this  circumstance,  together  with  the 
fact  that  the  presence  of  the  debtor  is  required  while  the 
bankruptcy  proceedings  are  going  on,  in  order  to  make 
desired  explanations,  have  made  it  seem  expedient  to  prevent 
the  debtor  from  leaving  the  jurisdiction,  so  that  if  the 
circumstances  indicate  that  he  has  incurred  criminal  liabil- 
ity, he  cannot  escape  punishment.  The  law  consequently 
provides  for  certain  measures  in  regard  to  the  person  of  the 
debtor,  in  accordance  with  the  following  systems: 

First  system.      The  bankrupt  is  arrested  in  Spain,  ^* 

Bolivia, 29  Chile, ^o  Costa   Rica,^!   Guatemala,^^  Haiti  ^3 

and  Honduras.^'* 

M  Nicaragua,  544,  545.  ^  Venezuela,  895.  ^  Art.  1335  c.  c.  p. 

2«Art.  521.  3»Art.  1350.  "Art.  21. 

82  Art.  1215.  "='  Art.  452. 

"  Art.  452  c.  c.  p. 

In  order  that  a  bankrupt  may  be  released  from  the  provisional  arrest 
provided  for  by  the  law,  he  requires  a  surety  who  must  guarantee  that  the 
bankrupt  will  present  himself  any  time  the  judge  so  reciuires;  hut  the  surety 
does  not  guarantee  the  payment  of  the;  liabilities  of  the  bankrupt.  Lima, 
Corte  Sup.  de  Just.,  Nov.  30,  1905,  A7iales  Judiciales,  vol.  2,  p.  104. 


622  LATIN-AMERICAN   COMMERCIAL   LAW 

Second  system.  The  bankrupt  is  subject  to  a  writ  of 
ne  exeat,  that  is  to  say,  he  cannot  leave  the  jurisdiction 
of  the  bankruptcy  proceedings,  in  Argentina,  ^^  Brazil,  ^^ 
Ecuador,  ^^  Mexico,  ^^  Panama  ^^  and  Venezuela. "^^ 

Third  system.  He  is  arrested  unless  he  gives  a  bond, 
in  Nicaragua."*^ 

Fourth  system.  He  is  arrested,  when  proper,  or  is 
subjected  to  police  supervision  in  Santo  Domingo.^- 

Fifth  system.     He  is  arrested  when  he  fails  himself  to 

declare   his   bankruptcy   before   the   judge   of   proper 

jurisdiction  within  five  days  after  the  actual  cessation 

of  payments,  in  Uruguay.'*^ 

The  bankrupt,  furthermore,  is  incapacitated  to  engage  in 

the  occupation  of  a  merchant  until  he  is  rehabihtated/"* 

In  Panama  ^^  a  bankrupt  cannot  be  a  broker,  an  auction- 
eer, a  manager  of  a  warehouse  or  corporation,  a  shipping 
agent,  or  an  expert  or  arbitrator  in  commercial  matters ;  and, 
finally,  he  is  deprived  of  the  exercise  of  rights  inherent  in  a 
citizen  of  the  Republic. 

Effects  of  a  declaration  of  bankruptcy  in  regard  to  judicial 
actions. 

As  the  bankruptcy  proceedings  are  designed  to  liquidate 
all  real  property,  chattels,  and  choses  in  action  belonging  to 
the  debtor  in  order  to  pay  his  debts,  up  to  the  full  extent  of 
his  economic  capacity,  so  all  suits  in  regard  to  property  or 
rights,  instituted  against  the  bankrupt,  must  be  brought 
before  the  judge  having  jurisdiction  of  the  bankruptcy  pro- 
ceedings and  are  joined  thereto.  It  is  for  this  reason  that 
such  proceedings  are  called  ''attractive"  (atractivo)  and 
"universal  "  because  they  merge  in  the  hands  of  the  judge  of 
the  bankruptcy  and  call  for  a  general  and  joint  decision 

35  Art.  1431.                              36  Art.  37.  ^^  Art.  950. 

38  Art.  967.                                39  Art.  1552.  ^  Art.    906. 

"  Art.  537.                                *2  Art.  455.  «  Art.  1557. 

** Spain,  13;  Argentina,  24;  Bolivia,  2;  Brazil,  2  c.  com.;  Colombia,  16; 
Costa  Rica,  9;  Ecuador,  941;  Mexico,  12;  Nicaragua,  5;  Panama,  33;  Peru,  13; 
San  Salvador,  9;  Uruguay,  29;  Venezuela,  897. 

"Arts.   1553,   1554. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        623 

of  all  pending  judicial  matters  relating  to  the  debtor's 
property.  ^^ 

In  Mexico  ''^  three  exceptions  are  made  to  the  foregoing 
rule:  (a),  proceedings  in  which  a  decision  has  been  rendered 
and  served  on  the  parties,  even  though  it  be  not  final  because 
subject  to  appeal;  (b),  foreclosure  proceedings  of  a  mortgagee 
or  pledgee;  (c),  proceedings  to  sell  certain  property  at  auction 
in  order  to  pay  a  bank  or  credit  institution  with  the  proceeds. 

A  peculiar  characteristic  of  a  final  decision  arrived  at  in 
bankruptcy  proceedings  is  that  it  produces  effects  in  regard 
to  all  persons,  whether  parties  to  the  proceedings  or  not,  a 
rule  in  derogation  of  the  general  principle  that  the  authority 
of  res  judicata  cannot  extend  to  persons,  things  or  actions 
not  involved  in  the  action  itself.''^ 

Effect  on  non-matured  obligations. 

By  virtue  of  a  declaration  of  bankruptcy  all  liabilities  of 
the  debtor  not  yet  due  become  immediately  due  as  of  the 
date  of  the  declaration.  Should  payment  be  made  before  the 
time  fixed  in  the  contract,  a  corresponding  discount  must  be 
allowed. ''^ 

«  Spain,  1173,  1319  c.  c.  p.;  Argentina,  1436;  Bolivia,  612;  Brazil,  7;  Chile, 
1366;  Ecuador,  942;  Guatemala,  1228;  Mexico,  983;  San  Salvador,  772,  776; 
Uruguay,  1549;  Venezuela,  898. 

A  mortgagee  can  carry  on  the  proceedings  for  foreclosure,  independently  of 
those  in  bankruptcy.  Argentina,  Cam.  la.  de  Apel.  Civ,  Buenos  Aires, 
June  27,  1914,  Jurisp.  de  los  Trihs.  Nacs.,  June,  1914,  p.  228. 

The  bankruptcy  proceedings,  by  their  very  nature  attract,  without  distinc 
tion,  all  actions,  whether  the  bankrupt  be  a  plaintiff  or  defendant;  all  of  them 
must  be  brought  to  the  cognizance  of  the  judge  carrying  on  such  proceedings, 
even  though  the  actions  are  within  the  jurisdiction  of  the  federal  courts. 
Argentina,  Cam.  Fed.  de  Apel.  del  Parana,  March  30,  1914,  Jurisp.  de  los 
Trib.  Nac.,  March,  1914,  p.  76. 

A  judicial  suit  in  which  a  certain  amount  of  money  is  demanded  from  a 
bankrupt,  must  be  submitted  to  the  bankruptcy  judge  and  the  bankruptcy 
proceedings.  Mexico,  2a  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  Hinojosa  P.  v. 
Receiver  of  the  bankruptcy  of  L.  G.  Otero,  April  14,  1911,  Diario  de  Jurisp., 
vol.  23,  p.  323. 

'"  Art.  983.  '^  Lyon-Caen  et  Renault,  vol.  7,  p.  111. 

«  Spain,  883;  Argentina,  1459;  Bolivia,  514;  Brazil,  26;  Chile,  1367;  Colom- 
bia, 163;  Ecuador,  943;  Guatemala,  1229;  Honduras,  871;  Mexico,  974; 
Nicaragua,  552;  Panama,  1571;  Peru,  895;  San  Salvador,  777;  Santo  Domingo, 
444;  Uruguay,  1581 ;  Venezuela,  899. 


624  LATIN-AMERICAN    COMMERCIAL    LAW 

In  applying  the  foregoing  rule  it  is  necessary  to  observe 
that: 

(a)  in  Argentina  and  Uruguay,  in  case  of  annual 
pensions,  their  amount  must  be  determined  by  the 
judge,  according  to  the  circumstances  of  the  case;  that 

(6)  in  Brazil,  in  case  the  obligation  depends  on  a 
condition  precedent,  it  is  not  due  until  the  condition 
arises;  while  in  Chile  °°  and  Nicaragua  "  the  creditor 
can  demand  the  deposit  in  court  or  the  delivery  to  him 
of  any  amount  payable  on  account  of  the  conditional 
debt,  provided  he  guarantees  to  pay  it  back  if  the 
condition  should  not  be  performed;  and  that 

(c)  in  Panama,  when  a  mortgagee  or  pledgee  creditor 
takes  advantage  of  the  benefits  of  the  rule,  he  is  subject 
to  the  bankruptcy  proceedings. 

Effects  in  regard  to  co-debtors  of  the  bankrupt. 

The  rules  governing  the  relations  between  the  co-debtors 
of  the  bankrupt  and  his  creditors  may  be  inferred  from  the 
general  principles  already  explained.  ^^  Some  codes,  how- 
ever, deal  especially  with  the  matter  as  follows: 

In  Argentina,  ^^  Panama  ^^  and  Uruguay, ^^  the  co- 
debtors  of  the  bankrupt  on  a  commercial  debt,  not  due 
at  the  time  of  the  bankruptcy,  provided  their  debt  was 
contracted  simultaneously  with  the  bankrupt,  must 
guarantee  that  they  will  pay  it  at  maturity,  or  pay  it  at 
once;   but  if  the  debt  was  not  simultaneously,   but 

Obligations  to  become  due  at  a  future  date  must  be  considered  as  due  on 
the  date  of  bankruptcy,  and  ought  to  be  paid  without  discount,  when  the 
period  to  maturity  is  not  certain.  Mexico,  D.  F.  Juzgado  Tercero  de  lo 
Civil,  Oct.  8,  1908,  Diario  de  Jur.,  vol.  27,  p.  552. 

«>  Art.  1370.  51  Art.  552. 

^^  See  chapter  on  Obligations  in  General. 

"  Arts.  1461,  1462,  1463. 

Notwithstanding  that  the  surety  waived  the  "benefit  of  levy"  and  bound 
himself  jointly  with  the  principal  debtor,  the  previous  demand  of  the  debtor 
is  indispensable.  In  case  the  debtor  is  bankrupt,  the  receiver  must  be  re- 
quested to  pay.  Argentina,  Cam.  la  de  Apel.  Civ.,  July  18,  1914,  Jur.  de  la 
Tnb.  Noes.,  July,  1914,  p.  149,  and  July  21,  1914,  ib.,  p.  156. 

"  Art.  1574.  "  Arts.  1583,  1584. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        625 

subsequently,  contracted,  as  is  the  case  with  endorse- 
ments, the  bankruptcy  of  a  later  endorser  does  not  give 
rise  to  any  claim  against  previous  endorsers,  before  the 
maturity  of  the  negotiable  instrument. 

In  case  of  suretyship,  if  the  principal  debtor  fails,  the 
surety  has  the  benefit  of  any  time  period  stipulated  for 
the  payment  of  the  debt;  should  the  surety  become 
bankrupt,  the  principal  debtor  must  provide  for  a  new 
surety  unless  the  surety  was  provided  by  the  creditor's 
designation. 

In  Panama  ^^  if  the  bankrupt  was  a  surety  he  enjoys 
the  "benefit  of  excusion,"  i.  e.,  the  right  to  demand  that 
the  principal  debtor  be  sued  first,  and  his  property,  if  he 
has  any,  sold  for  the  payment  of  the  debt,"  even  though 
he  waived  such  benefit.  Should  the  debt  not  yet  be  due, 
the  principal  debtor  must  pay  it  at  once  or  release  the 
creditors  from  the  obligations  of  sm-etyship.  The  co- 
debtors  or  sureties  of  the  bankrupt  can  bring  their 
claims  with  those  of  other  creditors  of  the  bankruptcy 
to  the  amount  of  what  they  paid  for  the  account  of  the 
bankrupt ;  but  not  for  what  they  paid  after  the  failure, 
unless  at  the  time  of  making  such  payment,  they 
subrogated  themselves  for  the  paid  creditor. 

In  Brazil  ^^  the  co-debtors  are  obliged  to  give  a 
guaranty  for  the  payment  of  the  debt  at  maturity. 

In  Chile, ^^  Guatemala,^"  and  San  Salvador,"  when 
the  drawer  of  a  non-accepted  bill  of  exchange,  or  its 
acceptor  or  the  maker  of  an  endorseable  promissory 
note  becomes  bankrupt,  the  other  obligors  must  pay 
immediately  or  give  a  guaranty  to  pay  at  maturity. 

In  Mexico''-  all  liabilities  due  to  suretyship  legally 
assumed  by  the  bankrupt  are  suspended  with  respect  to 
the  bankrupt  estate,  but  amounts  already  due  on 
account  of  such  suretyship,  at  the  time  of  the  declara- 

»  Art.  1573. 

"  See  chapter  on  Suretyship. 

68  Art,.  26.  "  Art.  1369.  eo  ^rt.  1230. 

«i  Art.  779.  «2  Art.  975. 


626  LATIN-AMERICAN    COMMERCIAL    LAW 

tion  of  bankruptcy,  must  be  paid  in  the  corresponding 
grade  and  preference. 

Interest  on  amounts  due. 

Interest  due  on  debts  of  the  bankrupt  ceases  to  run  as  a 
consequence  of  the  declaration  of  bankruptcy,  except  on 
debts  guaranteed  by  mortgage  or  pledge  up  to  the  value 
of  the  property  mortgaged  or  pledged. 

This  rule  varies  in  its  bearing  on  the  debtor  in  different 
countries,  as  follows: 

(a)  In  Spain,"^  Honduras,^^  Peru^^  and  San  Salva- 
dor/^ the  rule  is  unrestricted;  it  applies  to  the  relations 
of  the  creditors  with  the  debtor  and  with  one  another. 

(b)  In  Argentina,"  Ecuador/^  Guatemala,^^  Mexico,^" 
Panama,''^  Nicaragua,''-  Santo  Domingo,''^  Uruguay^'* 
and  Venezuela,  ^^  interest  does  not  rim.  as  between 
creditors  but  only  as  to  the  debtor;  that  is,  the  bank- 
rupt will  not  be  released  until  he  has  paid  the  prin- 
cipal and  the  interest  of  his  debts; 

(c)  In  Brazil  '''^  interest  runs  as  between  the  creditors 
up  to  the  amount  of  the  assets  of  the  bankruptcy;  so, 
in  regard  to  the  debtor,  interest  continues  to  run. 

Interest  on  securities  of  stock  companies  or  limited 
partnerships  when  payable  to  bearer  on  mortgage  bonds 
issued  by  realty  associations  {sociedades  de  credito  real), 
and  on  debts  guaranteed  by  mortgage,  anticresis  or 
pledge,  is  subject  to  payment  in  preference  to  other 
interest  with  the  proceeds  of  the  sale  of  the  mortgaged 
or  pledged  property.^'' 

Retroactive  effect  of  a  declaration  of  bankruptcy. 

As  a  declaration  of  bankruptcy  is  made  at  the  petition 
either  of  the  debtor  or  of  creditors,  it  is  not  infrequent  that 
such  declaration  is  made  after  the  insolvency  of  the  debtor 


63  Art.  884. 

6*  Art.  872. 

65  Art.  896. 

60  Art.  778. 

67  Art.  1460. 

68  Art.  944. 

69  Art.  1229. 

™  Art.  977. 

"  Art.  1567. 

"  Art.  569. 

"  Art.  445. 

7*  Art.  1582. 

^5  Art.  900. 

'6  Art.  27. 

"  Art.  27. 

DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS       627 

has  become  an  actual  fact  which,  for  one  reason  or  another, 
he  may  have  concealed;  therefore,  in  order  to  fix  the  rights 
of  the  creditors,  it  has  been  considered  necessary  to  make 
the  effects  of  the  declaration  of  bankruptcy  retroactive  to 
the  date  at  which  the  insolvency  really  commenced.  The 
judge,  in  judicially  declaring  the  bankruptcy,  fixes  a  certain 
date,  according  to  the  evidence,  to  which  the  legal  effects 
of  the  bankruptcy  relate  back;  but  at  the  same  time  he 
states  that  such  date  is  fixed  only  ''for  the  time  being,  with- 
out prejudice  to  a  third  party."  He  can  therefore  change 
the  date  in  a  proper  case  when  the  debtor  himself,  by  reason 
of  the  influence  that  such  date  may  have  upon  the  classi- 
fication of  the  bankruptcy,  or  when  any  creditor,  by  reason 
of  the  effects  such  retroactive  date  may  have  upon  the 
validity  of  his  or  another's  claim,  may  request  a  change 
of  the  designated  date  of  the  bankruptcy. 

In  this  respect  the  codes  adopt  different  systems,  namely : 
First  system.  The  judge,  according  to  the  data  dis- 
closed by  the  papers  and  books  of  the  bankrupt,  or  by 
evidence  produced  by  the  creditors,  can  fix  the  date  to 
which  the  effects  of  a  declaration  of  bankruptcy  must 
relate  back,  without  any  limitation.^^ 

Second  system.      The  judge  fixes  the  legal  date  of 
the  bankruptcy;  that  is,  the  date  at  which  the  bank- 

^8  Spain,  878;  Argentina,  1454;  Bolivia,  509;  Colombia,  156;  Ecuador,  937; 
Haiti,  438;  Honduras,  866;  Mexico,  987;  Panama,  1545;  Peru,  890;  Santo 
Domingo,  441. 

The  sale  of  movable  property  by  the  liquidator  of  a  bankrupt  association, 
after  the  date  to  which  the  effects  of  the  declaration  of  bankruptcy  relate 
back,  is  void,  even  though,  as  a  rule,  the  liquidator  has  authority  to  sell  the 
property  of  the  association,  and  it  has  not  been  proved  that  the  sale  was  made 
to  defraud  creditors.  The  declaration  of  bankrui)tcy  is  supposed  to  have 
been  made  at  the  date  to  whichi  ts  retrocative  effects  relate,  and  as  the  liqui- 
dator is  only  an  agent  of  the  association,  it  is  obvious  that  he  cannot  do  what 
the  association  could  not.  Colombia,  Cortc  Sup.  do  Just.,  Aug.  9,  1912; 
Gacela  Jud.,  vol.  XXI,  p.  106. 

The  novation  of  a  contract  in  which  a  person  substitutes  himself  for  the 
original  debtor  is  void  when  such  person  becomes  a  bankrupt  and  the  effects 
of  the  bankruptcy  relate  back  to  a  time  previous  to  the  contract,  according 
to  judicial  decision.  Lima,  Corte  Sup.  de  Just,  April  23,  1909,  Analca  Jud., 
vol.   5,   p.   52. 


628  LATIN-AMERICAN    COMMERCIAL    LAW 

ruptcy  became  a  fact.  But  he  cannot  relate  it  back 
more  than  a  certain  period  before  the  protest  of  the 
first  unpaid  negotiable  instrument,  or  the  application 
for  a  declaration  of  bankruptcy.  That  period  is  forty 
days  in  Brazil,"  one  year  in  Uruguay, ^°  and  two  years 
in  Venezuela.^^ 

Third  system.  The  declaration  of  bankruptcy  fixes 
the  date  to  which  its  effects  shall  relate  back,  and  no 
subsequent  change  in  this  respect  is  possible.^^ 

Revocation  of  acts  of  the  bankrupt  prior  to  the  declaration 
of  bankruptcy. 

Besides  this  retroactive  effect,  the  law  provides  for  the 
nullification  of  certain  acts  of  the  bankrupt  undertaken 
during  a  period  called  the  "suspected  period,"  according 
to  the  following  systems: 

System  of  Spain.  All  acts,  whether  of  mere  manage- 
ment or  involving  a  disposal  of  property,  undertaken 
after  the  period  to  which  the  effects  of  the  declaration 
of  bankruptcy  relate  back,  are  void.  Payments  by  the 
bankrupt,  whether  in  cash,  valuables  or  merchandise, 
made  within  fifteen  days  prior  to  the  declaration  of 
bankruptcy,  of  debts  due  subsequent  to  such  declara- 
tion, must  be  paid  back  to  the  estate  of  the  bankrupt. 
The  discount  by  the  debtor  of  his  own  obligations  is 
considered  as  an  anticipated  payment. 

The  following  contracts  are  considered  void  and 
fraudulent  when  made  by  the  debtor  within  thirty 
days  prior  to  his  bankruptcy: 

(a)  gratuitous  conveyances  of  immovable  property; 
(6)  dowries  in  favor  of  the  debtor's  daughters  out 
of  his  exclusive  property; 

(c)  conveyances  of  real  estate  in  payment  of  debts 
not  due  at  the  time  of  the  declaration  of  bankruptcy; 

(d)  contractual  mortgages  to  guarantee  obligations 
not  previously  guaranteed  in  that  way  for  loans  of 

"  Art.  16.  8»  Art.  1617.  8i  Art.  893. 

82  Chile,  1359;  Guatemala,  1224;  San  Salvador,  773. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        629 

money  or  merchandise,  the  deUvery  of  which  was 
not  made  at  the  time  of  the  execution  of  the  mortgage 
before  the  notary  and  the  witnesses  who  authenti- 
cated the  instrument; 

(e)  gifts  inter  vivos  made  after  the  last  balance 
previous  to  the  bankruptcy,  if   the  liabilities  exceed 
the  assets,  unless  such  gifts  are  made  for  a  past  con- 
sideration. 
The  following  contracts  are  voidable  at  the  petition 

of  any  creditor,  if  he  proves  that  the  purpose  of  the 

debtor  was  to  defraud  the  creditors: 

(a)  alienation  of  immovable  property  for  a  con- 
sideration, within  a  month  prior  to  the  declaration 
of  bankruptcy; 

(6)  dowries  given  to  the  daughters  within  the  same 
period,  out  of  property  belonging  to  the  matrimonial 
partnership,  or  any  other  conveyance  of  such  prop- 
erty without  consideration; 

(c)  dowries  or  the  burdening  of  property  by  one 
of  the  spouses  in  favor  of  the  other  within  six  months 
previous  to  the  declaration  of  bankruptcy,  unless 
such  dowry  was  made  with  or  the  burden  imposed 
upon  property  which  belonged  to  the  ancestors  of 
the  beneficiary  spouse,  or  such  property  was  acquired 
or  possessed  before  by  the  spouse  in  whose  favor  the 
dowry  was  made  or  the  burden  imposed; 

(d)  any  admission  by  the  bankrupt  that  he  re- 
ceived cash  or  goods  as  a  loan,  executed  in  a  public 
instrument  within  six  months  previous  to  the  bank- 
ruptcy, if  the  notary  does  not  testify  to  the  receipt 
of  the  money  or  goods;  or  if  made  in  a  private  instru- 
ment, if  the  entries  in  the  books  of  both  parties  do 
not  agree; 

(e)  all  contracts,  obligations  and  mercantile  trans- 
actions entered  into  by  the  bankrupt  within  ten 
days  before  the  declaration  of  bankruptcy.^"' 

83  Spain,  878  to  881;  Bolivia,  515  to  518;  Colombia,  158  to  162;  Honduras, 
866  to  869. 


630  LATIN-AMERICAN    COMMERCIAL    LAW 

Peru  ^**  has  adopted  this  system,  with  the  exception  of 
paragraphs  a  and  b  above,  which  are  changed  as  follows: 

(a)  alienations  of  movable  property  for  considera- 
tion within  sixty  days  prior  to  the  declaration  of 
bankruptcy ; 

(6)  dowTies  given  to  the  daughters  within  six 
months  prior  to  the  declaration  of  bankruptcy  out 
of  property  belonging  to  the  matrimonial  partner- 
ship, or  any  other  conveyance  of  such  property  with- 
out consideration. 

System  of  Argentina.  Acts  undertaken  by  the  bank- 
rupt after  he  judicially  petitioned  for  a  declaration  of 
bankruptcy,  and  after  the  date  fixed  by  the  judge  as  the 
actual  date  when  payments  were  suspended  are,  with 
respect  to  the  bankruptcy,  either  absolutely  or  con- 
ditionally void.^^ 

The  following  are  absolutely  void: 

(a)  alienations    of    realty    or    chattel    rights    and 

choses  in  action,  without  consideration; 

(6)  payments  of  debts  not  due,  whether  in  cash  or 

by   means    of   assignments    of   credits,    set-offs,    or 

conveyances  of  any  kind,  even  though  the  creditor  or 

the  debtor  acted  in  good  faith; 

(c)  payments  of  debts  past  due,  if  made  otherwise 
than  with  cash  or  commercial  paper. 

(d)  all  mortgages,  anticresis  (a  mortgage  in  which 
the  property  mortgaged  is  left  in  the  possession  of  the 
creditor  who  must  apply  its  fruits  or  proceeds  to  the 
payment  of  interest  and  amortization)  and  pledges  on 
the  bankrupt's  property  for  past  obligations  not  thus 
guaranteed. 

On  the  other  hand,  all  payments  made  by  the 
bankrupt  of  obligations  due,  alienations  in  general, 
acts  done  and  obligations  contracted,  even  though 

8^  Arts.  890  to  893. 

*5  The  nullity  of  the  acts  of  the  debtor  after  the  bankruptcy  was  declared, 
has  been  established  in  behalf  of  the  creditors,  and,  therefore,  it  cannot  be 
demanded  by  the  debtor  himself.  Argentina,  Cam.  de  Ap.  Com.,  Buenos 
Aires,  April  10,  1913,  Jur.  de  los  Tribs.  Noes.,  p.  230. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        631 

not  of  a  commercial  character,  when  undertaken  after 
the  debtor's  apphcation  for  a  declaration  of  bank- 
ruptcy or  after  the  cessation  of  payments,  provided 
that  those  who  have  received  something  from  or  have 
dealt  with  the  debtor  were  acquainted  with  the  fact 
of  such  application  or  cessation  of  payments.     The 
rights  of  third  parties  in  good  faith  claiming  sums 
belonging  to  them,  but  which  have  been  incorporated 
in  the  bankruptcy,  are  reserved.^^ 
System  of  Brazil.     The  following  acts  are  without 
effect  upon  the  creditors,  no  matter  whether  the  con- 
tracting party   knew   the   economic   condition   of   the 
seller,  or  whether  or  not  the  debtor  intended  to  defraud 
his  creditors :  ^^ 

(a)  payments,  within  the  period  of  the  bankruptcy, 
of  non-matured  obligations,  whatever  the  means  of 
extinguishing  them,  even  if  it  be  the  discount  of  the 
debtor's  own  obligations; 

(6)  payments,  within  the  legal  period  of  the  bank- 
ruptcy, of  obligations  due  and  payable  in  any  other 
way  than  by  cash  or  commercial  paper; 

(c)  mortgages  or  any  other  security  on  property 
{garantias  reaes)  including  the  right  of  retention  of 
merchandise  purchased,  when  they  are  created  within 
the  legal  term  of  the  bankruptcy,  and  relate  to  debts 
contracted  before  that  term.  If  the  mortgaged 
property  was  already  subject  to  another  mortgage 
inscribed  in  the  second  place,  the  receivers  must 
recover  the  amount  intended  for  the  owner  of  the 
revoked   mortgage; 

89  Argentina,  1454  to  1456. 

^  The  dissolution  of  an  association,  during  the  legal  period  to  which  the 
effects  of  the  declaration  of  bankruptcy  are  extended,  is  not  ipso  jure  void ;  it 
is  necessary  to  have  a  judicial  declaration  that  there  has  been  fraud  in  order 
to  nullify  it.  Brazil,  Trib.  de  Just,  dc  S.  Paulo,  April  14,  1896,  Rev.  Mcnsnl 
das  decisbes  do  Trib.  de  Just,  de  S.  Paulo,  vol.  3,  p.  79. 

The  sale  of  merchandise  by  the  debtor,  made  during  the  bankruptfiy,  is 
valid  unless  it  is  proved  that  there  was  fraud  on  the  part  of  both  parties. 
Brazil,  Trib.  de  Just,  de  S.  Paulo,  Sept.  19,  1903,  S.  Paulo  Judiciario,  vol.  3, 
p.   117. 


632  LATIN-AMERICAN    COMMERCIAL    LAW 

(d)  all  acts  without  consideration,  unless  in  pur- 
suance of  a  law,  or  if  they  involve  less  than  3001000, 
(about  $96  U.  S.)  undertaken  within  two  years  prior 
to  the  declaration  of  bankruptcy,  whether  or  not  they 
form  part  of  a  contract  entered  into  for  a  proper 
consideration; 

(e)  waiver  of  an  inheritance,  bequest  or  trust  fund 
within  two  years  before  the  declaration  of  bank- 
ruptcy; 

(J)  an  anticipated  restitution  of  the  dowry  or  its 
surrender  before  the  period  stipulated  in  the  ante- 
nuptial contract; 

(g)  the  recording  of  mortgages,  burdens  or  con- 
veyances inter  vivos,  whether  or  not  for  proper 
consideration,  of  property  susceptible  of  being  mort- 
gaged, when  made  after  a  warrant  of  attachment  or 
the  declaration  of  bankruptcy  is  issued.  The  failure 
to  register  the  mortgage  or  burden  gives  the  creditor 
in  question  the  privilege  of  joining,  for  the  payment  of 
his  debt,  with  the  other  non-privileged  creditors 
(chirographarios) ,  and  the  failure  to  record  a  convey- 
ance inter  vivos  gives  the  buyer  a  personal  action  to 
recover  the  price,  together  with  the  fruits  or  income 
of  the  realty.  The  acts  referred  to  under  c  and  d  are 
not  revocable  if,  when  they  were  executed,  the  debtor 
was  not  a  merchant.^^ 

System  of  Chile.     The  following  acts  are  void  with  re- 
spect to  the  estate  of  the  bankrupt  if  undertaken  within 
ten  days  prior  to  the  date  established  by  the  judge  as 
the  date  when  the  suspension  of  payments  took  place: 
(a)  conveyances  of  property  without  consideration. 
If  the  conveyance  was  in  favor  of  an  ancestor  or  a 
blood  relation  in  direct  or  collateral  Une,  within  the 
fourth  degree  of  relationship,  even  though  the  act  is 
done  through  an  intermediary  {interposita  persona) 
the  above  period  is  extended  to  one  hundred  and 
twenty  days  before  the  cessation  of  payments; 
88  Art.  55. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        633 

(6)  all  payments  made  in  anticipation,  whether  of  a 
civil  or  commercial  debt,  by  any  method.  The  dis- 
count of  promissory  notes  or  invoices  drawn  on  the 
debtor,  or  the  waiver  of  a  time  period  established  in 
his  favor,  constitutes  an  anticipation; 

(c)  all  payments  of  matured  debts  not  made  in  cash 
or  negotiable  instruments; 

(d)  all  mortgages,  pledges  or  anticresis  of  property 
of  the  bankrupt  for  debts  contracted  before  the  ten 
days  above  referred  to.  Payments  made  in  cash  of 
matured  obhgations,  as  well  as  acts  and  contracts 
with  proper  consideration,  made  in  the  interval  be- 
tween the  cessation  of  payments  and  the  declaration 
of  bankruptcy,  can  be  rescinded,  when  the  creditors 
thus  paid  or  the  third  parties  contracting  with  the 
debtor  were  aware  of  such  cessation.  If  the  bankrupt 
paid  a  bill  of  exchange  or  a  promissory  note  to  order 
after  the  date  fixed  as  that  of  the  cessation  of  pay- 
ments and  before  the  declaration  of  bankruptcy, 
the  reimbursement  of  the  amount  paid  can  only  be 
demanded  from  the  person  for  whose  account  the 
payment  was  made,  and  it  is  necessary  to  prove  that 
he  knew  of  the  cessation  of  payments  at  the  time  the 
bill  of  exchange  was  drawn  or  the  promissory  note 
endorsed. 

Other  acts  or  contracts,  antedating  the  period  of 

ten  days  before  the  cessation  of  payments,  may  be 

rescinded  as  provided  by  the  civil  law.«^ 

Syskm  of  Haiti.    All  acts  conveying  realty  without 

consideration  within  ten  days  prior  to  the  initiation  of 

the  bankruptcy  proceedings  are  void  with  respect  to  the 

body  of  creditors.    The  same  conveyances  made  for  a 

consideration,  if  they  are  fraudulent,  can  be  nullified  at 

the  petition  of    the    creditors.     All  commercial  acts 

entered  into  by  the  debtor  within  ten  days  of  the  above 

mentioned    initiation    of    proceedings    are    presumed 

8»  Chile,   1373  to  1376;  Ecuador,  945  to  947;  Guatemala,   1232  to  1234. 
Venezuela,  901  to  903. 


634  LATIN- AM  ERIC  AN  COMMERCIAL  LAW 

fraudulent  on  the  part  of  the  debtor,  and  can  be  de- 
clared void  if  any  fraud  is  proved  on  the  part  of  the 
other  contracting  parties.  All  acts  or  payments  de- 
frauding creditors  are  void.^° 

System  of  Mexico.  Transactions  of  the  bankrupt 
defrauding  his  creditors  at  any  time  before  the  declara- 
tion of  bankruptcy,  are  void,  whenever  the  person  with 
whom  the  transactions  were  concluded  was  aware  of 
the  fraud. 

All  contracts  without  consideration  made  in  favor  of 
relatives  in  ascending  or  descending  line  or  in  fulfillment 
of  non-matured  obligations  are  void  if  made  within 
thirty  days  previous  to  the  date  when  the  debtor  failed 
to  pay  the  obligation  which  brought  about  the  bank- 
ruptcy. A  creditor  who,  within  such  period,  extends 
the  period  of  his  credit  with  a  view  to  having  it  secured 
by  mortgage,  pledge  or  otherwise,  will  only  be  entitled 
to  such  guaranty  if  it  is  valid  according  to  law.^^ 

System  of  Nicaragua.  Payments  made  by  the  bank- 
rupt within  three  months  before  the  cessation  of 
payments,  are  void,  if  the  debt  was  not  due,  or  if  several 
debts  were  due  at  the  same  time  and  not  all  were  paid. 

Conveyances  of  property  without  consideration, 
pledges  or  mortgages  given  to  secure  debts  not  originally 
contracted  with  such  guaranty,  or  the  acknowledgment 
of  debts  not  proved  by  other  means,  if  made  within  six 
months  previous  to  the  cessation  of  payments  or  at  any 
time  after  the  last  balance  sheet  showing  that  the 
liabilities  of  the  bankrupt  were  greater  than  the  assets, 
are  void. 

All  contracts  made  after  the  cessation  of  payments,  or 
within  fifteen  days  before  the  declaration  of  bankruptcy, 
provided  the  cessation  did  not  take  place  earlier,  are 

*>  Haiti,  441  to  444. 

31  Mexico,   978  to  980. 

A  contract  made  by  an  insolvent  debtor  with  another  party  ignorant  of 
the  insolvency  is  not  void  when  it  was,  in  fact,  completed  more  than  thirty 
days  before  the  declaration  of  bankruptcy  of  the  debtor.  Mexico,  Trib.  Sup. 
del  Dist.  Fed.  2a  Sala,  Aug.  6,  1906,  Diar.  de  Jur.,  vol.  9,  p.  361. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        635 

rescindable  in  so  far  as  the  transaction  did  not  augment 
the  assets. 

All  conveyances  of  property  made  at  any  time  by  the 
debtor  can  be  rescinded  if  it  is  proved  that  they  were 
made  to  defraud  creditors,  and  the  action  is  brought 
within  three  years  after  the  declaration  of  bankruptcy. 
Fraud  is  presumed,  in  the  absence  of  proof  to  the 
contrary,  by  the  acknowledgment  at  any  time  by  the 
bankrupt  of  a  dowry  or  of  a  debt  in  favor  of  the  wife  or 
the  husband,  as  the  case  may  be,  when  it  does  not 
burden  inherited  property;  as  well  as  by  conveyance  of 
realty  for  a  consideration,  within  three  months  previous 
to  the  cessation  of  payments.  The  right  of  the  buyer  in 
good  faith  to  be  indemnified  in  so  far  as  it  is  proved  that 
the  price  benefited  the  bankrupt  estate,  is  reserved. ^- 

System  of  Panama.     Acts  of  any  kind  undertaken 
by  a  bankrupt  after  the  declaration  of  bankruptcy,  and 
payments  made  to  him  after  its  publication  are  void 
ipso  jure,  except  payment  of  a  bill  of  exchange,  the 
amount  of  which  ought  to  be  reimbursed  by  the  drawer 
or  by  the  person  for  whose  account  it  was  drawn,  and  of 
promissory  notes,  the  amount  of  which  must  be  reim- 
bursed by  the  first  endorser  if  the  person  who  made  the 
payment  was  aware  of  the  suspension  of  payments 
at  the  time  of  the  endorsement. 
The  following  acts  and  contracts  are  also  void,  but  only 
in  favor  of  the  body  of  creditors,  when  they  are  undertaken 
after  the  declaration  of  bankruptcy  or  thirty  days  prior 
thereto : 

(a)  acts  or  contracts  without  or  for  a  negligible 
consideration; 

(6)  pledges,  mortgages  or  any  other  act  or  stipulation 
designed  to  guarantee  obligations  previously  contracted, 
or  to  give  them  any  preference  over  other  debts; 

(c)  the  payment  of  non-matured  debts,  whether  made 
in  cash  or  by  means  of  assignments  or  endorsements 
or  in  any  other  way  by  which  an  obligation  is  extin- 

'*  Nicaragua,   546,   551. 


636  LATIN-AMERICAN  COMMERCIAL  LAW 

guished,  as  well  as  the  assignment  of  a  credit  already 
due  in  payment  of  a  debt; 

(d)  the   repudiation   of   an   inheritance   bequest   or 
usufruct  within  two  years  previous  to  the  date  of  the 
legal  existence  of  the  bankruptcy. 
Acts  and  contracts  without  consideration  made  by  the 
bankrupt  within  four  years  previous  to  the  date  to  which 
the  effects  of  the  bankruptcy  ought  to  relate  back,  are  void 
when  made  in  favor  of  the  spouse  or  relatives  of  the  bank- 
rupt in  ascending  or  descending  line,  or  of  brothers,  sisters, 
father-   or    mother-in-law,    sons-   or    daughters-in-law    or 
brothers-  or  sisters-in-law. 

The  following  acts  and  contracts,  whenever  undertaken, 
are  voidable  at  the  petition  of  the  receiver  or  any  of  the 
creditors  without  any  bar    by   the  statute  of  limitations: 
(o)  simulated    or    fraudulent    contracts.      There    is 
a  simulation  when  the  parties  declare  what  is  not  true; 
(6)  conveyances  of  property  made  with  or  without 
consideration,   when  the  other  party  knew  that  the 
debtor  entered  into  the  act  or  contract  with  a  view  to 
withdrawing  the  thing  or  its  full  or  partial  value  from 
his   creditors. 
In  like  manner  judgments  that  the  debtor  fraudulently 
allowed  to  be  obtained  against  him  can  be  set  aside,  if  detri- 
mental to  the  creditors. 

Acts  designed  to  acquire  or  preserve  rights,  for  the  exe- 
cution of  which  the  law  requires  certain  formalities  that 
have  not  been  complied  with  or  the  fulfillment  of  which 
must  take  place  within  a  certain  period,  can  be  rescinded 
when  they  were  intended  to  damage  the  creditors. 

Bilateral  contracts  which  at  the  time  of  the  declaration 
of  bankruptcy  were  not  performed  or  only  partially  per- 
formed, whether  on  the  part  of  the  bankrupt  or  of  the 
other  contracting  party  are  ipso  jure  rescinded.  In  this 
case  the  other  party  can  demand  and  be  paid  damages  as  a 
creditor  of  the  bankrupt,  unless  he  has  a  pledge  or  a  mort- 
gage as  security. 

In  the  case  of  hiring  services  or  things,  the  contract  can 


DECLARA.TION  OF  BANKRUPTCY  AND  ITS  EFFECTS        637 

be  rescinded  after  notice  is  served  according  to  civil  law,  the 
other  party  being  entitled  to  no  indemnity. 

The  foregoing  rules  concerning  the  nullity  or  rescission 
of  acts  and  contracts  of  a  bankrupt,  are  also  applicable  to 
those  made  by  his  heir  with  property  belonging  to  the  de- 
cedent bankrupt's  estate  from  the  death  of  the  debtor  to 
the  declaration  of  his  bankruptcy. 

When  an  action  for  rescission  is  admissible  against  a  per- 
son who  acquires  something,  it  is  also  admissible  against 
those  to  whom  he  conveyed  the  thing  without  consideration; 
or  even  where  there  was  a  consideration  if  the  transferee 
knew,  at  the  time  of  the  transaction,  of  the  complicity  of  the 
original  acquirer  with  the  bankrupt.^^ 

System  of  Santo  Domingo.     The  following  acts  are 
void,  so  far  as  concerns  the  body  of  creditors,  when 
they  are  undertaken  by  the  debtor  after  or  within  ten 
days  before  the  date  fixed  by  the  court  as  that  of  the 
suspension  of  payments :  gratuitous  conveyances  of  prop- 
erty of  any  kind;  payments,  whatever  their  nature,  for 
debts,   whether    due   or   not;   contractual   or  judicial 
mortgages  and  pledges  on  property  of   the  bankrupt 
for  obligations  contracted  before  the  bankruptcy. 
Payments  and  contracts  made  for  a  consideration  by  the 
debtor,  after  the  cessation  of  payments  and  before  the  dec- 
laration of  bankruptcy,  are  voidable  when  the  other  party 
to  the  transaction  knew  that  the  debtor  had  ceased  to  meet 
his  obligations. 

Up  to  the  date  of  the  declaration  of  bankruptcy  the  deeds 
of  mortgages  and  liens  legally  acquired  can  be  entered  in 
the  registry.  Registrations  made  after  the  cessation  of 
payments  or  within  ten  days  prior  thereto,  can  be  declared 
void  if  more  than  fifteen  days  have  elapsed  between  the 
execution  of  the  deed  and  its  registration.  This  period  is 
extended  one  day  for  every  three  leagues  of  distance  between 
the  place  where  the  deed  was  executed  and  where  it  is  to  be 
registered. 

In  case  a  bill  of  exchange  was  paid  after  the  date  estab- 

»»  Panama,  1579  to  1589. 


638  LATIN-AMERICAN  COMMERCIAL  LAW 

lished  for  the  cessation  of  payments  and  before  the  declara- 
tion of  bankruptcy,  the  action  to  recover  the  money  can 
be  instituted  against  the  person  for  whose  account  the  bill 
was  drawn.  In  case  of  payment  of  a  promissory  note  the 
action  can  only  be  brought  against  its  first  endorser.  In 
either  case  it  must  be  proved  that  the  person  from  whom 
the  money  has  been  demanded  was  aware  of  the  cessation 
of  payments. ^^ 

System  of  Uruguay.  The  following  acts  are  void 
when  undertaken  within  sixty  days  before  the  cessation 
of  payments,  according  to  the  judicial  decree: 

(a)  gifts  inter  vivos  without  a  past  consideration; 

(6)  conveyances  of  property  without  consideration; 

(c)  conveyances  of  realty  in  pajnnent  of  obligations 

not  due  at  the  time;  mortgages  and  pledges  in  support 

of  debts  which  had  no  such  security  before,  are  also 

void  when  contracted  within  ten  days  previous  to 

the  suspension  of  payments. 

The  following  acts  and  contracts  are  voidable  at  the 

petition  of  the  creditors,  when  it  is  proved  that  the  debtor 

intended  to  defraud  them: 

(a)  mercantile  transactions  entered  into  by  the 
bankrupt  within  ten  days  prior  to  the  declaration  of 
bankruptcy; 

(6)  loans,  in  cash  or  goods,  made  to  the  bankrupt 
within  six  months  previous  to  the  cessation  of  payments 
when  the  actual  delivery  of  the  money  or  goods  is  not 
proved  by  legal  means  independently  of  the  document 
in  which  acknowledgment  of  the  debt  is  made,  unless 
this  is  done  in  a  public  instrument  and  the  notary 
attests  the  delivery; 

(c)  conveyances  of  real  property  for  a  consideration 

within  a  month  prior  to  the  declaration  of  bankruptcy ; 

{d)  all  contracts  made  within  two  years  previous  to 

the  cessation  of  payments  when  some  simulation  to 

defraud  creditors  was  involved. 

Payment  by  the  bankrupt  in  cash,  negotiable  instru- 

5^  Santo  Domingo,  446  to  4-49. 


DECLARATION  OF  BANKRUPTCY  AND  ITS  EFFECTS        639 

ments,  goods  or  any  other  personal  property,  of  non- 
matured  debts  and  discounts  of  his  own  obUgations, 
within  fifteen  days  previous  to  the  declaration  of  bank- 
ruptcy, must  be  reimbursed  to  the  bankrupt  estate  by 
the  persons  who  received  the  money  or  property.^^ 

Revocation  of  the  decree  which  declared  the  state  of  bank- 
ruptcy. 

A  merchant  who  obtains  the  revocation  of  the  decree 
which,  at  the  petition  of  his  creditors,  declared  his  state  of 
bankruptcy,  can  institute  an  action  for  damages  against 
them  if  they  proceeded  maliciously  or  with  manifest  in- 
justice or  falsehood. ^^ 

95  Uruguay,  1576  to  1579. 

9«  Spain,  885;  Argentina,  1429;  Brazil,  21;  Chile,  1388;  Colombia,  154; 
Guatemala,  1222;  Honduras,  873;  Panama,  1550;  Peru,  897;  Uruguay,  1568; 
Venezuela,  1015. 


CHAPTER  XXXVIII 

Bankruptcy  (3) 
receivers  and  classification  of  creditors'  claims 

Starting  the  bankruptcy  proceedings. 

In  order  (a),  to  prevent  the  debtor  from  disposing  of  his 
property  with  the  prejudice  of  his  creditors;  (b),  to  have  a 
complete  and  dependable  information  concerning  his  assets 
and  liabilities,  the  character  and  validity  of  creditors'  claims 
and  the  nature  of  the  causes  which  produced  the  insolvency; 
(c),  to  provide  for  the  management  of  the  bankrupt's  prop- 
erty, and  (d),  to  pay  the  creditors  in  the  order  of  pref- 
erence established  by  the  law,  the  judge,  at  the  time  he  de- 
clares the  state  of  bankruptcy,  must : 

(a)  appoint  a  receiver  (called  varyingly  sindico, 
depositario,  curador,  agente)  who  is  charged  with  the 
duty  of  taking  possession  of  the  bankrupt's  prop- 
erty; 1 

In  Argentina  the  creditors  themselves,  by  a  majority 
of  votes  representing  the  majority  of  interest,  appoint 
the  receiver. 

In  Bolivia,  Haiti  and  Santo  Domingo  the  judge  must 
also  appoint  a  delegated  judge,  (juez  comisario)  who  is  to 
decide  questions  of  minor  importance  and  to  prepare  the 
case  for  judicial  decision. 

1  Spain,  Chile,  Colombia,  Ecuador,  Guatemala,  Mexico,  Panama,  Uruguay 
and    Venezuela. 

When  the  number  of  votes  and  the  financial  interest  represented  by  the 
voters  in  the  election  of  an  assignee  in  bankruptcy  do  not  reach  the  figures 
mentioned  in  art.  1412  of  the  Code  of  Commerce,  namely,  half  plus  one  of  the 
number  of  creditors  present,  provided  they  represent  at  least  three-fifths  in 
amount  of  the  total  number  of  the  voting  claims,  the  judge  must  appoint  the 
assignee.  Chile,  Corte  de  Apel.  de  la  Serena,  Dec.  31,  1895,  Gacela  de  los  Tribs., 
1896,  p.  1570. 

640 


RECEIVERS  AND  CLASSIFICATION  OF  CLAIMS  641 

In  Brazil,  besides  the  receiver  appointed  by  the  judge, 
the  creditors  appoint  one  or  more  Hquidators.- 

(h)  order  the  receiver  to  take  possession  of  the 
debtor's  property.  For  that  purpose  a  seal  is  placed  on 
the  doors  of  stores,  warehouses  and  other  places  where 
personal  property  may  be  located,  until  a  detailed 
inventory  can  be  made,  comprising  merchandise, 
furniture,  machinery,  fixtures,  negotiable  instruments, 
securities,  valuables  of  every  description,  commercial 
books,  papers,  correspondence  of  the  bankrupt,  which, 
when  entered  in  the  inventory,  are  vouched  for  by  the 
receiver.^ 

(c)  order  the  postmaster  to  deliver  to  the  receiver  any 
mail  addressed  to  the  bankrupt;  the  receiver  must  hand 
over  to  the  bankrupt  all  letters  of  a  personal  or  family 
character;  ^ 

(d)  publish  by  means  of  placards  and  in  the  press,  the 
declaration  of  bankruptcy,  as  well  as  summon  the 
creditors  to  produce  the  evidence  of  their  claims;  ^ 

(e)  order  any  person  having  property  of  the  bankrupt 
to  surrender  the  same  to  the  receiver;  ^ 

(J)  prohibit  the  making  of  any  payment  to  the  bank- 
rupt, under  penalty  of  again  paying  the  receiver;  ^ 
(g)  call  the  creditors  to  a  meeting  for  the  discussion  of 

*  The  director  of  a  corporation  cannot  be  appointed  the  receiver  of  the 
same.  Brazil,  1*  Cam.  da  Corte  de  Apel.,  Oct.  24,  1910,  Rev.  de  Dir.,  vol, 
XVIII,  p.  324. 

A  receiver  is  a  depositary  and  the  action  of  deposit  is,  therefore,  proper 
against  him  after  the  accounts  have  been  decided  upon,  and  in  case  he  refuses 
to  surrender  the  money,  books  and  property  of  the  bankrupt.  Brazil,  Trib.  de 
Just,  de  S.  Paulo,  March  13,  1905,  S.  Paulo  Judiciario,  vol.  7,  p.  253. 

3  Spain,  Argentina,  Boliiva,  Brazil,  Chile,  Colombia,  Ecuador,  Guatemala, 
Haiti,  Mexico,  Panama,  San  Salvador,  Santo  Domingo,  Uruguay  and  Vene- 
zuela. 

*  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Ecuador,  Guatemala, 
Haiti,  Mexico,  Panama,  San  Salvador,  Uruguay  and  Venezuela. 

^  Spain,  Argentina,  Bolivia,  Brazil,  Chile,  Colombia,  Ecuador,  Guatemala, 
Haiti,  Mexico,  Panama,  San  Salvador,  Uruguay,  and  Venezuela. 

'  Spain,  Argentina,  Brazil,  Chile,  Colombia,  Ecuador,  Guatemala,  Haiti, 
Mexico,  Uruguay  and  Venezuela. 

^  Spain,  Argentina,  Chile,  Ecuador,  Guatemala,  Mexico,  Panama,  San 
Salvador,   Uruguay  and   Venezuela. 


642  LATIN-AMERICAN  COMMERCIAL  LAW 

their  rights  and  claims  and  the  appointment  of  the 

definite  assignee  in  bankruptcy. ** 
In  Mexico/  the  call  is  not  issued  until  after  the  creditors 
have  presented  their  claims  and  proof  thereof,   and  the 
receiver  has  made  his  report  thereon. 

Duties  of  the  receiver. 

The  duties  of  the  receiver  are: 

(a)  to  take  possession  of  the  debtor's  property  de- 
scribing it  in  the  inventory; 

(b)  to  manage  such  property  as  an  agent  in  the 
common  interest  of  the  creditors; 

(c)  to  represent  the  body  of  creditors  in  court; 

(d)  to  sell  the  property  of  the  bankrupt  at  auction  or 
in  a  way  most  advantageous  to  the  creditors,  and  to 
keep  the  proceeds  for  a  proper  distribution  among  the 
latter; 

(e)  to  present  a  plan  for  the  distribution  of  the  liquid 
assets  among  the  creditors,  a  plan  which  must  be  dis- 
cussed by  the  creditors  and  sanctioned  by  the  judge; 

(/)  to  account  for  his  management.^" 

*  Spain,  Bolivia,  Brazil,  Chile,  Ecuador,  Haiti,  Panama    and  Venezuela. 

9  Art.   1445. 

The  code  articles  with  respect  to  the  above  countries  are  as  follows: 

Spain,  1713,  1193,  1194  c.  p.;  Argentina,  1421  to  1423,  1433,  1438;  Bolivia, 
521;  Brazil,  17,  18,  64,  65,  80;  Chile,  1350,  1396,  1401;  Colombia,  art.  62  of  the 
law  40  of  1907;  Ecuador,  398;  Guatemala,  1215,  1223;  Haiti,  451,  453,  454, 
460,  496;  Mexico,  1429,  1473;  Panama,  1795  to  1799  c.  p.;  San  Salvador,  689  c. 
p.;  Santo  Domingo,  451,  462,  479,  491;  Uruguay,  1557,  1558;  Venezuela,  894. 

w  Spain,  1218,  1283,  1291  c.  p.;  Argentina,  14.38  to  1444,  1486,  1492,  1495, 
1496  to  1511;  Bolivia,  598,  665,  674;  Brazil,  74,  83;  Chile,  1414  to  1433,  1498 
to  1508;  Colombia,  arts.  82  to  93  of  the  law  40  of  1907;  Costa  Rica,  604  to  611, 
616,  623,  633,  635,  641,  642,  646  c.  p.;  Ecuador,  976  to  979,  983;  Guatemala, 
1250,  1254,  493,  504,  553,  556;  Mexico,  1418,  1433  to  1436,  1442,  1486  to  1490; 
Panama,  1816  c.  p.;  San  Salvador,  703  c.  p.;  Santo  Domingo,  484  to  490,  497, 
532  to  537,  566,  569;  Uruguay,  1595  to  1602,  1613,  1627  to  1629,  1644  to  1648, 
1660,  1661,  1735  to  1741;  Venezuela,  894,  896,  913,  916,  917  to  922,  924  to  945. 

The  assignee  in  bankruptcy  cannot  start  suit  in  behalf  of  the  body  of  credit- 
ors without  their  consent.  Argentina,  Cam.  1*  de  Apel.  Civ.,  Dec.  30,  1913, 
Jur.  de  los  Tribs.  Nacs.,  December,  1913,  p.  193. 

A  judge  cannot  discharge  the  assignees  in  bankruptcy  on  account  of  accusa- 
tions against  them;  but  he  must  submit  the  accusations  to  the  meeting  of 


RECEIVERS  AND  CLASSIFICATION  OF  CLAIMS  643 

In  Brazil  ^^  the  sale  of  the  property  is  made  not  by  the 
receiver  but  by  a  liquidator. 

The  code  of  Nicaragua  differs  somewhat  in  this  respect/- 
as  it  provides  that  the  property  of  the  bankrupt  belongs  to 
his  creditors  pro  indiviso,  so  long  as  it  is  not  distributed 
among  them,  and  they  can  provide  for  its  management  as 
they  see  fit  within  the  rules  of  general  partnership.  The 
bankrupt  must  be  heard  in  the  discussion  of  the  business  as  a 
partner  in  a  general  partnership.  So  long  as  the  creditors  do 
not  adopt  regulations  for  the  management  of  the  property  of 
the  bankrupt  it  is  kept  in  deposit,  the  bailee  being  under  the 
obligation  of  selling  any  property  subject  to  deterioration. 
An  inventory  is  necessary  only  when  the  bankrupt  himself 
failed  to  present  one  at  the  time  he  applied  for  a  declaration 
of  bankruptcy. 

Compensation  of  the  receiver  or  assignee. 

The  receiver's  compensation  is  determined  differently  in 
the  various  countries  as  follows: 

In  Spain  ^^  joint  receivers  are  jointly  entitled  to  the 
following  compensation,  which,  in  the  absence  of  agree- 
ment to  the  contrary,  they  must  divide  equally; 

creditors  in  order  that  they  may  consider  them  with  a  view  to  a  resolution- 
Argentina,  Cam.  de  Apel.  Com.,  Buenos  Aires,  February  3,  1914,  Jur.  de  los 
Tribs.  Nacs.,  February,  1914,  p.  48. 

The  classification  or  graduation  of  the  claims  made  by  the  assignee  in  bank- 
ruptcy must  be  approved  by  the  judge  when,  being  in  accordance  with  the 
law,  it  has  been  accepted  by  the  meeting  of  creditors.  Mexico,  Juzgado  2°  de 
lo  Civ.  del  Dist.  Fed.,  May  25,  1905,  Diar.  de  Jur.,  vol.  V,  p.  601. 

A  bankrupt  estate  is  exclusively  represented  by  its  receiver.  Spain,  Trib. 
Sup.,  Oct.  23,  18S4.    Col.  Leg.  de  Esp.,  1883,  2d  sem.,  p.  497. 

Sales  of  realty  belonging  to  the  bankrupt,  made  by  the  receiver,  produce 
the  same  effect  as  those  made  by  an  owner  himself.  Spain,  Trib.  Sup.,  June  5, 
1861;  Gacela  of  July  1,  1867. 

"Art.  67.  12  Arts.  555,  556. 

"  Art.  1219  c.  p. 

The  compensation  due  to  receivers  is  not  a  fixed  one;  it  is  regulated  in  pro- 
portion to  the  transactions  they  undertake  in  the  exercise  of  their  duties.  The 
judicial  expenses  incurred  in  connection  with  the  claim  of  the  receiver  for  a 
greater  compensation  than  that  allowed  him  are  not  borne  l)y  th(i  bankrupt 
estate,  but  by  him.  Spain,  Trib.  Sup.,  May  21,  1883,  Col.  Leg.  de  Esp.  Materia 
Civ.,  1st  sem.,  p.  854. 


644  LATIN-AMERICAN  COMMERCIAL  LAW 

(a)  one-half  of  the  cash  value  of  all  pubUc  securi- 
ties sold; 

(6)  two  per  cent  of  the  liquid  proceeds  of  the  sale 
of  jewelry,  movables,  live  stock  or  fruits  not  produced 
during  the  administration; 

(c)  one  per  cent  of  the  net  proceeds  of  the  sale  of 
realty  and  the  amounts  collected  on  debts  due  the 
estate; 

(d)  five  per  cent  of  the  net  income  accruing  during 
their  administration,  as  far  as  not  comprised  in  the 
foregoing  paragraphs.  If  the  receivers  must  make 
trips  in  the  performance  of  their  duties,  the  expenses 
incurred  must  be  refunded. 

In  Argentina  ^^  before  the  distribution  of  the  assets 
is  made,  the  creditors  must  convene  in  order  to  fix  the 
compensation  of  the  receivers  and  other  employees  of 
the  common  estate.  The  parties  concerned  may  appeal 
to  the  judge  from  the  resolution  adopted  by  the  cred- 
itors. 

In  Bolivia  ^^  each  receiver  is  entitled  to  a  compensa- 
tion of  a  half  per  cent  of  the  amounts  collected  on  claims 
or  debts  due  the  estate;  two  per  cent  of  the  proceedings 
of  the  sale  of  merchandise  belonging  to  the  estate;  and 
one  per  cent  on  sales  and  dispositions  of  property  of 
any  kind  not  pertaining  to  the  commercial  business  of 
the  bankrupt. 

In  Chile,  ^^  Ecuador  ^^  and  Venezuela,  ^^  receivers, 
whether  provisional  or  definite,  are  entitled  to  compen- 
sation as  fixed  by  the  commercial  court  after  the  account 
of  their  management  has  been  approved. 

In  Colombia  ^^  the  receiver  is  entitled  to  the  same 
compensation  as  a  depositary,  plus  a  half  per  cent  of  the 
amounts  collected  from  the  bankrupt;  in  addition  he 
must  be  compensated  for  his  work  in  the  bankruptcy 
proceedings,  according  to  expert  valuation,  provided  he 
has  not  delayed  them. 

"  Art.  1512.         15  Art.  604.  «  Art.  1438. 

"  Art.  984.         ^  Art.  946.  "  Law  40  of  1907,  art.  98. 


RECEIVERS  AND  CLASSIFICATION  OF  CLAIMS  645 

In  Guatemala  ^^  the  depositaries,  as  well  as  the 
receivers,  are  entitled  to  a  compensation  of  two  per  cent 
of  the  actual  value  of  the  bankrupt's  property  for  the 
depositary,  and  three  per  cent  for  the  receiver.  The 
general  meeting  of  creditors  may  increase  the  compensa- 
tion according  to  circumstances. 

In  Mexico  -^  the  assignees  are  entitled  to  a  compensa- 
tion of  eight  per  cent  of  the  proceedings  of  the  bank- 
rupt's property  if  not  in  excess  of  $25,000;  four  per  cent 
of  the  excess  above  that  amount  up  to  $200,000.  The 
receiver  appointed  by  the  judge  {interventor  provisional) 
is  entitled  to  the  compensation  allowed  to  attorneys  in 
the  appropriate  tariff  of  fees. 

In  Panama  --  the  compensation  of  the  receivers  is 
fixed  by  the  creditors ;  if  they  fail  to  agree,  it  is  fixed  by 
the  judge  under  expert  opinion. 

In  San  Salvador  ^^  the  compensation  is  three  per  cent 
of  the  liquid  assets.  If  the  receiver  asks  for  a  greater 
compensation  the  creditors  must  decide. 

In  Uruguay  "■*  the  compensation  is  fixed  by  the  board 
of  superintendents  of  the  bankruptcy,  or  by  the  judge 
in  default  of  such  officers;  the  amount  so  fixed  can  be 
changed  at  the  petition  of  the  receiver  or  of  the  creditors. 
The  determination  of  the  compensation  takes  place 
when  the  funds  realized  out  of  the  bankrupt's  property, 
are  ready  for  distribution.  When  the  judge's  appoint- 
ment of  the  receiver  is  not  ratified  by  the  creditors,  the 
compensation  of  the  judicial  receiver  must  be  paid  when 
he  ceases  in  his  functions.  If  the  receiver,  before  the 
accomplishment  of  his  duties  resigns  his  position  with- 
out good  reason,  he  forfeits  all  right  to  be  compen- 
sated. If  the  resignation  is  well  founded  and  a  new 
receiver  is  appointed,  the  judge,  taking  into  con- 
sideration the  period  during  which  each  receiver  ren- 
dered services  and  the  importance  thereof,  fixes  the 
compensation. 

«>  Art.  1255.  21  Arts.  1427,  1428.  "  Art.  1824. 

23  Art.  707  c.  p.  24  Arts.  1G03  to  1605. 


646  LATIN-AMERICAN  COMMERCIAL  LAW 

CLASSIFICATION    OF    CREDITOR'S    CLAIMS 

The  claims  or  rights  of  the  persons  concerned  in  a  bank- 
ruptcy to  the  property  found  at  the  time  of  the  inventory  of 
the  debtor's  business  may  be  of  different  character.  Some 
property  may  not  belong  to  the  bankrupt  and  the  creditors 
cannot  apply  it  to  the  payment  of  the  liabilities;  other 
property  may  be  subject  to  a  lien  or  burden  in  favor  of  one 
or  more  creditors;  other  property,  finally,  must  be  distrib- 
uted in  equal  parts  among  the  creditors,  as  will  presently 
be  explained. 

Property  recoverable  from  the  receivers. 

Merchandise,  securities  and  any  other  kind  of  property 
constituting  a  part  of  the  estate  in  bankruptcy,  the  title  to 
which  has  not  been  conveyed  to  or  vested  in  the  bankrupt 
legally  and  irrevocably,  is  considered  as  belonging  to  another 
person  and  must  be  placed  at  the  disposal  of  its  lawful 
owners,  after  acknowledgment  of  their  rights  by  the  general 
meeting  of  the  creditors  or  by  a  final  judgment;  the  bank- 
rupt estate,  however,  retaining  in  said  property  any  rights 
inhering  in  the  bankrupt  in  whose  stead  said  estate  is  sub- 
stitute, provided  it  performs  the  duties  attaching  thereto.  ^^ 

The  following  items  are  considered  as  included  within  the 
general  description  of  property  of  another  mentioned  in  the 
foregoing   paragraph : 

(a)  the  unappraised  and  appraised  dowry  property 
which  may  remain  in  the  control  of  the  husband,  if  his 
receipt  is  established  by  a  notarial  instrument,  recorded 
in  accordance  with  the  provisions  of  law ; 

(b)  the  paraphernalia  property  which  the  wdfe  may 
have  acquired  by  inheritance,  legacy,  or  gift,  whether  in 

25  Spain,  908;  Argentina,  1487  to  1490;  Bolivia,  653;  Brazil,  138;  Chile,  1509; 
Colombia,  165;  Costa  Rica,  30;  Ecuador,  985  to  988;  Guatemala,  1258;  Haiti, 
570  to  578;  Honduras,  896;  Mexico,  998;  Peru,  920;  San  Salvador,  803;  Santo 
Domingo,  574  to  578;  Uruguay,  1699,  1703,  1709;  Venezuela,  947. 

Persons  entitled  to  recover  from  the  bankrupt  estate  property  belonging  to 
them,  have  no  right  to  vote  in  the  meeting  of  the  ordinary  creditors,  and  the 
decisions  adopted  therein  arc  not  binding  on  such  persons.  Spain,  Trib.  Sup., 
Jan.  27,  18-72;  Gaceta  of  Feb.  1st,  1872. 


RECEIVERS  AND  CLASSIFICATION  OF  CLAIMS  647 

the  specific  form  in  which  it  was  received,  or  in  another 
into  which  it  has  been  converted,  provided  the  exchange, 
or  new  investment  was  recorded  in  the  Commercial 
Registry  according  to  law; 

(c)  the  property  which  the  bankrupt  may  have  on 
deposit,  control  or  trust,  lease  or  usufruct; 

(d)  merchandise  which  the  bankrupt  may  have  in  his 
control  under  a  commission  or  agency  to  purchase,  sell, 
transport  or  deliver; 

(e)  bills  of  exchange  or  promissory  notes  which, 
without  endorsement  or  any  statement  transferring 
ownership  therein,  had  been  sent  to  the  bankrupt  for 
collection,  and  those  he  may  have  received  for  the 
account  of  another,  drawn  or  endorsed  directly  in  favor 
of  the  principal: 

(/)  funds  forwarded  to  the  bankrupt  outside  of 
current  account  for  delivery  to  a  specified  person  in  the 
name  and  for  the  account  of  the  principal,  or  to  satisfy 
obligations  to  be  met  at  the  place  of  residence  of  the 
former; 

(g)  sums  which  are  owing  the  bankrupt  for  sales 
effected  for  the  account  of  another,  and  the  drafts  or 
promissory  notes  of  like  origin  which  are  in  his  posses- 
sion, although  they  are  not  drawn  in  favor  of  the  owner 
of  the  merchandise  sold,  provided  it  is  proved  that  the 
obligation  arises  therefrom  and  that  they  are  in  the 
possession  of  the  bankrupt  for  the  account  of  the  owner 
in  order  to  be  cashed,  and  the  amount  thereof  to  be 
remitted  at  the  proper  time,  which  fact  is  a  legal 
presumption  if  the  amount  has  not  been  entered  in  a 
current  account  between  them; 

(h)  goods  sold  to  the  bankrupt  for  cash  but  not  paid 
for  in  whole  or  in  part  so  long  as  they  remain  packed  in 
bulk  in  the  warehouse  of  the  bankrupt,  or  in  the  shape 
in  which  they  were  at  the  time  of  delivery,  and  are  in 
such  state  as  to  be  specifically  distinguished  by  the 
marks  or  numbers  of  the  packages  or  bales; 

(i)  merchandise  which  the  bankrupt  has  purchased  on 


648  LATIN-AMERICAN  COMMERCIAL  LAW 

credit,  so  long  as  the  actual  delivery  thereof  has  not 
been  made  to  him  at   his  warehouse  or  in  the  place 
agreed  upon,  and  merchandise  the  bills  of  lading  or 
shipping  receipts  whereof  have  been  forwarded  to  him, 
after  the  goods  had  been  shipped,  by  order  and  for  the 
account  and  risk  of  the  purchaser.    In  such  case  and  in 
the  case  referred  to  in  the  paragraph  h,  the  receivers  or 
assignees  may  retain  the  goods  purchased  or  claim  them 
for  the  bankruptcy  estate,  on  paying  the  price  thereof 
to  the  vendor.    The  amount  of  circulating  bank-notes  of 
banks  of  issue  which  are  in  bankruptcy  are  also  consid- 
ered as  another's  property  in  the  bankruptcy  of  a  bank.-® 
The  code  of  commerce  of  Argentina  "  provides  that  in 
no  case  is  the  lack  of  registry  a  hindrance  for  the  enforce- 
ment of  the  rights  of  the  wife  legally  proved  in  juido  ordin- 
ario  (regular  suit),  without  prejudice  to  the  liability  of  the 
husband. 

In  Bolivda  ^^  the  wife  of  the  bankrupt  is  to  be  paid  as  a 
creditor  guaranteed  by  mortgage  for  all  her  dowry  and 
paraphernalia,  which,  at  the  time  of  the  declaration  of 
bankruptcy  may  have  been  aUenated  or  consumed;  as  well 
as  for  all  that  is  promised  her  at  the  time  and  in  considera- 
tion of  her  marriage,  provided  it  is  made  in  a  pubhc  instru- 
ment and  in  so  far  as  it  does  not  exceed  the  amount  allowed 
by  law. 

Classification  of  creditor's  claims. 

There  are  different  methods  of  classifying  creditors'  claims, 
and  establishing  their  order  of  preference  in  payment  out 
of  the  assets.    The  following  are  the  principal  methods : 

In  Spain,  Honduras,  Mexico  and  Peru  ^^  the  classi- 
cs Spain,  909,  910;  Argentina,  1470,  1471;  Bolivia,  653  to  655;  Brazil,  138; 
Chile,  1510  to  1519;  Colombia,  165,  166;  Costa  Rica,  31  to  33;  Ecuador,  985  to 
988;  Guatemala,  1259  to  1266;  Haiti,  538  to  551,  570  to  579;  Honduras,  897; 
Mexico,  999;  Peru,  921;  San  Salvador,  804;  Santo  Domingo,  574  to  579; 
Uruguay,  1700  to  1705,  1709;  Venezuela,  917  to  949. 
^  Art.  1470.  28  Art.  656. 

29  Spain,  911  to  914;  Honduras,  899  to  901;  Mexico,  1000  to  1003;  Peru,  922 
to  925. 

Lawful  credits  are  those  which,  having  been  approved  by  the  general  meeting 


RECEIVERS  AND  CLASSIFICATION  OF  CLAIMS  649 

fication  of  the  debts  must  be  made  by  dividing  them 
into  two  sections,  namely: 

(a)  debts  which  must  be  paid  from  the  proceeds 
of  the  personal  property  of  the  bankrupt,  and 

(6)  those  which  are  to  be  paid  from  the  proceeds 
of  the  real  estate. 
The  preference  of    the    creditors  in  the  first  section  is 
established  according  to  the  following  order: 

1.  the  creditors  especially  preferred  in   this  order: 

(a)  creditors  for  burial,  funeral  and  probate  ex- 
penses; 

(b)  creditors  for  maintenance  (acreedores  ali- 
menticios),  i.  e.,  those  who  have  advanced  the  bank- 
rupt and  his  family  necessaries  of  life; 

(c)  creditors  for  personal  services,  including  the 
business  employees,  for  the  six  months  preceding  the 
bankruptcy; 

2.  the  creditors  who  have  a  preferential  claim 
according  to  the  commercial  code; 

3.  the  creditors  preferred  according  to  civil  law  and 
creditors  having  a  legal  mortgage,  in  those  cases  in 
which,  in  accordance  with  the  civil  law,  they  have  a 
preferential  claim  on  the  personal  property; 

4.  the  creditors  whose  claim  is  evidenced  by  a  public 
instrument  or  by  an  instrument  made  through  an  ex- 
change agent  or  broker; 

of  creditors,  have  not  been  subsequently  legally  objected  to.  Mexico,  D.  F. 
Juz.  3°  de  lo  Civ.,  Oct.  8,  1908,  Diar.  de  Jur.,  v.  XXVII,  p.  552. 

Claims  objected  to  can  be  admitted,  when  the  objection  proved  groundless. 
They  must  be  paid  in  due  proportion  in  so  far  as  the  assets  of  the  bankruptcy 
have  not  been  distributed  among  the  creditors.    lb. 

Shareholders  of  a  corporation  are  not  creditors  in  the  bankruptcy  thereof. 
lb. 

Debts  arising  from  judicial  expenses  and  personal  services  are  preferred  at  the 
time  of  making  distribution  of  the  assets  of  a  bankruptcy.    lb. 

In  view  of  the  proofs  and  documents  produced  by  the  creditors,  the  receiver 
must  prepare  his  report  and  submit  it  to  the  meeting  of  the  creditors,  and  the 
latter  must  decide  upon  the  acceptance  or  refusal  of  every  claim  l)y  plurality 
of  votes.  The  rights  of  the  excluded  creditor  to  obtain  the  revocation  of  such 
decision  are  reserved.  Spain,  Trib.  Sup.,  Feb.  7,  1881;  Gacela  of  March  27, 
1881. 


650  LATIN- AMERICAN  COMMERCIAL  LAW 

5.  ordinary  creditors  by  reason  of  commercial  trans- 
actions ; 

6.  ordinary  creditors  according  to  civil  law. 
Priority  in  payment  of  the  creditors  of  the  second 

section  is  subject  to  the  following  order: 

1.  creditors  with  a  lien  on  the  reality  in  rem  must  be 
paid  in  the  order  prescribed  by  the  mortgage  law; 

2.  creditors  specially  preferred  and  the  others  al- 
ready enumerated  in  the  first  section,  in  the  order 
therein  provided. 

In  Argentina  ^°  the  creditors  are  divided  into  five  prin- 
cipal classes,  according  to  the  nature  of  their  claims: 

1.  creditors  who  are  the  owners  of  property  found 
among  the  property  of  the  bankrupt,  as  previously 
decsribed  in  dealing  with  the  property  recoverable 
from  the  receiver  or  assignee; 

2.  creditors  with  a  general  preference  on  the  whole 
property  of  the  bankruptcy,  which  comprise  claims 
included  in  the  first  section  of  creditors  under  the 
Spanish  code,  as  above  mentioned,  and  governmental 
claims  for  fiscal  duties; 

3.  creditors  with  special  preference  arising  from 
hens  and  pledges; 

4.  mortgage  creditors; 

5.  ordinary,  simple  or  general  creditors. 

In  Bolivia  ^^  besides  the  rights  of  those  who  claim  owner- 
ship in  specific  objects,  there  are  three  classes  of  preferences: 

1.  privileged  claims; 

2.  claims  granted  by  legal,  judicial  or  contractual 
mortgage,^-  which  include  those  guaranteed  by  pledge 
and  those  of  the  wife  for  dowry  and  paraphernalia, 
which  at  the  time  of  the  declaration  of  bankruptcy 
were  already  consumed,  or  gifts  promised  her  by  her 

30  Arts.  1469  to  1475,  1495,  1501  and  1502. 

31  Arts.  650,  656. 

3^  A  mortgage  is  called  legal  when  it  originates  in  a  provision  of  the  law ;  it 
is  called  judicial  when  it  originates  in  a  judicial  decision,  and  is  contractual 
when  it  arises  from  an  agreement. 


RECEIVERS  AND  CLASSIFICATION  OF  CLAIMS  651 

husband  as  a  consideration  for  marriage,  in  so  far  as 
they  do  not  exceed  the  legal  limits; 

3.  claims  evidenced  by  a  public  or  private  instru- 
ment without  any  mortgage. 
In  Brazil  ^^  the  law  of  bankruptcy  names  five  different 
classes  of  creditors  who  are  to  be  paid  in  the  following  order : 

1.  creditors  with  a  general  preference  as  to  the  entire 
assets,  as  those  originating  in  judicial  expenses,  burial 
of  the  bankrupt,  salaries  of  employees  and  others  accord- 
ing to  law; 

2.  creditors  with  a  preference  as  regards  the  real 
estate  (mortgage  and  anticresis  creditors); 

3.  creditors  with  a  special  preference,  as  the  pledge, 
on  personal  property; 

4.  creditors  having  the  privilege  of  being  paid  sepa- 
rately, as  creditors  of  a  person  whose  heir  is  the  bank- 
rupt; 

5.  ordinary  creditors  whose  claims  are  evidenced 
by  private  instruments; 

6.  personal  creditors  of  each  of  the  unlimited  part- 
ners, with  their  respective  classifications. 

The  right  of  retention  of  merchandise  sold  to  the 
bankrupt  can  also  be  exercised  in  accordance  with  the 
provisions  of  the  commercial  code. 
In  Chile  ^^  and  Colombia  ^^  the  creditors  are  divided  into 
five  classes: 

1.  those  having  a  general  preference; 

2.  those  having  a  special  preference  with  respect 
to  a  certain  thing; 

3.  those  secured  by  a  mortgage; 

4.  those  in  favor  of  the  public  treasury  or  public 

»» Arts.  85,  98. 

"  Arts.  2472  to  2489  c.  c.  and  1520  com.  c. 

Lawyers  of  the  bankrupt  are  not  crefiitor.s  of  the  bankruptcy  but  only  those 
appointed  by  receivers  to  defend  the  bankrupt  estate  itself.  Brazil,  Trib.  de 
Just,  de  S.  Paulo,  Nov.  28,  1897,  Rev.  Mens,  dns  Decisoes,  v.  Ill,  p.  111. 

Repre.sentatives  of  the  receivers  are  not  creditors  of  the  bankruptcy  estate, 
as  the  office  of  receiver  is  personal  and  cannot  be  delegated.    lb. 

"  Arts.  2495  to  2510  c.  c.  and  164,  165  com.  c. 


652  LATIN-AMERICAN  COMMERCIAL  LAW 

welfare  or  religious   institutions   against  the  collectors 
of  their  revenues,  and  those  of  the  wife,  children  or  ward 
against  the  husband,  father  or  guardian; 
5.  ordinary  creditors. 
In  Ecuador  ^^  only  three  classes  are  admitted: 

1.  preferred  debts  payable  out  of  proceeds  of  the 
movable  property; 

2.  mortgage  debts,  and 

3.  ordinary  debts. 

In  Guatemala  ^^  there  are  six  classes  of  creditors'  claims: 

1.  mortgage  or  pledge  claims; 

2.  general  preferred  claims; 

3.  specially  preferred  claims; 

4.  taxes  and  wages  due  at  the  time  of  the  declaration 
of  bankruptcy,  deposits  of  fungible  things,  debts  due 
the  state  and  public  institutions. 

5.  the  above  debts  when  not  fully  paid  with  the 
proceeds  of  the  things  affected  to  their  payment,  and 

6.  ordinary  claims. 

In  Haiti  ^^  and  Santo  Domingo  ^^  there  are  three  kinds 
of  debts: 

1.  those  with  special  preference  with  respect  to  real 
estate; 

2.  other  preferred  claims,  and 

3.  ordinary  debts. 

Nicaragua  ^°  enumerates  the  order  in  which  debts  must 
be  paid  very  similar  to  that  of  the  code  of  Spain  in  regard 
to  creditors  who  have  a  preference  as  to  personal  property 
or  real  estate;  mortgage  and  pledge  creditors  must  be  paid 
after  the  expenses  of  the  judicial  proceedings  for  the  preser- 
vation of  the  assets,  or  those  incurred  for  obtaining  the 
fruits  or  benefits  thereof  have  been  paid. 

Panama  "^^  distinguishes  two  classes  of  claims,  namely, 
those  against  the  bankrupt  prior  to  the  bankruptcy,  and 
those  against  the  receiver  considered  as  the  representative  of 

36  Arts.  1035,  1040,  1043.  "  Arts.  1268  to  1276. 

'8  Arts.  533  to  552.  »  Arts.  552,  556,  565,  570. 

«  Arts.  559,  560.  "  Arts.  1591  to  1599. 


RECEIVERS  AND  CLASSIFICATION  OF  CLAIMS  653 

a  legal  entity  capable  of  incurring  obligations.    The  first  class 
is  divided  into  two  groups: 

1.  creditors  secured  by  a  mortgage,  pledge  or  any 
other  security  constituting  a  property  interest  in  rem, 
and  payable  as  preferred  creditors  out  of  the  proceeds 
of  the  property  affected; 

2.  all  other  creditors  of  the  bankrupt  who  must  be 
paid  whatever  the  date  of  the  debt  in  the  order  estab- 
lished by  the  civil  code. 

The  second  class  creditors  are  those  whose  credits  origi- 
nated in: 

(a)  expenses,  judicial  or  other,  incurred  in  the  com- 
mon interest  of  the  creditors,  in  verifying  the  credits  and 
liquidating  the  assets,  in  preserving  and  managing  the 
property  and  distributing  it  among  the  creditors; 

(6)  contracts  lawfully  entered  into  by  the  re- 
ceiver; 

(c)  rescission  of  contracts  entered  into  by  the  debtor 
when,  by  reason  of  such  rescission,  it  becomes  necessary 
to  return  money  or  property  or  to  indemnify  a  good 
faith  possessor  of  property  recovered  by  the  bankrupt 
estate; 

(d)  fiscal  or  municipal  taxes; 

The  following  claims  are  also  considered  included  in 
this  class,  provided  they  do  not  exceed  100  balboas 
($100  U.  S.) : 

(e)  expenses  arising  out  of  the  burial  of  the  debtor  or 
members  of  his  family  who  lived  with  him  and  did  not 
leave  any  property; 

(/)  expenses  incurred  in  medical  assistance  and  food 
supplies  furnished  the  debtor  for  a  month  prior  to  the 
bankruptcy; 

(g)  wages,   without   limitation   of  amount,   paid   to 

clerks,  employees  and  servants  of  the  debtor  during  the 

last  three  months  preceding  the  bankruptcy. 

All  these  claims  against  the  estate  must  be  paid  first  and 

with  preference  to  any  other  claims  not  specially  secured  by 

property  already  burdened  in  favor  of  the  creditor. 


654  LATIN-AMERICAN  COMMERCIAL  LAW 

In  Uruguay  ^-  the  law  divides  the  creditors  into  four 
grades,  namely: 

(a)  first  class  of  preferred  personal  claims  comprises 
judicial  costs  incurred  for  the  common  benefit  of  the 
creditors,  management  expenses,  expenses  for  the 
bankrupt's  funeral,  if  the  death  took  place  before  the 
declaration  of  bankruptcy,  or  after  such  declaration, 
if  such  expenses  were  verified  by  the  assignee  and 
authorized  by  a  creditor's  committee,  medical  assistance 
to  the  bankrupt,  w^ages  of  employees,  workers  and 
servants  of  the  bankrupt  for  the  six  months  prior  to  the 
bankruptcy,  subsistence  supplied  the  bankrupt  or  his 
family  during  the  same  period,  and  arrears  for  taxes; 

(6)  the  second  class  of  personal  preferred  claims 
includes  all  those  which,  according  to  law,  are  secured 
by  a  lien  upon  certain  personal  property,  such  as  the 
innkeeper's  and  carrier's  lien,  the  lien  of  the  creditor  of 
a  farmer  for  money  lent  for  the  cultivation  of  land,  upon 
the  fruits  of  the  crops  of  the  preceding  year,  etc.,  etc. 

(c)  the  third  class  of  personal  preferred  claims  in- 
cludes those  of  the  public  treasury  against  the  collector 
of  taxes,  etc.;  those  of  national  or  municipal  charitable 
or  educational  institutions  and  churches  against  the 
collectors  or  managers  of  their  funds;  those  of  married 
women  and  minor  children  for  their  non-specified 
property  managed  by  the  bankrupt  husband  or  father; 
and  those  of  a  ward  against  his  guardian; 

(d)  the  fourth  and  last  class  comprises  those  debts 
having  no  priority  and  payable  pro  rata,  without 
consideration  of  date,  out  of  the  surplus  remaining  after 
payment  of  the  three  preceding  classes.  The  provision 
of  article  1728  warrants  mention  inasmuch  as  it  pre- 
scribes that  the  bankrupt's  wife  cannot  institute  any 
action  arising  from  benefits  or  privileges  conceded  to 
her  in  the  marriage  settlement,  and  vice  versa,  the 
creditors  cannot  in  any  case  avail  themselves  of  the 
stipulations  of  that  settlement  in  favor  of  the  bankrupt. 

"2  Arts.  1732  to  1734,  1750  com.  c,  as  amended  by  law  of  Jan.  25,  1916. 


RECEIVERS  AND  CLASSIFICATION  OF  CLAIMS  655 

Venezuela  '^^  admits  three  classes  of  preferred  claims: 

1.  those  having  a  special  privilege  as  to  personal 
property; 

2.  those  having  a  special  privilege  as  to  real  estate; 
and 

3.  those  secured  by  mortgage  either  legal,  judicial  or 
contractual. 

Rules  for  the  payment  of  debts  of  the  different  classes. 

Claims  must  be  paid  pro  rata  within  each  class,  without 
distinction  as  to  date,  and  in  accordance  with  the  order 
established  by  law.  The  following  are  excepted  from  this 
rule: 

(a)  mortgage  creditors  who  are  entitled  to  recover 
their  debts  in  the  order  of  the  recording  of  their  mort- 
gages in  the  public  registry. 

(6)  creditors  whose  claims  are  evidenced  by  a  public 
notarial  instrument,   or  by  a  commercial  instrument 
authenticated  by  a  broker ;  they  likewise  are  to  be  paid 
in  the  order  of  the  dates  of  their  instruments. 
Notwithstanding  the  foregoing  provisions,  the  preferences 
or  liens  upon  specific  property,  as  established  by  law,  re- 
main unaffected;  if  there  are  several  creditors  of  the  same 
class  so  preferred  the  general  rule  is  to  be  observed.     The 
proceeds  of  the  sale  are  not  to  be  distributed  among  the 
creditors  of  one  grade  or  order,  until  all  the  claims  of  the 
previous  grade  or  order  are  entirely  paid  according  to  their 
priority.'^'* 

In  Chile,  "^'^  Colombia, ^^  and  Uruguay,  ^^  the  debts  of  the 
first  class  affect  the  whole  property  of  the  bankrupt,  and 
must  be  paid  in  the  order  of  preference  indicated  in  their 
enumeration.     If  property  is  affected  simultaneously  by  a 

"  Arts.  1848,  1851,  1854,  1861,  1863,  1864  c.  c. 

"Spain,  916,  917;  Argentina,  1499;  Bolivia,  651,  665;  Guatemala,  1247  to 
1278;  Haiti,  552;  Honduras,  903,  904;  Mexico,  1005,  1006;  Peru,  927,  928; 
Santo  Domingo,  5.52;  Venezuela,  849  c.  c.,  997  com.  c. 

«  Arts.  2473,  2476,  2478,  2482,  24S6,  2489  c.  c. 

«  Arts.  2496,  2498,  2.500,  2.503,  2.506,  2.509  c.  c. 

«  Arts.  1745  to  1750. 


656  LATIN-AMERICAN  COMMERCIAL  LAW 

debt  of  the  first  and  second  class,  the  latter  must  prevail,  but 
if  the  other  property  of  the  bankrupt  is  insufficient  to  pay  the 
debts  of  the  first  class,  they  must  have  priority  in  respect 
to  the  deficit,  and  must  participate  with  the  others  of  the  first 
class  in  the  order  enumerated  by  the  civil  code.  Wlien  the 
debts  of  the  first  class  have  not  been  fully  satisfied  from  the 
proceeds  of  the  personal  property  the  balance  is  divided 
among  the  mortgaged  properties  and  must  be  paid  with  the 
proceeds  of  mortgaged  property  after  preference  to  the 
mortgaged  debts.  Debts  of  the  third  class  have  a  prefer- 
ence among  themselves  according  to  the  date  of  their  in- 
scription in  the  registry,  and  those  of  the  fourth  class 
according  to  their  respective  dates.  Ordinary  debts  are  to 
be  paid  pro  rata,  regardless  of  date. 

In  Costa  Rica  '^^  the  code  provides  for  a  preference  in 
favor  of  the  business  employees.  With  the  exception  of 
preferred  claims,  all  others  must  be  paid  pro  rata,  regardless 
of  date. 

«  Art.  35  of  law  of  Oct.  15,  1901. 


CHAPTER  XXXIX 

BANKRUPTCY    (4) 

Kinds  of  bankruptcies. 

With  respect  to  their  legal  effects,  bankruptcies  are 
divided  into  three  classes:  (a)  fortuitous,  (6)  culpable, 
and  (c)  fraudulent.^ 

The  codes  of  Bolivia,-  Colombia  ^  and  Nicaragua  ^  estab- 
lish five  classes  of  bankruptcy,  namely:  (a)  suspension  of 
payment;  (b)  fortuitous  insolvency;  (c)  culpable  insolvency; 
(d)  fraudulent  insolvency;  and  (e)  flight  of  the  debtor 
{alzamiento) . 

Practically,  however,  this  classification  hardly  differs 
from  the  former,  inasmuch  as  the  word  insolvency  in  this 
case  is  interchangeable  with  bankruptcy  and  the  other  codes 
deal  separately  with  suspension  of  payment,  attributing  to 
this  pecuUar  condition  of  a  merchant  the  same  effects  in 
general  as  those  attached  thereto  by  the  three  codes  above 
mentioned ;  whereas  the  flight  of  the  debtor  makes  him  liable 
as  a  fraudulent  bankrupt  in  all  the  Latin- American  countries. 

Fortuitous  bankruptcy. 

A  bankruptcy  is  fortuitous  when  a  merchant  has  suffered 
misfortunes  which  ought  to  be  considered  as  accidental  in 
the  regular  and  prudent  conduct  of  good  business  administra- 
tion, yet  which  reduce  his  capital  to  such  a  point  that  he  is 
not  able  in  whole  or  in  part  to  pay  his  debts.  ^ 

» Spain,  886;  Argentina,  1513,  1514,  1526;  Chile,  1330;  Ecuador,  918; 
Guatemala,  1200;  Haiti,  435,  436;  Honduras,  874;  Mexico,  953;  Panama, 
1557,  1558;  Peru,  898;  San  Salvador,  791;  Santo  Domingo,  584,  591;  Uruguay, 
1658;  Venezuela,  871. 

2  Art.  488.  »  Art.  122.  *  Art.  529. 

5  Spain,  887;  Bolivia,  490;  Chile,  1331;  Colombia,  124;  Ecuador,  918; 
Guatemala,  1201;  Honduras,  875;  Me.xico,  954;  Nicaragua,  531;  Peru,  899; 
San  Salvador,  792;  Uruguay,  1639;  Venezuela,  871. 

657 


658  LATIN-AMERICAN  COMMERCIAL  LAW 

Culpable  bankruptcy. 

In  characterizing  a  bankruptcy  as  culpable,  there  are  three 
systems,  as  follows: 

System  of  Spain.  According  to  this  system  there  are 
two  cases,  one  of  irrebuttable  culpability,  the  other  of 
presumptive  culpability,  rebuttable  by  evidence  to  the 
contrary. 

(a)  A  bankrupt  is  conclusively  deemed  culpable: 
(1),  if  his  domestic  and  personal  expenses  are  exces- 
sive and  out  of  proportion  to  his  resources  and  social 
status;  (2),  if  he  has  suffered  losses  in  imprudent 
gambling  or  other  transactions  undertaken  with  a 
view  to  postponing  his  bankruptcy;  or  (3),  if  he  sold 
at  a  loss  goods  bought  on  credit  and  not  paid  for,  or 
if,  according  to  his  balance  sheet,  he  owed  double  the 
amount  of  his  assets  for  direct  obligations; 

(6)  A  bankrupt  is  only  presumed  to  be  culpable, 
but  may  overcome  the  presumption  by  proving  his 
innocence:  (1),  if  he  has  not  kept  his  books  with  all 
the  legal  requisites,  or  has,  by  some  error  in  book- 
keeping, caused  damage  to  a  third  party;  (2),  if  he  has 
failed  to  make  a  statement  of  his  bankruptcy  within 
the  period  established  by  the  law;  or  (3),  if,  at  the 
time  of  the  declaration  of  bankruptcy  or  during  the 
legal  proceedings  consequent  thereon,  he  has  absented 
himself  or  has  failed  without  valid  excuse  to  appear 
personally  in  the  cases  in  which  the  law  so  requires.® 
System  of  Argentina.    The  code  does  not  set  out  the 
specific  cases  in  which  a  bankrupt  must  necessarily  be 
considered    culpable,    but    merely    provides    that    the 
circumstances  above  mentioned  must  be  taken  into 
consideration  in  determining  culpability.^ 

System  of  Mexico.     There  is  no  distinction  between 

6  Spain,  888,  889;  Bolivia,  491,  492;  Chile,  1333;  Colombia,  125,  126;  Costa 
Rica,  36;  Ecuador,  919,  920;  Guatemala,  1202,  1203;  Haiti,  580,  581;  Hon- 
duras, 876,  877;  Peru,  900,  901;  San  Salvador,  793,  794;  Santo  Domingo, 
585,  586;  Uruguay,  1635,  1660;  Venezuela,  872,  873. 

'  Art.  1515. 


BANKRUPTCY  659 

the  cases  in  which  the  presumption  of  culpabihty  is 
conclusive  and  those  in  which  it  is  rebuttable.  On  the 
other  hand,  the  absence  of  commercial  books,  or  defec- 
tive bookkeeping,  or  failure  of  the  bankrupt  to  record 
in  the  Conmiercial  Registry  the  documents  which  must 
legally  be  entered  therein,  stamps  the  bankruptcy  as 
fraudulent.^ 

System  of  Nicaragua.  In  all  the  cases  above  men- 
tioned there  is  a  conclusive  presumption  of  culpable 
bankruptcy.^ 

Fraudulent  bankruptcy. 

A  bankruptcy  must  be  considered  as  fraudulent  if  the 
bankrupt  has  absconded,  taking  with  him  all  or  a  part  of 
his  property;  has  simulated  contracts  disposing  of  his  prop- 
erty, or  has  entered  in  his  books  property  not  his  own;  has 
not  made  at  the  proper  time  and  place  the  appropriate 
entries  of  his  transactions,  to  the  prejudice  of  creditors;  has 
failed  to  keep  books  or  to  keep  them  properly;  has  antici- 
pated payments  to  the  prejudice  of  his  creditors;  has  ac- 
knowledged fictitious  debts,  or  debts  without  good  considera- 
tion; has,  after  his  last  balance  sheet,  drawn  upon  a  person 
without  having  supplied  him  with  funds,  or  previously 
secured  his  consent  thereto;  has  negotiated,  without  the 
owner's  authorization,  bills  of  exchange  sent  him  for  col- 
lection or  for  any  purpose  not  authorizing  him  to  dispose 
thereof,  unless  he  has  sent  the  proceeds  to  the  owner;  has 
bought  property  of  any  kind  and  registered  the  title  in  the 
name  of  another;  has  converted  to  his  own  use  the  property 
of  another;  or  if,  after  the  declaration  of  bankruptcy,  he  has 
applied  to  his  own  use  or  withdrawn  from  his  estate  any  of 
his  property.  ^'^ 

8  Mexico,  955,  957;  Panama,  1557. 

The  bankruptcy  of  a  commercial  house  must  be  considered  fraudulent  when 
its  liabilities  exceed  its  assets  by  twenty-five  per  cent,  and  its  books  are  not 
kept  in  proper  form.  Mexico,  Dist.  Fed.  Juzgado  Terccro  de  lo  Civil,  Octo- 
ber 8,  1911,  Diario  de  Jurispriidencia,  vol.  XXVII,  p.  552. 

9  Nicaragua,  532. 

10  Spain,  890;  Argentina,  1516;  Bolivia,  493  to  495;  Chile,  1334  to  1336; 


660  LATIN-AMERICAN  COMMERCIAL  LAW 

In  Spain, ^^  Colombia/^  Haiti/^  Honduras, ^^  Peru,^^ 
and  San  Salvador,  ^"^  the  bankruptcy  of  a  merchant  whose 
financial  position  cannot  be  ascertained  from  the  entries 
and  statements  in  his  books  is  presumed  to  be  fraudulent, 
in  the  absence  of  proof  to  the  contrary. 

In  Argentina,^''  Chile, ^^  Mexico, ^^  Panama, ^^  and  Uru- 
guay, ^^  the  bankruptcy  of  a  broker  or  exchange  agent  is 
always  considered  fraudulent. 

In  Panama  --  a  bankruptcy  is  also  considered  fraudulent 
when,  after  making  an  inventory  and  general  balance  sheet, 
the  debtor  finds  that  his  liabilities  exceed  his  assets  by 

Colombia,  127,  129;  Costa  Rica,  39;  Ecuador,  921,  922;  Guatemala,  1204; 
Haiti,  586,  587;  Honduras,  878;  Mexico,  956;  Nicaragua,  533,  534;  Panama, 
1558;  Peru,  902;  San  Salvador,  795;  Santo  Domingo,  591;  Uruguay,  1686; 
Venezuela,  874. 

The  fact  that  various  circumstances  of  those  enunciated  in  arts.  137,  138, 
1515  and  1516  of  the  code  of  commerce  are  present  is  not  enough  to  declare  a 
bankruptcy  fraudulent ;  there  must  be  a  fraudulent  intention  on  the  part  of  the 
debtor.  Argentina,  Cam.  de  Apel.  Crim.,  Buenos  Aires,  May  8,  1913,  Jur.  de 
los  Tribs.  Macs.,  May,  1913,  p.  197. 

No  matter  how  irregular  and  unwise  the  management  of  a  commercial 
house  may  be,  it  does  not  warrant  a  declaration  of  fraudulent  bankruptcy  un- 
less there  is  a  purpose  on  the  part  of  the  debtor  to  defraud  his  creditors.  Argen- 
tina, Cam.  de  Apel.  Crim.  y  Correc,  Buenos  Aires,  July  11,  1914,  Jur.  de  los 
Tribs.  Macs.,  July,  1914,  p.  233. 

Fraud  can  be  proved  by  aU  the  means  of  evidence  accepted  in  law,  and  the 
judge  is  not  bound  by  the  legal  rules  of  evidence  in  regard  thereto.  Knowledge 
of  the  debtor  of  the  damage  caused  to  his  creditors  is  enough  to  charge  him 
with  fraud,  and  the  knowledge  and  participation  in  such  fraud  characterizes 
as  fraudulent  the  act  of  the  party  contracting  with  the  debtor.  Brazil,  la 
Cam.  da  Corte  de  Apel.,  October  28,  1907,  Keu.  de  Direito,  vol.  6,  p.  629. 

11  Art.  891. 

The  provision  in  art.  890  of  the  commercial  code  that  a  bankruptcy  is 
presumed  fraudulent  when  the  debtor  did  not  keep  books,  is  appUcable  to  the 
case  of  his  failure  to  keep  any  one  of  the  books  declared  necessary  by  the  law, 
because  each  of  those  books  is  an  integral  part  of  the  legal  bookkeeping  system. 
The  entries  in  the  inventory  are  the  basis  for  those  of  the  journal;  the  ledger 
classifies  the  data  of  the  journal  and  all  the  entries  must  be  in  accordance  with 
the  correspondence;  this  is  a  connection  which  the  law  has  provided  as  a  matter 
of  public  interest  and  for  the  benefit  of  commerce.  Spain,  Trib.  Sup.,  April  24, 
1901,  Blanco  y  Constans,  Derecho  Mercantil,  vol.  1,  p.  834. 

12  Art.  128.  "  Art.  587.  "  Art.  879. 

15  Art.  903.  16  Art.  796.  i^  Arts.  112,  1519. 

18  Art.  1335.  19  Art.  956.  ^  Art.  1558. 

"1  Art.  1666.  "  Art.  1558. 


BANKRUPTCY  661 

twenty  per  cent  and  fails  to  declare  his  bankruptcy  to  the 
court  at  once. 

Accomplices  of  the  bankrupt. 

All  persons  who  aided  the  bankrupt  to  abscond  with  all 
or  part  of  his  property,  or  those  who  helped  him  to  defraud 
his  creditors  in  any  way,  must  be  considered  as  accomplices 
of  the  bankrupt.  In  addition  to  the  penalty  pro\'ided  for 
in  the  penal  code  they  incur  the  loss  of  all  the  rights  they 
may  have  against  the  assets  of  the  bankruptcy,  of  which 
they  are  declared  accomplices;  and  they  must  return  any 
property  or  rights  they  may  have  obtained  by  the  trans- 
action thus  declared  fraudulent. ^^ 

COMPOSITION    WITH     CREDITORS    DURING     THE    BANKRUPTCY 

PROCEEDINGS 

Time  for  proposing  the  settlement. 

xA-fter  the  bankruptcy  proceedings  have  begun  the  debtor 
has  another  opportunity  to  settle  with  his  creditors.     The 
proper  time  for  making  such  settlement  varies  as  follows: 
System  of  Spain.      The  settlement  can  take  place 
after  the  debts  have  been  verified  and  the  classification 
of  the  bankruptcy  made.     This  privilege  is  not  ex- 
tended to  fraudulent  bankrupts  or  to  those  who  ab- 
sconded during  the  bankruptcy  proceedings.-^ 

System  of  Argentina.  The  settlement  can  be  made 
after  the  verification  of  debts,  without  waiting  for  the 
classification  of  the  bankruptcy,  provided,  however, 
that  there  is  no  accusation  of  fraud  pending  against  the 
bankrupt.  2'' 

23  Spain,  893,  894;  Argentina,  1517,  1518;  Bolivia,  499,  500;  Chile,  1337, 
1340;  Colombia,  130,  131;  Costa  Rica,  40,  42;  Guatemala,  1205,  1207;  Haiti, 
590,  591;  Honduras,  881,  882;  Mexico,  957,  958,  960;  Nicaragua,  535;  Panama, 
1559;  Peru,  902,  903;  Santo  Domingo,  593,  595;  Uruguay,  1665;  Venezuela, 
877. 

"Spain,  898;  Honduras,  886;  Mexico,  988;  Peru,  910. 

«  Argentina,  1398;  Bolivia,  568,  .578;  Brazil,  103,  104;  Chile,  14.54;  Ecuador, 
1004,  1014;  Guatemala,  1288;  Uruguay,  1668;  Venezuela,  965,  974. 


662  LATIN-AMERICAN  COMMERCIAL  LAW 

System  of  Haiti.  The  settlement  can  be  made  any 
time  after  the  verification  of  debts,  miless  the  books 
and  papers  of  the  bankrupt  present  evidence  or  a  pre- 
sumption of  fraud.  2^ 

Settlement  can  only  be  made  at  a  meeting  of  creditors. 

Settlements  between  the  bankrupt  and  his  creditors  must 
be  made  at  a  meeting  of  the  latter,  duly  called  and  consti- 
tuted. Separate  agreements  between  the  bankrupt  and 
any  of  his  creditors  are  void;  the  creditor  who  makes  them 
loses  his  rights  against  the  bankrupt  estate,  and  the  bank- 
rupt is  considered  culpable,  if  he  is  not  thereby  quahfied 
as  fraudulent.  ^^ 

Creditors  who  can  refrain  from  sharing  in  the  settlement. 

Creditors  with  a  special  or  general  preference  and  those 
who  have  a  mortgage  or  pledge  may  abstain  from  voting  at 
the  meeting  of  creditors;  and  by  doing  so,  their  respective 
rights  cannot  be  impaired.  Should  they,  however,  prefer 
to  discuss  the  proposition  of  settlement  and  to  vote  upon  it, 
they  are  thereby  included  in  the  extension  of  time  for  pay- 
ment and  in  the  reduction  of  liabilities  agreed  to  at  the  meet- 
ing, without  prejudice,  however,  to  the  security  and  prefer- 
ence they  possess.  ^^ 

In  Argentina,  2^  Chile,  ^"  Ecuador,  ^^  Nicaragua,  ^^  Panama,  ^^ 
Santo  Domingo,  ^^  Uruguay,  ^^  and  Venezuela, ^^  by  the  mere 

26  Haiti,  513,  515;  Nicaragua,  571;  Santo  Domingo,  507,  510. 

27  Spain,  899;  Argentina,  1398,  1409;  Bolivia,  569;  Brazil,  106,  110;  Chile, 
1456,  1457;  Ecuador,  1008,  1021 ;  Guatemala,  1293,  1294;  Haiti,  513;  Honduras, 
887;  Mexico,  989;  Nicaragua,  572;  Panama,  1604,  1605;  Peru,  911;  Santo 
Domingo,  504  to  506;  Uruguay,  1695;  Venezuela,  967  to  970. 

2«  Spain,  900;  Bolivia,  572;  Guatemala,  1298;  Honduras,  888;  Mexico,  990; 
Peru,  912. 

Creditors  who  claim  ownership  in  any  part  of  the  property  of  the  estate  in 
bankruptcy  are  not  obliged  to  participate  in  the  discussion  and  acceptance 
of  the  settlement  of  the  bankrupt  with  the  creditors,  and  in  refraining  from 
attending  the  meetings  of  the  other  creditors  they  are  not  bound  by  the  decision 
reached.    Spain,  Trib.  Sup.,  January  27,  1872;  Gaceta  of  February  1,  1872. 

29  Art.  1398.  30  Xrt.  1460.  "  Art.  1005. 

32  Arts.  573,  574.  ^3  Art.  1606.  s*  Art.  608. 

35  Art.  1696.  3«  Art.  967. 


BANKRUPTCY  663 

fact  that  a  privileged  or  mortgage  creditor  votes  at  the 
meeting  for  or  against  the  acceptance  of  the  settlement,  he 
thereby  loses  his  preference.  A  creditor  may  renounce  his 
preference  or  mortgage  for  a  part  of  his  claim,  and  with 
respect  to  that  part  and  sum  he  may  vote  at  the  meeting 
of  creditors. 

In  Brazil  ^^  and  Haiti,  ^^  the  privileged  and  mortgage 
creditors  are  absolutely  denied  the  right  to  participate  in 
the  meeting, 

Panama  provides,   in  addition,   that  when  the  creditor 
has  renounced  his  privilege  or  mortgage,  he  may  recover 
the  same  if  the  settlement  is  not  accomplished;  whereas  in 
Uruguay  the  creditor  recovers  his  preference  or  security 
if  the  settlement  is  rejected. 

Votes  necessary  for  acceptance  of  settlement. 

The  proposition  made  by  the  debtor  must  be  submitted 
for  the  discussion  and  vote  of  the  creditors.  It  cannot  be 
accepted  unless  there  is  in  its  favor  a  majority  composed 
of  at  least  half  plus  one  of  the  creditors  attending  the  meet- 
ing, representing  an  interest  of  at  least  three-fifths  of  the 
total  liabilities,  deducting  the  preferred  or  mortgage  cred- 
itors who  have  not  renounced  their  preference  or  mortgage 
by  participating  in  the  discussion  and  acceptance  of  the 
proposition  of  settlement. ^^ 

In  Argentina,"*"  Ecuador, ^^  Uruguay  ^-  and  Venezuela," 
the  necessary  majority  must  consist  of  at  least  two-thirds  of 
the  total  number  of  creditors  (in  Argentina,  of  the  creditors 
attending  the  meeting)  representing,  at  least,  three-quarters 

"  Art.  106.  ^8  Art.  514. 

39  Spain,  901;  Chile,  1463;  Guatemala,  1297,  1298;  Haiti,  513,  514;  Honduras, 
889;  Mexico,  991;  Peru,  913;  Santo  Domingo,  507,  508. 

In  order  that  a  settlement  between  a  bankrupt  and  his  creditors  be  valid  it 
must  be  accepted  by  half  plus  one  of  the  creditors  present  at  the  meeting  called 
therefor,  and  such  plurality  must  represent  three-fifths  of  the  total  liabilities  of 
the  bankrupt.  Mexico,  Tribunal  Sup.  del  Dist.  Fed.,  3a.  Sala,  May  20,  1911, 
Parcels  R.  W.  and  Buch.  Miguel  v.  the  Receiver  of  the  United  States  Banking 
Co.  S.  A.,  Diario  de  Jut.,  vol.  XXV,  p.  193. 

«Art.  1399.  "Art.  1008.  "Art.  1696. 

«  Art.  970. 


664  LATIN-AMEEICAN  COMMERCIAL  LAW 

of  the  liabilities,  or  else  three-quarters  of  the  creditors 
(in  Argentina,  of  the  attending  creditors)  representing  at 
least  two-thirds  of  the  liabilities. 

In  Brazil,"*^  the  majority  is  constituted  as  in  the  case  of 
a  preventive  composition  with  creditors.  ^^ 

In  Panama  ^^  the  settlement  must  be  accepted  by  the 
majority  of  creditors  representing  at  least  three-quarters 
of  the  total  liabilities,  the  preferred  or  mortgage  creditors 
excepted. 

Opposition  to  the  approval  of  the  settlement. 

Notwithstanding  the  acceptance  of  the  bankrupt's  propo- 
sitions for  a  settlement  by  the  necessary  majority  of  his 
creditors,  there  are  certain  legal  grounds  on  which  absent 
or  dissenting  members  may  oppose  the  approval  of  such 
settlement  by  the  court.  In  this  matter,  the  Latin- American 
codes  may  be  divided  into  the  following  systems: 

System  of  Spain.     The  only  grounds  of  opposition 
are: 

(a)  defects  in  the  legal  formalities  prescribed 
for  calling  the  meeting  of  creditors  and  conducting 
its  deliberations; 

(6)  a  want  of  legal  or  representative  capacity  on 
the  part  of  any  of  the  voters,  provided  his  vote 
decided  the  majority  in  number  or  amount; 

(c)  the  existence  of  a  fraudulent  understanding 
between  the  debtor  and  one  or  more  of  the  creditors, 
or  among  the  creditors  themselves  for  the  approval 
of  the  propositions  of  settlement; 

(d)  a  fraudulent  exaggeration  of  claims  in  order  to 
procure  a  majority  in  amount; 

(e)  fraudulent  error  in  the  balance  sheet  of  the 
bankrupt,  or  in  the  report  of  the  receiver  or  assignee, 
in  order  to  facilitate  the  acceptance  of  the  debtor's 
proposals. '^^ 

"  Art.  106.  «  See  Chapter  I,  supra.  «  Art.  1606. 

«  Spain,  902,  903;  Honduras,  890,  891;  Mexico,  992,  993;  Nicaragua,  575; 
Peru,  914,  915. 


BANKRUPTCY  665 

System  of  Argentina.  The  only  grounds  of  objection 
are  those  indicated  in  b,  c,  and  d  above.  ^^  It  is  beheved, 
however,  that  a  defective  call  of  the  meeting  of  creditors 
is  sufficient  ground  for  opposition  even  in  Argentina. 

System  of  Bolivia.  All  the  grounds,  except  e  above, 
are  recognized.  ^^ 

System  of  Brazil.  In  addition  to  the  grounds  above 
mentioned,  the  settlement  may  be  objected  to  if  its 
acceptance  implies  a  greater  sacrifice  for  the  creditors 
than  the  sale  of  the  property  of  the  bankrupt.  ^° 

System  of  Chile.  No  specific  grounds  are  assigned 
as  a  basis  of  opposition  to  the  settlement;  the  law 
merely  provides  that  such  opposition  must  be  well 
founded.  ^^ 

System  of  Panama.  The  judge,  whether  at  the  peti- 
tion of  a  creditor  or  of  the  receiver  or  ex  officio,  must 
refuse  his  approval  to  the  settlement  in  the  following 
cases: 

(a)  when  it  has  not  obtained  the  necessary  majority 
of  votes  in  number  or  amount  required  by  law,  or  has 
not  been  published  in  the  official  and  another  local 
periodical ; 

(6)  when  the  debtor,  in  order  to  obtain  the  ac- 
ceptance of  the  creditors,  has  concealed  property, 
simulated  liabilities  or  in  any  other  way  vitiated  the 
consent  of  the  creditors; 

(c)  if  the  settlement  is  contrary  to  public  policy; 

The  approval  of  a  settlement  between  the  bankrupt  and  his  creditors  is 
subject  only  to  those  objections  expressed  in  art.  933  of  the  code  of  commerce, 
among  which  the  fact  that  no  decision  has  been  made  on  the  classification  of 
the  bankruptcy  is  not  enumerated.  Mexico,  Trib.  Sup.  del  Dist.  Fed.  3a.  Sala, 
May  20,  1911,  Parcels  R.  W.  and  Buch.  Miguel  v.  the  Receiver  of  the  United 
States  Banking  Co.  S.  A.,  Dinrio  de  Jur.,  vol.  XXV,  p.  193. 

A  settlement  with  the  creditors  which  has  been  objected  to  has  no  l)in(ling 
force  until  a  judicial  approval  thereof  is  obtained.  Spain,  Tril>.  Sup.,  Octo- 
ber 24,  1871;  Gaceta  of  October  29,  1871. 

■•^  Argentina,   1401. 

«  Bolivia,  580;  Guatemala,  1303. 

w  Brazil,  108. 

6' Chile,  1474;  Ecuador,  1013;  Haiti,  517;  Santo  Domingo,  512;  Uruguay, 
1699. 


666  LATIN-AMERICAN  COMMERCIAL  LAW 

{d)  when  those  who  by  their  v^ote  constituted  part 
of  the  necessary  majority  lacked  proper  represen- 
tative capacity. 
Even  after  the  settlement  has  been   approved  by  the 
judge   the   creditors   may   ask   that  it  be   declared   void 
when    any    of    the    above    mentioned    circumstances    are 
disclosed.  ^2 

System  of  Venezuela.     The  settlement  must  be  dis- 
approved even  without  the  petition  of  any  one: 

(a)  when   the   bankruptcy  is  culpable  or  fraudu- 
lent; 

(6)  when  the  majority  was  obtained  by  simulating 
claims; 

(c)  when  the  legal  formalities  were  not  observed. ^^ 

Time  for  demanding  disapproval  of  the  settlement. 

Creditors  may  oppose  the  approval  of  the  settlement 
within  a  period  of  eight  days  from  the  date  of  the  meeting  at 
which  the  debtor's  proposals  were  accepted.^* 

In  Panama  the  period  is  ten  days  ^^  and  in  Venezuela,  six 
days.^^ 

Effects  of  the  settlement  in  regard  to  the  creditors. 

After  the  settlement  has  been  approved  by  the  unsecured 
and  unpref erred  creditors,  it  is  binding  upon  the  bankrupt 
and  the  creditors  whose  claims  antedate  the  declaration  of 
bankruptcy,  provided  they  have  been  legally  summoned  or 
have  been  served  with  notice  of  the  approval  of  such  settle- 
ment and  have  not  objected,  even  though  their  claims  are 
not  included  in  the  balance  sheet  of  the  bankruptcy  and  they 
have  not  been  parties  to  the  proceedings.^^ 

S2  Panama,   1609,   1611. 

*'  Venezuela,  977. 

"Spain,  902;  Argentina,  1401;  Bolivia,  574;  Chile,  1473;  Ecuador,  1013; 
Haiti,  517;  Honduras,  890;  Mexico,  992;  Nicaragua,  575;  Peru,  914;  Santo 
Domingo,  512    Uruguay,  1699. 

"Art.  1609. 

*«  Art.  975. 

"Spain,  904;  Honduras,  892;  Mexico,  994;  Peru,  916. 


BANKRUPTCY  667 

In  Argentina,^*  Bolivia, '^^  Brazilj^"  Chile,"  Ecuador,^^ 
Guatemala,^^  Haiti, ''^  Nicaragua,"'^  Santo  Domingo, ^'^  Uru- 
guay "  and  Venezuela,*'^  the  approval  of  the  settlement  by 
the  judge  makes  it  binding  upon  all  the  ordinary  creditors, 
whether  known  or  unknown  at  the  time  of  said  approval, 
and  whatever  the  amount  of  their  claims  as  ultimately 
determined. 

In  Panama,^^  after  the  settlement  is  approved  by  the  judge 
it  is  binding  upon  all  the  creditors  except  the  preferred 
creditors  who  did  not  participate  in  it;  and  their  claim  against 
the  debtor  is  reduced  according  to  the  agreement,  notwith- 
standing that  the  bankrupt  improves  his  financial  position, 
or,  after  paying  the  amount  agreed  upon,  a  balance  remains 
to  his  credit. 

Effects  in  regard  to  the  debtor. 

By  virtue  of  the  settlement,  and  in  the  absence  of  an 
express  stipulation  to  the  contrary,  the  debts  are  extin- 
guished to  the  extent  of  the  part  released,  even  though  a 
surplus  may  after  payment  remain  to  the  bankrupt  out  of 
the  assets  of  the  bankruptcy  or  he  may  subsequently  im- 
prove his  financial  position.  Should  there  not  be  an  express 
stipulation  as  above  mentioned,  the  creditors  whose  debts 

s^Art.   1410. 

A  seller  cannot  sue  the  person  who  bought  the  sold  merchandise  from  the 
first  buyer,  when  the  latter  has  made  a  preventive  composition  with  his 
creditors.  Nor  can  the  seller  retain  the  goods  bought  and  consigned  to  the 
second  buyer  who  dealt  with  the  first.  Argentina,  Cam.  de  Apel.  Com., 
Buenos  Aires,  October  5,  1912,  Jur.  de  los  Tribs.  Nacs.,  October,  1912,  p.  377. 

When  the  proportion  of  the  liabilities  as  agreed  upon  by  the  creditors  in  their 
settlement  with  the  bankrupt  is  paid,  all  actions  arising  from  the  original 
obligation  are  extinguished,  notwithstanding  that  they  originated  in  an 
accommodation  by  the  plaintiff  in  favor  of  the  bankrupt.  Argentina,  Cam.  de 
Apel.  Com.,  Buenos  Aires,  September  18,  1913,  Jur.  de  los  Tribs.  Noes.,  Sep- 
tember, 1913,  p.  397. 

"Art.  576.  ""Arts.  Ill,  113. 

A  settlement  between  the  debtor  and  his  creditors  does  not  release  the 
receiver  from  the  liabilities  he  may  have  incurred  during  his  administration. 
Brazil,  Cam.  da  Cortc  de  Apel.,  July    G,    1908,  Rev.  de  Dircito,  vol.  9,  p.  304. 

"  Art.  1478.  «2  Art.  1016.  "  Art.  1306. 

«*  Art.  518.  «'  Art.  574.  «« Arts.  516,  517. 

"  Arts.  1705,  1708.        ^^  Art.  978.       «» Arts.  1615,  1618,  1619. 


668  LATIN-AMERICAN  COMMERCIAL  LAW 

have  not  been  fully  paid  preserve  their  right  of  action  for 
the  balance  with  respect  to  after-acquired  property  of  the 
debtor."" 

The  code  of  Panama  provides  "^^  that,  as  a  consequence  of 
the  judicial  approval  of  the  settlement,  the  bankrupt  re- 
covers control  of  all  his  rights  in  so  far  as  they  have  not  been 
restricted  by  the  creditors,  and  the  receiver  must  surrender 
all  his  property  to  him,  accounting  for  the  management 
thereof.  The  agreement  must  be  performed  under  the 
inspection  of  a  supervisor  appointed  by  the  creditors.  In 
case  of  non-fulfillment,  the  guaranties  are  invoked  in  behalf 
of  the  body  of  creditors. 

Effects  in  regard  to  co-debtors. 

In  Argentina,"^  Brazil,^^  Ecuador  "*  and  Venezuela,^^  the 
law  expressly  provides  that  the  sureties  and  co-debtors  of 
the  bankrupt  are  not  discharged  from  their  obligations  by 
virtue  of  the  composition  between  the  bankrupt  and  his 
creditors;  the  latter  can,  therefore,  demand  from  them  the 
payment  of  any  part  of  their  claims  left  unpaid  by  the 
settlement. 

In  Chile  ^^  and  in  Panama  "^  the  settlement  releases  the 
sureties  and  joint  debtors  of  the  bankrupt,  but  only  with 
respect  to  the  creditors  who  voted  for  the  acceptance  of  the 
settlement. 

'"Spain,  905,  907;  Argentina,  1411,  1522;  Bolivia,  577;  Brazil,  111;  Chile, 
1474;  Ecuador,  1018;  Guatemala,  1306;  Haiti,  518;  Honduras,  893,  895; 
Mexico,  995,  997;  Nicaragua,  578,  579;  Peru,  917,  919;  Santo  Domingo,  516; 
Uruguay,  1710;  Venezuela,  980. 

"  Arts.  1615,  1616,  1617. 

"Art.  1410.  "Art.    114. 

A  creditor  who,  in  accepting  a  settlement  with  his  bankrupt  debtor,  reserves 
his  rights  against  the  co-obligors  or  sureties,  has  a  right  to  recover  from  them 
the  portion  of  the  credit  which  was  not  paid  by  the  bankrupt.  Brazil,  Trib.  de 
Just,  de  S.  Paulo,  March  17,  and  August  26,  1896;  Gaceta  Jur.  de  S.  Paulo, 
vol.  12,  p.  151. 

The  opposition  to  the  acceptance  of  a  settlement  with  the  debtor  implies 
the  reservation  of  rights  against  the  co-debtors.  Brazil,  Trib.  de  Just,  de  S. 
Paulo,  June  23,  1902,  S.  Paulo  Judiciario,  vol.  1,  p.  250. 

■'^Art.  1017.  "Art.  979.  '«Art.  1481. 

^7  Art.  1618. 


BANKRUPTCY  669 

Other  effects  of  the  settlement. 

Finally,  the  effect  of  a  settlement  in  Chile  is  that  it 
produces  a  mortgage  upon  the  whole  property  of  the  debtor 
in  favor  of  the  creditors;  "^  and  in  that  country  ^^  as  well  as 
in  Bolivia,^"  Brazil, ^^  Guatemala  ^'^  and  Uruguay,^^  after  the 
settlement,  the  debtor  remains  subject  to  the  supervision  of 
an  inspector  appointed  by  his  creditors,  unless  the  latter 
expressly  agree  to  dispense  therewith. 

Rescission  of  the  settlement. 

Should  the  debtor  breach  the  stipulation,  any  of  the 
creditors  may  demand  the  rescission  of  the  settlement  and 
the  continuation  of  the  bankruptcy  proceedings  before  the 
judge  or  court  having  jurisdiction  thereof.^^ 

In  Brazil, ^^  besides  the  above  mentioned  cause  of  rescis- 
sion two  others  are  admitted,  namely,  (1),  the  abandonment 
on  the  part  of  the  debtor  of  his  entire  property  or  his  selling 
it  at  a  low  price,  and  (2),  his  having  been  declared  a  culpable 
or  fraudulent  bankrupt  or  guilty  of  some  other  similar 
offense. 

Nullity  of  the  settlement. 

The  settlement  of  the  bankrupt  with  his  creditors  can  be 
declared  void  according  to  the  following  systems: 

System  of  Argentina.  Settlement  between  a  bankrupt 
and  his  creditors  can  be  nullified  by  petition  of  any  of 
the  creditors  in  so  far  as  benefits  obtained  by  the  debtor 
are  concerned,  if,  within  one  year  after  the  agreement 
any  deceit  or  fraud  on  his  part  has  been  proved,  whether 
occurring  before,  during,  or  after  the  proceedings  for 
settlement. 

No  action  for  the  nullity  of  a  settlement  judicially 

'8  Art.  1480.                              "Art.  1464.  «)  Art.  585. 

"Art.  120.                                «2Art.  1307.  »' Art.  1709. 

8"  Spain,  90G;  Brazil,  11.5;  Chile,  1486;  Ecuador,  1023;  Guatemala,  1310; 

Honduras,  894;  Mexico,  996;  Nicaragua,  577;  Panama,  1617;  Peru,  918; 
Santo  Domingo,  520;  Uruguaj^,  1706;  Venezuela,  986. 

85  Art.  115. 


670  LATIN-AMERICAN  COMMERCIAL  LAW 

approved  may  be  brought,  except  on  account  of  deceit 
or  fraud  resulting  in  a  concealment  of  assets,  or  exagger- 
ation of  liabilities.  The  nulhty  of  the  settlement  in  this 
case  discharges  the  sureties  ipso  jure.^ 

System  of  Chile.  No  actions  for  annulling  the  settle- 
ment can  be  allowed  other  than  those  founded  on  a 
subsequent  conviction  of  the  bankrupt  for  fraudulent 
bankruptcy,  or  on  the  concealment  of  the  assets  or 
exaggeration  of  the  habilities  discovered  after  the 
approval  of  the  agreement.  Annulment  of  the  composi- 
tion disqualifies  the  bankrupt  from  making  a  new 
settlement,  and  discharges  ipso  jure  any  party  who 
guaranteed  it.^^ 

System  of  Santo  Domingo.  The  annulment  of  the 
settlement  may  be  founded  on  deceit  or  on  the  fact  that 
the  bankruptcy  was  declared  fraudulent.  In  both 
cases  the  sureties  are  discharged.^^ 

System  of  Uruguay.  In  case  of  fraud,  the  settlement 
is  void.  The  annulling  of  the  settlement  releases 
sureties  ipso  jure.  An  action  for  annulment  is  only 
proper  when  based  upon  deceit,  resulting  either  from 
concealment  of  assets  or  exaggeration  of  the  habihties.*^ 

Cases  in  which  no  settlement  is  made. 

When  a  settlement  has  not  been  concluded  between  the 
debtor  and  his  creditors,  the  bankruptcy  proceedings  must 
continue  until  after  the  complete  liquidation  of  the  property 
of  the  bankrupt,  and  a  distribution  of  the  proceeds  among 
the  creditors  in  the  form  already  established  has  been  made. 
The  bankrupt,  however,  is  not  released  from  his  liabihties; 
he  may  be  sued  by  his  creditors  until  he  has  fully  paid  his 
debts.s" 

^  Argentina,    1405. 

8'  Chile,  1485;  Ecuador,  1022;  Guatemala,  1310;  Venezuela,  985. 

^  Santo  Domingo,  520. 

89  Uruguay,  1704,  1706. 

90  Spain,  921;  Argentina,  1522;  Bolivia,  673;  Brazil,  144;  Chile,  1533;  Co- 
lombia, 166;  Costa  Rica,  51  of  the  law  of  October  1.5,  1901;  Ecuador,  1050; 
Guatemala,  1287;  Haiti,  598;  Honduras,  908;  Mexico,  1013;  Nicaragua,  580; 


BANKRUPTCY  671 

In  Argentina  ^^  the  creditors,  after  refusing  acceptance  of 
the  proposal  of  settlement  made  by  the  debtor,  can  decide, 
by  the  same  plurality  of  votes  required  for  acceptance,  to 
take  over  the  entire  property  of  the  bankrupt,  including  his 
liabihties.  In  this  way  the  bankrupt  is  entirely  released 
from  his  obligations  both  as  to  the  preferred  and  the  ordinary 
creditors,  whether  assenting  to  or  dissenting  from  the 
decision  taken  by  such  plurality. 

The  code  of  Chile  ^-  has  a  provision  which  may  leaS  to 
very  similar  results.  If  at  the  first  meeting  of  the  creditors 
the  receiver  is  authorized  to  continue  the  business  of  the 
bankrupt,  the  object  and  duration  of  such  authorization 
must,  at  the  same  time,  be  determined,  as  well  as  the  sum 
which  the  receiver  must  keep  at  his  disposal  for  the  needs 
of  the  business.  The  authorization  can  be  given  only  by 
unanimous  vote  of  the  creditors  present.  In  order  to  obtain 
unanimity,  the  creditors  who  favor  the  continuance  of  the 
business  can  exclude  the  dissentients  on  paying  them  the 
proportion  due  them,  considering  the  assets  of  the  bankrupt 
estate. 

Venezuela  ^^  limits  the  power  to  continue  the  business  of 
the  bankrupt  to  bankrupt  stock  companies. 

Discontinuance  of  bankruptcy  proceedings. 

In  Argentina,^'*  Chile,^°  Santo  Domingo,^*'  Uruguay  ^''  and 
Venezuela,^^    whenever    the    bankruptcy    proceedings    are 

Panama,  1631,  1632;  Peru,  932;  Santo  Domingo,  608;  Uruguay,  1769;  Vene- 
zuela, 1012. 

"  Art.  1412.  92  Art.  1429.  "  Art.  983. 

9*  Arts.   1465,   1466. 

The  closing  of  the  bankruptcy  proceedings  due  to  insufficientcy  of  the  assets 
constitutes  a  presumption  of  fraud  on  the  part  of  the  debtor.  Argentina,  Cam. 
de  Apel.  Com.,  Buenos  Aires,  August  14,  1913,  Jur.  de  Los  Tribs.  Nacs.,  Au- 
gust, 1913,  p.  300. 

After  the  bankruptcy  proceedings  are  closed  the  creditors  can  individualyl 
sue  the  debtor  for  the  payment  of  their  claims,  the  statute  of  limitations 
running  from  the  day  the  judge  declared  that  the  creditors  recovered  their 
individual  right  of  action.  Argentina,  Cam.  de  Apel.  Com.,  Buenos  Aires, 
November  27,  1913,  Jur.  de  los  Triba.  Nacs.,  November,  1913,  p.  320. 

95  Arts.  1495  to  1497.  96  Art.  527.  97  Arts.  1711,  1712. 

98  Art.  991. 


672  LATIN-AMEHTCAN  COMMERCIAL  LAW 

stopped  because  the  assets  of  the  bankruptcy  do  not  cover 
the  expenses  of  the  proceedings,  the  judge  ex  officio  or  at 
the  request  of  the  receiver  or  of  any  creditor,  may  order 
the  suspension  of  the  proceedings.  The  effect  of  the  order  is 
that  the  state  of  bankruptcy  subsists,  but  every  creditor 
recovers  his  right  to  sue  the  debtor  and  to  attach  his  prop- 
erty individually  and  independently  of  the  other  creditors. 
This,  naturally,  is  the  worst  outcome  for  the  bankrupt. 
In  Argentina  the  above-mentioned  order  imphes  that  there 
is  a  presumption  of  fraud  or  gross  negligence  on  the  part  of 
the  debtor,  and  the  judge  must  transfer  the  proceedings  to 
the  appropriate  judge  of  criminal  jurisdiction. 

REHABILITATION  OF  THE  BANKRUPT 

It  has  already  been  observed  that  the  declaration  of 
bankruptcy  brings  about  the  legal  incapacity  of  the  bank- 
rupt to  engage  in  business,  and  places  him  in  a  peculiar 
legal  condition  which  differs  in  detail  from  country  to  coun- 
try. 

Rehabilitation  and  discharge  are  in  Latin-America  two 
things  entirely  different.  The  object  of  rehabilitation  is 
to  restore  to  the  bankrupt  the  legal  capacity  again  to  become 
a  merchant,  with  all  corresponding  civil  rights.  This  can 
be  obtained  from  the  bankruptcy  judge  through  the  pro- 
ceedings hereafter  described. 

Discharge,  on  the  other  hand,  refers  to  the  release  of 
the  debtor  from  his  obligation  to  pay  his  debts.  This  can 
only  be  obtained  by  actual  full  payment,  by  composition 
with  the  creditors  after  paying  the  portion  stipulated,  or 
by  the  lapse  of  the  period  of  limitation.  So  long  as  none 
of  these  forms  of  discharge  has  taken  place,  the  debtor  is 
not  released,  even  though  he  may  have  been  rehabilitated. 

In  order  for  the  bankrupt  to  be  rehabilitated  and  to  regain 
his  full  civil  rights,  special  proceedings  and  conditions  are 
necessary.  These  requirements  differ  somewhat  in  the 
various  countries,  and  they  differ  for  the  various  classes 
of  bankruptcies. 


BANKRUPTCY  673 

Rehabilitation  of  fraudulent  bankrupts. 

There  are  two  systems  in  regard  to  the  rehabihtation  of 
fraudulent  bankrupts,  namely: 

System  of  Spain.  No  rehabilitation  is  ever  possible 
for  a  fraudulent  bankrupt. ^^ 

System  of  Argentina.  Rehabilitation  may  be  gi^anted 
to  the  fraudulent  bankrupt  after  he  has  served  or  paid 
the  penalty  imposed  upon  him,  or  the  criminal  action 
has  lapsed  by  limitation  and  the  full  amount  of  his 
liabilities  has  been  paid  or  guaranteed.  ^°° 

Rehabilitation  of  a  culpable  bankrupt. 

For  the  rehabilitation  of  the  culpable  bankrupt,  the 
following  systems  may  be  noted: 

System  of  Spain.  A  culpable  bankrupt  may  obtain 
rehabilitation  by  proving  that  he  has  paid  the  amount 
agreed  upon  in  the  composition  with  his  creditors,  or 
else  that  he  has  paid  all  his  debts  in  full.^°^ 

System  of  Argentina.  In  order  to  obtain  rehabilita- 
tion a  culpable  bankrupt  must  prove,  in  addition,  that 
he  has  paid  the  penalty  imposed  upon  him.^°- 

In  Uruguay,  he  may  also  be  rehabilitated  (a)  on 
payment  in  full;  (b)  when  he  has  been  discharged  or 
released  by  his  creditors;  (c)  when,  five  years  having 
elapsed,  he  has  paid  at  least  fifty  per  cent  of  his  debts, 
or  else  when,  ten  years  having  elapsed,  he  has  paid 
twenty-five  per  cent  of  his  debts,  and  in  both  cases, 
the  property  of  the  bankruptcy  has  been  exhausted.  ^°^ 

System  of  Mexico.     A  culpable  bankrupt  may  be 

»« Spain,  920;  Guatemala,  1314;  Haiti,  605;  Honduras,  907;  Nicaragua,  580; 
Panama,  1633;  Peru,  931;  Santo  Domingo,  612. 

100  Argentina,  1528;  Bolivia,  692;  Brazil,  144;  Chile,  1527;  Colombia,  176; 
Costa  Rica,  52;  Ecuador,  1062;  Mexico,  1014;  Uruguay,  1773;  Venezuela,  1023. 

101  Spain,  921;  Bolivia,  693;  Brazil,  144;  Colombia,  178;  Honduras,  908; 
Peru,  932. 

102  Argentina,  1527;  Chile,  1528;  Costa  Rica,  51;  Ecuador,  WO:',;  (luatemala, 
1315;  Haiti,  606;  Nicaragua,  580;  Santo  Domingo,  612;  Uruguay,  1773; 
Venezuela,   1024. 

103  Art.  1774. 


674  LATIN-AMERICAN  COMMERCIAL  LAW 

rehabilitated  when  he  gives  to  his  creditors  a  satis- 
factory guaranty  that  he  will  pay  his  debts  in  full 
when  he  can.^°^ 

System  of  Panama.  The  rehabilitation  of  a  cul- 
pable bankrupt  may  be  granted  when  the  following 
conditions  have  been  satisfied: 

(a)  that  the  bankrupt  has  paid  his  liabilities,  or 
the  amount  agreed  in  the  composition; 

(6)  that  he  has  served  or  paid  the  penalty  imposed 
upon  him; 

(c)  that  five  years  have  elapsed  since  the  declara- 
tion of  bankruptcy,  provided  the  criminal  proceed- 
ings in  bankruptcy  have  been  dismissed  or  he  has 
been  acquitted  by  the  court.  ^°^ 

Rehabilitation  of  a  fortuitous  bankrupt. 

The  rehabilitation  of  a  fortuitous  bankrupt  may  be  ob- 
tained in  Spain,  106  Bohvia,io^  BraziV^^  Ecuador,  ^o^  Hon- 
duras,"°  Guatemala,  "1  Panama,  ^i-  Peru  ^^^  and  Santo 
Domingo,  11^  under  the  same  conditions  provided  for  a  cul- 
pable bankrupt. 

In  .Argentina,  11^  the  rehabilitation  must  be  granted  to 
the  fortuitous  bankrupt  when  he  has  paid  his  debts,  or  else 
when  three  years  have  elapsed  since  the  declaration  of  bank- 
ruptcy. 

In  Brazil,  116  a  culpable  or  a  fortuitous  bankrupt  can  be 
rehabilitated  ten  years  after  the  declaration  of  bankruptcy, 
if  he  has  paid  more  than  50%  of  his  debts,  or  twenty  years 
after  said  declaration,  if  he  has  paid  25%  of  his  debts. 

In  Chile,  11^  Costa  Rica  ^^^  and  Uruguay,  ^^  rehabiUtation 
is  an  automatic  consequence  of  the  judicial  classification 
of  the  bankruptcy  as  fortuitous. 

In  Colombia,  1-0  a  fortuitous  bankrupt  may  obtain  re- 

M^  Art.  101 L  i°s  Arts.  1631  to  1634.  ™  Art.  921. 

K"  Art.  692.  108  Art.  144.  io»  Art.  1058. 

"0  Art.  908.  1"  Art.  1315.  "2  Arts.  1632,  1633. 

"3  Art.  932.  1"  Art.  604.  "«  Art.  1526. 

118  Art.  145.  11^  Art.  1533.  "s  Art.  50. 

119  Art.   1773.  120  Art.  178. 


BANKRUPTCY  675 

habilitation  by  proving  that  he  has  carried  out  the  com- 
position, if  there  was  one,  or  else  that,  with  the  assets  of  the 
estate  and  further  payments,  all  the  Habilities  will  be  paid. 

In  Mexico,  ^-^  the  fortuitous  bankrupt  may  obtain  re- 
habilitation simply  by  promising  in  legal  form  to  pay  his 
debts  when  possible. 

In  Nicaragua  ^"  he  may  obtain  it  by  full  payment  of  his 
debts  or  by  a  settlement  with  his  creditors. 

BANKRUPTCY    OF    PARTNERSHIPS   AND    CORPORATIONS 

Effects  of  a  declaration  of  bankruptcy  upon  a  commercial 
association. 

The  classification  of  commercial  associations  according  to 
the  liability  of  their  members  for  the  debts  of  the  association 
shows  that  in  one  type  of  association,  the  general  partner- 
ship, the  members  are  unhmitedly  liable  {sociedad  colediva) ; 
in  another,  the  stock  company,  they  are  liable  only  up  to 
the  amount  of  their  contributions  (sociedad  anonima) ;  and 
finally,  in  a  third  type,  the  limited  partnership,  one  or  more 
of  the  associates  are  unlimitedly  liable  while  the  other  or 
others  are  liable  only  up  to  the  amount  of  their  contributions 
{sociedad  en  comandita).  These  distinctions  will  explain  the 
difference  in  effect  of  the  bankruptcy  of  different  types  of 
commercial  association  with  respect  to  their  members  and 
to  third  parties. 

The  bankruptcy  of  a  general  partnership  {sociedad  colec- 
tiva)  necessarily  involves  the  bankruptcy  of  each  of  its 
members;  but  in  carrying  on  the  proceedings,  the  individual 
property  of  each  must  be  kept  separated  from  that  of  the 
others  in  order  to  satisfy  the  individual  liability  of  each 
member.  ^2^ 

The  bankruptcy  of  one  of  the  associates,  on  the  other  hand, 

1"  Art.  1010.  1"  Art.  580. 

1"  Spain,  923;  Argentina,  1439;  Bolivia,  547;  Brazil,  6;  Chile,  370;  Colombia, 
487;  Costa  Rica,  22;  Ecuador,  954 ;  Guatemala,  1199;  Haiti,  22,  449;  Honduras, 
909;  Mexico,  948;  Nicaragua,  143,  598;  Panama,  1621,  1622;  Peru,  934;  San 
Salvador,  785;  Santo  Domingo,  458;  Uruguay,  1576;  Venezuela,  910. 


676  LATIN-AMERICAN  COMMERCIAL  LAW 

does  not  necessarily  involve  the  bankruptcy  of  the  associa- 
tion, of  any  type.^^* 

Limited  partners  and  stockholders  of  a  corporation  can 
only  be  compelled,  in  case  of  the  association's  bankruptcy, 
to  complete  the  amount  of  their  stipulated  contributions.^-'^ 

According  to  art.  314  of  the  Code  of  Commerce  of  Brazil 
a  limited  partner  cannot  be  declared  a  bankrupt  because  of 
the  bankruptcy  of  the  partnership. 

Liability  of  limited  partners   and   stockholders  in  case  of 
bankruptcy  of  the  association. 

It  has  been  already  observed  that  if,  at  the  time  of  the 
bankruptcy,  the  partners  of  a  limited  partnership  or  the 
stockholders  in  a  stock  company  have  not  paid  in  the  full 
amount  of  their  stipulated  contributions,  the  receiver  of  the 
bankrupt  estate  has  a  right  to  call  upon  them  for  further 
payments  so  far  as  necessary,  within  the  limit  of  their 
respective  liabilities.^-^ 

The  special  partner  of  a  limited  partnership  or  the  stock- 
holder of  a  corporation  who  owes  the  whole  or  any  part  of 
his  contribution  and  is  at  the  same  time  a  creditor  of  the 
bankruptcy,  can  only  demand  the  difference  between  the 
amount  of  his  claim  and  the  amount  due  on  his  contribu- 
tion.127 

Creditors  of  the  association  and  creditors  of  the  members. 

Considering  the  partnership  or  the  corporation  as  a 
separate  entity,  its  capital,  property  and  assets  constitute 
the  creditors'  guaranty  for  the  payment  of  their  claims.    The 

124  Spain,  924;  Argentina,  417;  Bolivia,  301;  Cliile,  380;  Colombia,  505; 
Costa  Rica,  24;  Guatemala,  1199;  Honduras,  910;  Panama,  1623;  Peru,  935; 
Uruguay,   1576. 

125  Spain,  925,  926;  Argentina,  437;  Bolivia,  245;  Chile,  456,  480;  Colombia, 
581,  604;  Costa  Rica,  58;  Ecuador,  926,  727,  302;  Guatemala,  347;  Haiti,  26,  33; 
Honduras,  911;  Mexico,  154,  163;  Nicaragua,  145;  Peru,  936;  Panama,  1627; 
San  Salvador,  787;  Santo  Domingo,  22,  33;  Uruguay,  410,  425;  Venezuela,  223. 

128  Spain,  925;  Argentina,  437;  Brazil,  346;  Chile,  378,  379;  Honduras,  911; 
Mexico,  1020;  Peru,  936;  San  Salvador,  787;  Uruguay,  500. 

127  Spain,  926;  Honduras,  912;  Mexico,  1021;  Peru,  937;  San  Salvador,  788. 


BANKRUPTCY  677 

creditors  of  the  individual  partner  or  stockholder  have  no 
right  to  vsuch  property  and  assets.  But  in  a  general  partner- 
ship every  partner  is  jointly  and  unlimitedly  liable  for  all 
the  obligations  of  the  partnership,  as  are  the  managing 
members  of  a  limited  partnership.  A  conflict  may  therefore 
occur  between  the  creditors  of  the  association  and  the 
creditors  of  the  individual  partners.  This  conflict  is  resolved 
by  the  codes  according  to  the  following  systems : 

First  system.  The  private  creditors  whose  claims 
against  a  partner  antedate  the  formation  of  the  part- 
nership rank  with  the  creditors  of  the  latter  in  their 
proper  grade  and  class  according  to  law.  Those  whose 
claims  originated  after  the  formation  of  the  partnership 
can  only  be  paid  out  of  the  residue,  if  any,  after  the 
partnership  debts  have  been  paid,  rights  of  the  mort- 
gage and  preferred  creditors  being  reserved.  ^-^ 

Second  system.  The  private  creditor  of  a  partner  can 
levy  only  against  the  stock  or  share  certificates  and  the 
liquid  funds  of  the  debtor  in  the  partnership,  provided 
the  debtor  has  no  other  unburdened  property,  or  if  such 
property  is  not  sufficient  to  pay  the  debt.  When  a 
person  is  a  member  of  several  associations,  each  with 
different  partners,  and  one  of  the  associations  has  fallen 
into  bankruptcy,  the  creditors  thereof  can  levy  only 
upon  the  net  funds  belonging  to  tlie  common  debtor  in 
the  solvent  partnerships  after  the  creditors  of  the  latter 
have  been  paid.^-^ 

Third  system.  The  private  creditors  of  an  associate 
cannot  be  paid  their  claims  in  case  of  bankruptcy  of  the 
association  until  after  the  creditors  of  the  latter  have 
been  fully  satisfied.^-" 

Fourth  system,  ^^^len  a  partnership  becomes  bank- 
rupt, the  judge  must  at  the  same  time  declare  the 
bankruptcy  of  the  partners,  but  separate  proceedings 

•  128  Spain,  927;  Guatemala,  257;  Honduras,  913;  Mexico,  1019;  Panama,  1G24; 
Peru,  938;  San  Salvador,  789. 

•29  Argentina,    417. 

»»»  Bolivia,  303;  Chile,  ;i80;  Colombia,  505;  Ecuador,  2()();  Uruguay,  478. 


678  LATIN-AMERICAN  COMMERCIAL  LAW 

must  be  initiated.  Only  the  creditors  of  the  partner- 
ship are  entitled  to  share  in  the  bankruptcy  proceedings 
comprising  the  property  of  the  partnership.  In  the 
proceedings  for  the  individual  bankruptcy  of  a  partner 
the  partnership  creditors  can  appear  and  rank  with  the 
individual  creditors  for  the  full  nominal  amount  of  their 
claims.  ^^^ 

Fifth  system.  The  private  creditors  of  a  partner  in 
case  of  bankruptcy  of  the  association  will  be  paid  out 
of  the  residue  of  the  partnership  assets  coming  to  the 
partner  after  payment  of  the  partnership  creditors;  but 
if  the  private  creditor  has  any  preferential  right  to  the 
debtor's  property,  he  can  claim  the  preference  con- 
currently with  the  general  body  of  partnership  creditors 
who  lay  claim  to  the  same  property  as  assets  of  the 
partnership.  ^^2 

Sixth  system.  The  creditors  of  a  partnership  cannot 
bring  an  action  against  the  partners  until  after  they 
have  brought  action  against  the  partnership. ^^^ 

Representatives  of  commercial  associations  in  bankruptcy. 

Partnerships  or  corporations  are  represented  during  the 
bankruptcy  proceedings  in  the  manner  provided  for  such 
cases  in  the  by-laws,  and  in  the  absence  thereof,  by  the 
board  of  directors;  dnd  they  may,  at  any  stage  thereof, 
submit  to  the  creditors  any  proposals  of  settlement  which 
they  may  consider  proper.  ^^■^ 

^*^  Costa  Rica,  23,  25;  Nicaragua,  161. 

132  Uruguay,  478. 

133  Venezuela,  214. 

"4  Spain,  929;  Argentina,  1536;  Honduras,  915;  Mexico,  1023;  Peru,  940. 

The  fact  that  the  manager  of  a  corporation  has  been  accused  of  fraud  com- 
mitted in  connection  with  the  business  of  the  association  does  not  imply  that 
the  corporation  itself  is  a  fraudulent  bankrupt  deprived  of  the  privilege  of 
making  settlement  with  its  creditors.  Mexico,  Trib.  Sup.  del  Dist.  Fed.  3a 
Sala,  May  20,  1911,  Parcels  R.  W.  and  Buch.  Miguel  v.  the  Receiver  of  the 
United  States  Banking  Co.  S.  A.  Diario  de  Jur.,  vol.  XXV,  p.  193. 

The  bankruptcy  of  a  commercial  association  is  considered  fraudulent  when 
the  books  of  the  same  are  so  defectively  kept  that  important  entries  were 
omitted  and  erasures  or  amendments  therein  were  made.  Mexico,  Juzgado 
segundo  de  lo  Civil  del  Dist.  Fed.,  May  25,  1905,  Diar.  de  Jur.,  vol.  V,  p.  601. 


BANKRUPTCY  679 

The  penalties  established  for  culpable  or  fraudulent 
bankrupts  must  be  applied  to  managers,  directors  or  liqui- 
dators of  a  commercial  association  which  is  declared  in 
bankruptcy,  if  they  have  committed  the  acts  considered  by 
the  law  to  constitute  culpable  or  fraudulent  bankruptcy.  ^^^ 

Public  service  companies. 

Railroad  and  other  companies  devoted  to  works  of  general, 
provincial  or  municipal  public  service,  which  find  themselves 
unable  to  meet  their  obligations,  may  request  from  the 
appropriate  judge  or  court  a  declaration  of  suspension  of 
payments.  This  can  also  be  requested  by  any  lawful 
creditor.  ^^^ 

The  operation  of  railroads  or  any  other  public  service 
cannot  be  interrupted  through  any  judicial  or  administrative 
action.  ^^'' 

Requisites  of  the  settlement. 

A  public  service  company  or  undertaking,  being  in  a  state 
of  suspension  of  payments,  which  appears  before  the  court 
and  applies  for  a  settlement  with  its  creditors,  must  accom- 
pany its  application  with  the  balance  sheet  of  its  assets  and 
liabilities.  For  purposes  connected  with  the  settlement,  the 
creditors  are  divided  into  three  groups:  the  first  includes 
creditors  for  personal  services,  and  those  whose  claims 
originate  in  lawful  expropriations,  works  and  materials;  the 
second,  the  mortgage  bondholders,  including  the  principal, 
the  coupons  and  amortization  due  and  unpaid,  the  coupons 
and  amortization  being  computed  at  their  full  value,  and  the 
bonds  according  to  the  rate  of  issue,  this  group  being  divided 
into  sections  according  to  the  different  classes  of  bond  hold- 
ers; and  the  third,  all  other  credits,  whatever  their  nature 
and  order  of  preference  inter  se  and  with  relation  to  the 
preceding  groups.  ^^^ 

135  Argentina,   1537;  Costa  Rica,  43. 
"« Spain,  930;  Honduras,  916;  Mexico,  1026;  Peru,  941. 
'"Spain,  931;  Argentina,  1539;  Honduras,  917;  Mexico,  1027;  Peru,  942; 
Uruguay,  65;  law  of  May  31,  1893. 

•'8  Spain,  932,  933;  Honduras,  918,  919;  Mexico,  1028,  1029;  Peru,  943. 


680  LATIN-AMERICAN  COMMERCIAL  LAW 

In  Argentina  ^^^  at  any  stage  of  the  bankruptcy  proceed- 
ings against  a  stock  company  and  whatever  responsibihty 
its  managers,  directors  or  hquidators  may  have  incurred, 
the  corporation  is  allowed  to  make  a  composition  with  its 
creditors. 

Effects  on  public  service  companies  of  the  declaration  of 
suspension  of  payments. 
The  declaration  of  suspension  of  payments  made  by  the 
judge  or  court  produces  the  following  effects : 

(a)  it  suspends  the  levy  of  any  writ  of  attach- 
ment or  execution  of  judgment  against  property  of 
the  company ; 

(b)  it  obliges  the  company  or  enterprise  to  deposit  in 
a  bank,  authorized  thereto,  any  surplus  of  its  income 
after  meeting  the  expenses  of  the  management,  opera- 
tion and  construction; 

(c)  it  obliges  the  company  or  enterprise  to  submit  to 
the  judge  or  court,  within  a  period  of  four  months,  a 
proposition  of  settlement  with  its  creditors,  previously 
approved,  in  the  case  of  a  stock  company,  at  an  ordinary 
or  extraordinary  meeting  of  stockholders.^'"' 

Approval  of  the  settlement. 

The  settlement  must  be  approved  if  it  has  been  accepted 
by  the  creditors  who  represent  three-fifths  of  the  groups  or 
sections  above  mentioned.  It  is  also  to  be  considered  as 
approved  by  the  creditors,  if  a  sufficient  number  of  them 
have  not  attended  the  first  call  and  if,  at  a  second  meeting, 
it  has  been  accepted  by  creditors  w^ho  represent  two-fifths 
of  the  total  of  each  of  the  first  two  groups  and  of  their  sec- 
tions, provided  no  objection  was  made  by  more  than  two- 
fifths  of  any  of  said  groups  or  sections  or  of  the  total  liabil- 
ities. ^-^^ 

"9  Art.  1538. 

1"  Spain,  934;  Honduras,  920;  Mexico,  1030;  Peru,  945. 

"1  Spain,  935;  Honduras,  921;  Mexico,  1031;  Peru,  940. 


BANKRUPTCY  681 

Opposition  to  the  approval  of  the  settlement. 

Within  fifteen  days  from  the  publication  of  the  result 
of  the  vote,  if  it  has  been  favorable  to  the  settlement,  the 
dissenting  creditors  and  those  who  may  not  have  attended, 
may  object  to  the  settlement  because  of  defects  in  the  call- 
ing of  the  creditors  and  in  their  acceptance  of  the  settlement 
or  for  any  other  reason  provided  for  by  the  commercial 
code.i"^ 

After  the  settlement  has  been  approved  without  objection 
or  if  the  objection  has  been  overruled  by  final  decree,  the 
settlement  is  binding  on  the  company  and  on  the  creditors 
whose  claims  antedate  the  suspension  of  payments,  pro- 
vided they  have  been  summoned  in  legal  form,  or  if,  having 
been  notified  of  the  settlement,  they  did  not  object  thereto 
within  the  time  prescribed  in  the  code  of  civil  procedure.  ^'*^ 

Effects  of  the  settlement  with  respect  to  partners. 

In  Argentina  ^'^^  the  creditors  of  a  partnership  who  have 
made  a  settlement  with  it,  do  not  preserve  their  right  of 
action  against  the  partners,  unless  they  have  expressly 
reserved  such  right  at  the  time  of  accepting  the  settlement. 

The  Chilean,^'*''  Ecuadorian  ^^^  and  Venezuelan  ^■'^  codes 
provide  that  while  the  creditors  may  come  to  an  arrange- 
ment with  one  of  the  partners,  nevertheless  the  partnership 
continues  subject  to  the  bankruptcy  proceedings,  and  the 
individual  property  of  the  partner  who  made  the  arrange- 
ment is  subject  to  the  terms  of  his  agreement. 

Conflict  of  laws. 

As  commerce  consists  in  bringing  the  products  of  the 
different  countries  of  the  world  within  the  reach  of  consumers 
at  home  as  well  as  abroad,  the  case  of  bankruptcy  becomes 
very  complex,  due  to  the  great  variety  of  laws  applica}:)le 
to  persons  and  things  involved  in  the  liquidation  of  the 

"2  Spain,  936;  Honduras,  922;  Mexico,  1032;  Peru,  947. 

»«  Spain,  937;  Honduras,  923;  Mexico,  1033;  Peru,  948. 

•"Art.  1410.  i<°Art.  1471.  '^Art.  1020. 

'«Art.  982. 


682  LATIN-AMERICAN  COMMERCIAL  LAW 

business.  The  effects  produced  by  a  declaration  of  bank- 
ruptcy made  by  the  courts  of  one  country  upon  the  branches 
of  an  affected  commercial  house  in  other  countries,  or  upon 
the  property  abroad  of  the  bankrupt,  or  on  the  relations 
created  by  contracts  entered  into  by  him;  the  law  govern- 
ing the  acceptance  and  classification  of  creditors'  claims 
and  the  classification  of  the  bankruptcy;  the  jurisdiction 
of  the  courts;  the  rehabiUtation  of  the  bankrupt — these 
are  a  few  among  the  many  questions  calling  for  solution 
on  the  part  of  the  law.  Unfortunately  most  of  the  commer- 
cial codes  of  Spanish-America  are  silent  on  these  matters 
and  the  conflicts  are  left  without  any  other  solution  than 
that  deducible  from  general  principles.  Other  codes  have 
such  general  and  vague  provisions  that  they  scarcely  pro- 
vide a  more  definite  basis  for  solution  of  the  conflict.  The 
codes  only  of  Brazil,  Costa  Rica  and  Panama  indicate  by 
their  detailed  provisions  that  their  authors  reaHzed  the 
importance  of  these  problems. 

In  Argentina, ^'*^  Uruguay,"^  Costa  Rica  ^^°  and  Panama, ^^^ 
a  foreign  declaration  of  bankruptcy  cannot  be  invoked 
against  the  domestic  creditors  of  a  bankrupt,  either  to  call 
up  for  discussion  their  claims  against  the  domestic  property 
of  the  debtor,  or  to  nullify  transactions  of  or  with  the  bank- 
rupt. Once  the  bankruptcy  is  declared  by  the  courts  of 
the  Republic,  the  creditors  participating  in  the  foreign  bank- 
ruptcy proceedings  are  not  taken  into  consideration,  except 
when  there  is  a  surplus  remaining  after  the  domestic  credit- 
ors have  been  paid. 

In  Bolivia  the  only  provision  bearing  on  the  matter  is 
that  of  article  545  of  the  Commercial  Code,  prescribing  that 
in  order  to  place  the  property  of  the  bankrupt  under  receiver- 
ship, when  it  is  located  outside  his  residence,  the  delegated 
judge  (juez  comisario)  must  address  the  necessary  letters 
rogatory  to  the  judge  of  the  places  where  the  property  is 
located. 

In  Brazil  ^^-  foreign  judgments  in  regard  to  the  bankruptcy 

'«  Art.  1383.  i«  Art.  1577.  i»  Arts.  8  to  12. 

'^i  Arts.  1638  to  1648.  »"  Arts.  161  to  166. 


BANKRUPTCY  683 

of  individuals  or  corporations  residing  in  Brazil,  are  effect- 
ive after  such  decisions  have  been  authorized  {homologaqao) 
by  the  federal  supreme  court.  This,  however,  does  not 
interfere  with  the  rights  of  mortgagees  residing  in  Brazil  or 
with  rights  of  non-preferred  creditors  who  have  already 
brought  their  actions  in  Brazil. 

The  authorization  of  the  foreign  judgment  by  the  supreme 
court  cannot  involve  branches  established  in  Brazil;  the 
Brazilian  creditors  can  petition  for  the  bankruptcy  of  those 
branches  and  must  be  paid  with  its  assets  in  preference  to 
foreign  creditors. 

The  law  of  the  place  where  the  bankruptcy  proceedings 
are  conducted  determines  the  classification  of  creditors' 
claims. 

Compositions  of  the  debtor  with  his  creditors  whether 
preventive  or  not,  made  in  a  foreign  country  and  affecting 
property  in  Brazil,  also  require  the  authorization  {homo- 
logaqao) of  the  Brazilian  supreme  court. 

Such  authorization  cannot  be  granted  to  judgments  of 
foreign  courts  declaring  the  bankruptcy  of  Brazilians  resid- 
ing in  Brazil,  unless  in  this,  as  well  as  in  the  other  cases, 
international  treaties  provide  otherwise. 

In  Costa  Rica,  if  a  merchant  or  an  association  having 
branches  or  agencies  in  the  Repubhc  fails  in  a  foreign  country, 
such  branches  or  agencies  are  put  in  liquidation  if  requested, 
by  means  of  rogatory  letters,  issued  by  the  authority  having 
cognizance  of  the  bankruptcy  of  the  merchant  or  association. 
These  branches  and  agencies  may  also  be  declared  in  bank- 
ruptcy when  proper  according  to  law. 

The  term  "resident  creditor"  for  the  effects  of  the  bank- 
ruptcy law  includes: 

(a)  a  Costa  Rican  by  birth  or  naturalization,  though 
resident  abroad;  and, 

(6)  a  foreigner  residing  in  Costa  Rica  at  the  time 
the  contract  from  which  the  debt  arises  was  entered 
into. 

If  the  bankrupt  is  an  agency  or  branch  established  in 
Costa  Rica  the  rules  applicable  to  the  bankruptcy  of  a 


684  LATIN-AMERICAN  COMMERCIAL  LAW 

merchant  or  association  residing  in  Costa  Rica  are  ob- 
served. 

Mexico  provides  that  if  a  foreign  commercial  enterprise 
becomes  bankrupt  abroad  its  branches  in  Mexico  are  Hqui- 
dated,  or  are  also  to  be  declared  in  bankruptcy,  when  proper; 
and  such  bankruptcy  is  subject  to  the  provisions  of  the 
IVIexican  law.^^^ 

In  Nicaragua/^^  in  case  of  a  foreign  declaration  of  bank- 
ruptcy, partial  bankruptcy  proceedings  can  be  undertaken 
with  respect  to  the  property  existing  in  Nicaragua.  If  the 
delivery  of  such  property  be  demanded  by  foreign  courts, 
it  must  not  be  made  until  the  expiration  of  thirty  days  from 
the  publication  of  such  demand;  and  the  delivery  is  to  be 
confined  to  that  portion  of  the  property  that  is  un- 
claimed in  the  Repubhc,  unless  otherwise  provided  by  the 
law. 

The  code  of  Panama  ^^^  provides  that,  unless  otherwise 
stipulated  in  international  treaties,  a  foreign  declaration 
of  bankruptcy  is  without  effect  in  Panama,  except  when  a 
judicial  exequatur  has  been  issued  upon  it,  according  to  law: 
preventive  measures  against  the  bankrupt's  property  located 
within  the  Repubhc  can,  however,  be  undertaken  by  virtue 
of  letters  rogatory,  even  before  the  exequatur  is  obtained. 

Within  thirty  days  after  the  publication  in  Panama  of  the 
last  notice  of  a  bankruptcy  declared  abroad,  the  creditors 
residing  in  Panama  can  institute  local  proceedings  in  bank- 
ruptcy, and  must  be  paid  in  preference  to  foreign  creditors. 
If  there  are  several  bankruptcy  proceedings  pending  as  above 
mentioned,  the  residue  left  after  paying  the  domestic 
creditors  must  be  turned  over  to  the  creditors  abroad  who 
first  sent  in  letters  rogatory  requesting  preventive  measures. 

If  a  bankrupt  undertook  occasional  commercial  acts 
abroad  for  the  account  and  under  the  responsibihty  of  the 
main  house,  the  creditors  residing  in  Panama  rank  with  the 
non-resident  creditors  who  have  enforced  their  rights  before 
the  court  in  which  the  proceedings  are  pending.  For  the 
purposes  of  these  provisions,  resident  or  domestic  creditors 

153  Art.  949.  1"  Art.  595.  ^^^  Arts.  1638  to  1648. 


BANKRUPTCY  685 

are  deemed  to  be  those  whose  claims  must  be  satisfied  within 
the  country,  though  they  reside  abroad. 

The  classification  and  preference  of  creditors'  claims  are 
governed  by  the  national  law. 

Preventive  or  other  settlements,  as  well  as  objections  to 
the  declaration  of  banla-uptcy  approved  by  the  judicial 
authorities  of  other  countries,  are  only  binding  upon  credit- 
ors residing  in  Panama  if  they  were  cited  in  legal  form,  and 
after  an  exequatur  has  been  issued. 

In  case  of  plurality  of  bankruptcies,  the  bankrupt's 
incapacities  are  governed  by  the  law  of  the  country  where  he 
has  his  personal  domicil.  His  rehabilitation  in  that  case  can 
only  become  effective  when  it  has  been  decreed  in  all  the 
places  where  proceedings  were  initiated. 

Quite  different  from  the  provisions  of  other  codes  is  that  of 
Santo  Domingo,^'"  which  prescribes  that  no  apportionment 
can  be  made  of  the  banki'upt's  property  among  the  creditors 
residing  in  the  Republic,  until  after  setting  aside  in  reserve 
the  portion  belonging  to  the  foreign  creditors  listed  in  the 
corresponding  balance  sheet.  If  these  creditors  are  not 
accurately  described  in  such  balance  sheet,  the  delegated 
judge  can  provide  for  an  increase  in  the  funds  reserved; 
the  privilege  of  the  receiver  to  oppose  such  provision  before 
the  commercial  courts  being  reserved. 

For  the  solution  of  the  conflicts  of  law  between  iVrgentina, 
Uruguay,  Paraguay  and  Peru  the  treaties  signed  at  the 
Montevideo  International  Congress  of  1889  must  be  taken 
into  consideration,  because  the  four  countries  mentioned 
ratified  these  treaties.  Among  them  there  is  one  referring  to 
commercial  law;  articles  35  to  48  thereof  read  as  follows: 

Art.  35.  The  judges  of  the  commercial  domicil  of  the 
bankrupt  are  competent  to  take  cognizance  of  the  bank- 
ruptcy proceedings  even  though  he  occasionally  performs 
commercial  acts  in  another  country,  or  maintains  in  it 
agencies  or  branches  acting  for  the  account  and  under  the 
responsibility  of  the  main  house. 

Art.  36.    Should  the  bankrupt  have  two  or  more  independ- 

iwArt.  567. 


686  LATIN-AMERICAN  COMMERCIAL  LAW 

ent  commercial  houses  in  different  states,  the  judges  of  the 
places  where  such  houses  are  located  are  competent  to  take 
cognizance  of  the  bankruptcy  of  each  of  them  respectively. 

Art.  37.  In  the  case  of  the  article  above,  when  the  declara- 
tion of  bankruptcy  occurs  in  one  of  the  countries,  all  preven- 
tive measures  decreed  in  the  proceedings  are  to  be  carried 
out  with  respect  to  the  property  of  the  bankrupt  in  other 
countries,  without  prejudice  to  the  rights  granted  to  local 
creditors  by  the  following  articles. 

Art.  38.  After  all  preventive  measures  have  been  carried 
out  by  means  of  letters  rogatory,  the  judge  who  received 
such  letters  must  publish  notices  for  sixty  days  notifying  the 
declaration  of  bankruptcy  and  the  preventive  measures 
already  taken. 

Art.  39.  The  local  creditors  during  the  aforesaid  period, 
counting  from  the  day  following  the  publication  of  the 
notices,  can  begin  new  bankruptcy  proceedings  against  the 
bankrupt,  or  proceedings  in  civil  insolvency  {concursarlo 
civilmente)  if  the  bankruptcy  proceedings  are  not  proper. 

In  this  case  the  various  bankruptcy  proceedings  must  be 
carried  out  separately,  and  the  laws  of  the  country  in  which 
they  take  place  must  be  respectively  observed. 

Art.  40.  The  term  local  creditors,  in  reference  to  the 
proceedings  begun  in  any  country,  includes  those  whose 
claims  must  be  paid  in  that  country. 

Art.  41.  '\Mien  a  plurality  of  bankruptcy  proceedings  is 
proper,  according  to  the  provisions  of  this  title,  the  residue 
left  to  the  bankrupt  in  a  country  shall  be  placed  at  the 
disposal  of  the  creditors  in  the  other  country.  An  agreement 
between  the  respective  judges  is  required  therefor. 

Art.  42.  Should  the  bankruptcy  proceedings  be  carried 
out  only  in  one  country,  either  because  it  is  proper  according 
to  Art.  35,  or  because  the  local  creditors  did  not  exercise  the 
rights  granted  them  by  Art.  39,  all  the  creditors  of  the  bank- 
rupt are  bound  to  present  the  evidence  of  their  claims  and 
enforce  their  rights  before  the  judge  or  court  which  declared 
the  bankruptcy. 

Art.  43.     Even  though  the  bankruptcy  proceedings  are 


BANKRUPTCY  687 

carried  on  in  a  single  place,  the  mortgage  creditors,  previous 
to  the  declaration  of  bankruptcy,  can  enforce  their  rights 
before  the  courts  of  the  country  where  the  mortgaged  or 
pledged  property  is  located. 

Art.  44.  The  preferred  claims  which  are  to  be  paid  in  the 
country  where  the  bankruptcy  proceedings  take  place,  shall 
be  respected,  although  the  property  burdened  with  such 
preference  is  taken  to  another  state,  and  bankruptcy  or  civil 
insolvency  proceedings  have  been  begun  in  such  state 
against  the  bankrupt. 

This,  however,  shall  not  take  place  when  the  property  was 
so  taken  during  the  period  to  which  the  effects  of  the  declara- 
tion of  bankruptcy  are  to  relate  back. 

Art.  45.  The  powers  of  the  receivers  shall  be  recognized  in 
all  the  countries,  if  they  are  in  accordance  with  the  law  of  the 
country  where  the  bankruptcy  proceedings  take  place,  and 
they  must  everywhere  be  admitted  to  the  functions  incum- 
bent upon  them  according  to  the  terms  of  the  present  treaty. 

Art.  46.  In  case  of  plurality  of  proceedings  in  bankruptcy, 
the  court  in  whose  jurisdiction  the  bankrupt  resides  is 
competent  to  decree  all  the  measures  of  a  civil  character 
which  may  affect  him  personally. 

Art.  47.  The  rehabilitation  of  the  bankrupt  shall  only  be 
proper  when  it  has  been  effected  in  all  the  bankruptcy  pro- 
ceedings. 

Art.  48.  The  provisions  of  this  treaty  in  the  matter  of 
bankruptcy  shall  be  applied  to  stock  companies,  whatever 
the  method  provided  in  the  contracting  states  for  the  liqui- 
dation of  such  companies  in  case  of  suspension  of  payments. 


CHAPTER  XL 

LEGAL    PROCEDURE 

Spain. — Bravo  Molt6,  Emilio:  Organizacion  judicial  vigente  con  una  intro- 
ducci6n  hist6rica.    Madrid,  1890. 

Costa,  Joaquin :  Reorganizaci6n  del  notariado,  del  registro  de  la  propiedad  y 
de  la  administraci6n  de  justicia. 

Escosura,  Gabriel  de  la:  Gula  notarial  de  Espana  (publicado  por  r.  o.  de  16 
de  febrero  de  1898).    Madrid,  1898. 

Gutierrez  Canas:  Gutierrez,  Demetrio:  Ensayo  sobre  la  filosofia  del  procedi- 
miento  judicial,  la  tecnica  y  la  moral  en  el  foro.    Valladolid,  1900-1905.    4  v. 

Manresa  y  Navarro,  Jose  Maria:  Comentarios  de  la  ley  de  enjuiciamiento 
civil.  3d  ed.    Madrid,  1910.    7  v. 

Medina,  Le6n,  and  Maran6n,  Manuel :  Leyes  notariales  de  Espana  conforme 
a  los  textos  oficiales.    Madrid,  1905. 

Novoa  Soan6,  Ram6n:  El  progreso  del  instrumento  publico,  2d  ed.  Madrid, 
1910. 

Reus,  Emilio:  Ley  de  enjuiciamiento  civil  de  3  de  febrero  de  1881  concordada 
y  anotada  con  gran  extensi6n.    Madrid,  1907-1910.    6  v. 

Rodriguez,  Antonio  G.,  and  Gutierrez,  Jimenez  M.:  Justicia  municipal. 
Manual  prdctico  para  la  aplicaci6n  de  la  ley  de  5  de  agosto  de  1907.  Madrid, 
1908. 

Romero  y  Delgado,  Arturo :  Manual  tedrico-prdctico  para  la  redacci6n  de  los 
instrumentos  publicos.    Madrid,  1909. 

Sdnchez  de  Ocaiia,  Ram6n:  Organizacidn  judicial  vigente.  Leyes  orgdnicas 
de  15  de  septiembre  1870  y  de  14  de  octubre,  1882,  anotadas  y  concordadas. 
Madrid,  1894. 

Torre  e  Izquierdo,  Tirso  de  la:  Exemplarium.    Valencia,  1907-1908.    2  v. 

Same:  Comentario  a  la  legislaci6n  notarial.    Valencia,  1904. 

Argentina. — Avellaneda,  Nicolds  A. :  Proyecto  de  ley  sobre  organizaci6n  y 
atribuciones  de  la  administraci6n  de  justicia.    La  Plata,  1910. 

Baldana,  Juan:  El  escribano  argentine.  Teoria  y  prdctica  notarial.  Buenos 
Aires,  1913.    4  v. 

Band6n,  Hector  C.:  Estudio  te6rico  para  la  profesi6n  de  escribano  publico, 
3d  ed.    La  Plata,  1908. 

Calvento,  Mariano  G.:  El  c6digo  de  procedimientos  civil  y  comercial  ex- 
plicado  y  anotado  con  la  jurisprudencia  de  las  Cdmaras  de  apelaci6n.  Buenos 
Aires,  1909. 

Canale,  Jos6  L.:  Cuestiones  prdcticas  del  juicio  civil.    Buenos  Aires,  1915. 

Casarino,  N.:  Apimtes  de  procedimientos  judiciales.     Buenos  Aires,  1896. 

Castillo,  J.  A.:  Estudio  te6rico-prdctico  para  el  oficio  de  escribanos  piiblicos 
en  la  provincia  de  Buenos  Aires  y  en  la  capital  federal  de  la  Repiiblica.  Nueva 
edici6n.    Buenos  Aires,  1893. 


LEGAL    PROCEDURE  089 

Castro,  Manuel  Antonio  de:  Prontuario  de  prdctica  forense,  anotado  por  el 
Dr.  Dominguez,  2d  ed.    Buenos  Aires,  1865. 

De  la  Colina,  Salvador:  Derecho  y  legislaci6n  procesal;  materia  civil  y 
comercial,  2d  ed.    Buenos  Aires,  1916. 

Espil,  Felipe:  La  suprema  corte  y  su  jurisdicci6n  extraordinaria.  Buenos 
Aires,  1915. 

Esteves  Sagui,  Miguel:  Tratado  elemental  de  los  procedimientos  civiles,  en  el 
foro  de  Buenos  Aires.    Buenos  Aires,  1850. 

Garcia  Merou,  Enrique  (hijo)  El  recurso  extraordinario  ante  la  Corte 
suprema  de  justicia  de  la  naci6n.    Buenos  Aires,  1915. 

Garmendia,  Miguel  Angel:  La  justicia  en  los  territories  nacionales.  Posadas, 
1901. 

Same:  Derecho  civil  y  procesal.    Buenos  Aires,  1915. 

Gonzalez  Calder6n,  Juan  A.:  La  funci6n  judicial  en  la  constituci6n  argen- 
tiua;  conferencias  expuestas  en  la  Facultad  de  ciencias  juridicas  y  sociales  de  la 
Universidad  nacional  de  la  Plata  para  optar  a  la  suplencia  de  la  cdtedra  de 
derecho  constitucional.    Buenos  Aires,  1911. 

Gonzdlez,  Leandro  M.:  El  notariado  argentine  o  auxiliar  del  escribano  de 
registro.     2d  ed.    Buenos  Aires,  1893.    3  v. 

Hall,  J.  J.:  El  c6digo  de  procedimientos  civil  y  comercial,  interpretado  por 
la  jurisprudencia  de  las  cdmaras  de  apelaci6n  de  la  capital  federal  en  sus  299 
tomos  de  fallos  publicados.    Buenos  Aires,  1904.    3  v. 

Same:  Colecci6n  de  formularios  de  escritos  forenses  en  materia  civil  y  comer- 
cial.   Buenos  Aires,  1911. 

Iniguez,  Eusebio:  Estudio  sobre  el  c6digo  de  procedimientos  civiles  de  la 
capital  federal.    Buenos  Aires,  1915. 

Irigoyen,  Bernardo  de:  Justicia  nacional.  Apuntes  sobre  la  jurisdicci6n  de  la 
corte  suprema.    Buenos  Aires,  1903. 

Jofre,  Tomds:  Admin istraci6n  de  justicia  de  la  provincia  de  Buenos  Aires. 
Disposiciones  vigentes.    Buenos  Aires,  1915. 

Malaver,  Antonio  E.:  Montes  de  Oca,  Juan  Jos6;  Moreno,  Jos6  Maria,  and 
Ferndndez,  Juan  S. :  Manual  de  procedimientos  civiles  y  comerciales,  adaptado 
al  uso  de  los  practicantes  de  jurisprudencia.    Buenos  Aires,  1870. 

Malagarriga,  Carlos  C:  La  prucba  judiciaria  en  materia  civil.  Buenos 
Aires,  1913. 

Same:  C6digos  de  procedimientos  vigentes  en  la  capital  y  en  la  provincia  de 
Buenos  Aires.    Buenos  Aires,  1894-1897.    2  v. 

Parody,  Alberto:  Comentario  al  c6digo  de  procedimientos  en  lo  civil  y  comer- 
cial de  la  provincia  de  Santa  Fe.    Buenos  Aires,  1912-1915.    3  v. 

Proyecto  de  c6digo  de  procedimientos  civiles  y  comerciales,  presentado  a 
S.  E.  el  senor  ministro  do  justicia  e  instrucci6n  publica,  doctor  Romulo  S. 
Na6n  por  la  comisi6n  designada  por  decreto  de  16  de  septiembre,  1909.  Publi- 
caci6n  oficial.    Buenos  Aires,  1910. 

Pueyrredon,  Honorio:  Apuntes  de  procedimiento  civil.    Buenos  Aires,  1912. 

Rodriguez,  Alberto  M.:  Comentarios  al  c6digo  de  procedimientos  en  materia 
civil  y  comercial  de  la  capital  de  la  llepublica  Argentina.  2d  ed.  Buenos 
Aires,  1908-1915.    3  v. 

Silguiera,  J.  Honorio:  .  .  .  Procedimientos  judiciales;  jurisdicci^u,  sus 
diversas  clases,  con  la  jurisprudencia  de  los  tribunalcs.     Suprema  corte  na- 


690  LATIN-AMERICAN  COMMERCIAL  LAW 

clonal.  Suprema  corte  de  justicia  de  la  provincia,  cdmaras  de  apelaci6n  en  lo 
civil  y  en  lo  criminal  de  la  capital  federal.    Buenos  Aires,  1908. 

Same:  Estudios  sobre  procedimientos  y  organizaci6n  judicial.  (Resena 
histdrica.)    Buenos  Aires.  1904. 

Varaugot:  Historia  y  filosofla  del  notariado  argentine.  Buenos  Aires, 
1894. 

Veyga,  Tomds  de:  La  forma  de  la  justicia  argentina.    Buenos  Aires,  1911. 

Bolivia. — Mallea  Balboa,  Enrique:  Manual  de  procedimientos.  La  Paz, 
1908. 

Oropeza,  Samuel :  Compilaci6n  de  las  leyes  del  procedimiento  civil  boliviano, 
2d  ed.    Sucre,  1906. 

Zamorano,  Horacio:  Compilacion  del  procedimiento  civil.    Sucre,  1891. 

Brazil. — Almeida  Oliveira,  A.  de:  A  assignagao  de  diez  dias  no  foro  commer- 
cial e  civil.    Rio  de  Janeiro,  1915. 

Same:  A  lei  das  execuQoes.    Rio  de  Janeiro,  1915. 

Bautista,  Francisco  de  Paula:  Compendio  de  theoria  e  pratica  do  processo 
civil  comparado  com  o  commercial  e  de  hermeneutica  juridca.  7th  ed.  Lisboa, 
1910. 

Botelho,  Antonio  Augusto:  Roteiro  dos  escribaes  e  tabellaes.  Rio  de 
Janeiro,  1882. 

Carvalho  de  Mendonga,  J.  X.:  Tratado  de  justiga  de  pax.  Sao  Paulo 
(1900?). 

Monteiro  Joao:  Theoria  do  processo  civil  e  commercial.  3d  ed.  Sao  Paulo, 
1913.    3v. 

Moraes  Carvalho,  Alberto  Antonio:  Praxe  forense.  Direito  pratico  do 
processo  civil  brazileiro.    3d  ed.    Rio  de  Janeiro,  1915. 

Nogueira  Almeida,  J.  L. :  Estudo  theorico  e  pratico  sobre  fianza  as  custas 
no  direito  processual  brasileiro.    Sao  Paulo,  1909. 

Oliveira  Machado,  Joaquim  de:  Novissima  guia  dos  tabellaes  ou  o  notariado 
no  Brasil  e  a  necessidade  de  sua  reforma,  3d  ed.      Rio  de  Janeiro  (1912?). 

Ramalho,  Joaquim  Ignacio:  Praxe  brasileira,  2d  ed.  Augm.  com  annotaQoes 
pelo  Dr.  Pamplulo  d'Assumpgao.    Sao  Paulo,  1904. 

Ribas,  Antonio,  and  Ribas,  Julio:  Consolidagao  das  leis  do  processo  civil.  Rio 
de  Janeiro,  1915. 

Souza  Pinto,  Jose  Maria  Federico  de:  Primeras  linhas  sobre  o  processo 
civil  brasileiro,  2d  ed.    Rio  de  Janeiro,  1875. 

Tavares  Bastos,  Jose:  Custas  judiciarias  na  Republica.  Rio  de  Janeiro 
(1903?). 

Same:  As  attribugoes  de  promoter  publico  na  Republica.  Rio  de  Janeiro, 
1907. 

Chile. — Ballesteros,  Manuel  E.:  La  lei  de  organizaci6n  i  atribuciones  de 
los  tribunales.    Santiago,  1890.    2  v. 

Coo  Tagle,  Alberto:  Concordancias  de  la  lei  de  organizaci6n  i  atribuciones  de 
los  tribunales  con  la  lejislaci6n  chilena.    Santiago,  1896. 

Freeman,  O.,  Pedro:  Explicaciones  del  c6digo  de  procedimiento  civil. 
Santiago,  1915. 

Lira,  Jose  Bernardo:  Prontuario  de  los  juicios  o  tratado  de  procedimientos 
judiciales  i  administrativos  con  arreglo  a  la  lejislacidn  chilena  .  .  .  4th  ed. 
Santiago,  1886.    2  v. 


LEGAL    PROCEDURE  691 

Ugarte  Zenteno,  Francisco:  De  los  actos  de  comeroio  en  su  relaci6n  con  la 
competencia  de  jurisdicci6n.    Santiago,  1869. 

Molina  Ramos,  Juan  Jose:  Recursos  de  casaci6n  i  revisi6n  de  la  Corte 
suprema.    Santiago,  1903.     1  v.  only  published. 

Otero  Espinosa,  Franklin:  Concordancias  y  jurisprudencia  del  c6digo  de 
procedimiento  civil  de  la  republica  de  Chile  .  .  .  2d  ed.     Santiago,   1910. 

Pinto,  S.  Francisco:  Prontuario  de  los  juicios  civiles  y  de  jurisdiccidn  volun- 
taria.    Santiago,  1912. 

Risopatr6n,  Carlos:  Ley  de  organizaci6n  y  atribuciones  de  los  tribunales  y 
comentarios.    Santiago,  1900. 

Same:  Estudios  sobre  el  c6digo  de  procedimiento  ci\'il.  Santiago, 
1914. 

Rodriguez,  Agustin:  Estudio  sobre  el  recurso  de  casaci6n  (Memoria  premiada 
en  el  ultimo  certamen  de  la  Facultad  de  leyes  i  ciencias  pollticas).  Santiago, 
1897. 

Ruiz  de  la  Barra,  Eleazan:  Concordancias  indicadas  de  los  artlculos  del 
c6digo  de  procedimiento  civil  chileno.    Santiago,  1913. 

Toro  Melo,  David,  and  Echeverria  Anibal:  Codigo  de  procedimiento  civil 
anotado.     (Ed.  oficial).    Santiago,  1902. 

Vera,  Robustiano :  Manual  del  notario  publico,  del  receptor  y  del  procurador 
de  niimero.   .  .   .  Santiago,  1884. 

Colombia. — Concha,  Jose  Vicente:  Elementos  de  pruebas  judiciales,  3d  ed. 
Bogota,  1911. 

Rodriguez  Pinerez,  Eduardo:  Codigo  judicial  colombiano,  y  leyes  vigentes 
que  lo  adicionan  y  reforman,  5th  ed.    Bogotd,,  1917. 

Cuba. — Betancourt,  Angel  C:  Ley  de  enjuiciamiento  civil  vigente  en  la 
republica  de  Cuba  .  .  .  con  las  modificaciones  introducidas  .  .  .  hechas 
tambien  ...  las  enmiendas  que  la  situaci6n  politica  del  pais  hacen  necesarias 
en  la  prdctica,  con  notas  aclaratorias  y  concordancias  con  otros  cuerpos  legales. 
Habana,  1913. 

Biblioteca  Juridica  de  la  Republica  de  Cuba.  Juicio  de  desahucio.  Orden 
Num.  170  de  1902  sobre  modificaciones  del  titulo  XVII  del  libro  segundo  en  la 
ley  de  enjuiciamiento  civil  con  algunas  anotaciones  y  derechos  y  gastos  en  los 
juicios  de  desahucio.    Habana,  1903. 

Dolz  Arango,  Ricardo:  Programa  del  derecho  procesal.    Habana,  1896. 

Fuentes,  Alfredo  G.:  El  recurso  de  casaci6n.    Habana,  1907. 

Trujillo  y  Acosta,  Alberto:  Compilaci6n  procesal  civil.    Habana,  1905. 

Ecuador. — Borja,  J.  M.:  Manual  de  procedimientos  judiciales.  Guayaguil, 
1890. 

Guatemala. — Gir6n,  Jose  Eduardo:  El  notario  practico,  o  tratado  de 
notarla.    Guatemala,  1900. 

Haiti. — Dalbemar,  Jean  Joseph:  Des  institutions  judiciaires  et  de  la  justice 
de  paix  en  Haiti.  Manuel  theorique  et  pratique  de  la  justice  de  paix  en  mati^re 
civile,  judiciaire  et  extrajudiciaire,  2d  ed.,  rev.  Paris,  1897.    2  v. 

Code  de  procedure  civil  (d'Haiti)  annot^  par  Jaques  Nic61as  Legcr.  New 
York,  1902. 

Justin,  Jos.:  De  I'organisation  judiciaire  en  Haiti.     Havre,  1910. 

Honduras. — Mombreflo,  Alberto:  Elementos  de  prdctica  forcnse  en  materia 
civil,  segun  la  legislaci6n  hondurena.     Tegucigalpa,  1893. 


692  LATIN-AMERICAN  COMMERCIAL  LAW 

Mexico. — Argara,  Marciano:  Elementos  de  procedimientos  judiciales  en 
materia  civil  conforme  al  c6digo  del  Estado  de  Mexico.    Mexico,  1884. 

Castillo  Velasco,  Federico  M.  del:  Prdctica  sobre  enjuiciamiento  civil. 
Puebla,  1897. 

Cortes,  Francisco:  Libro  de  los  alcaldes  o  sea  tratado  completo  de  los  pro- 
cedimientos civiles.    Oaxaca,  1885. 

Esteva  Ruiz,  Roberto:  iQue  cuestiones del  orden  civil  o  del  mercantil  caen 
bajo  el  conocimiento  de  los  tribunales  federales?  Mexico.  Diario  de  Jurisp. 
V.  4,  p.  703. 

Gonzdlez,  Nestor:  Competencia  de  los  tribunales  comunes.    Mexico,  1903. 

Ibarrardn  y  Ponce,  Fernando :  Manual  razonado  de  procedimientos  civiles  y 
penales  del  Estado  de  Vera  Cruz.    Puebla,  1898. 

L6pez  Portillo,  Jesus:  El  enjuiciamiento  conforme  al  c6digo  de  procedimien- 
tos civiles  del  Estado  (Jalisco).    Guadalajara.    Mexico,  1880  (?).    2  v. 

Lozano,  Antonio  de  J.:  Formularies  para  entablar,  proseguLr  y  terminar  toda 
clase  de  juicios  y  diligencias  con  arreglo  a  los  c6digos  vigentes  de  procedimientos 
civil  y  mercantil.    Mexico,  1900. 

Lozano,  Antonio  de  J.,  and  Vniamar,  Aniceto:  Formularios  para  la  substan- 
ciaci6n  de  los  juicios  extraordinarios  y  diligencias  de  jurisdicci6n  voluntaria 
con  arreglo  a  los  codigos  de  procedimientos  civil  y  mercantil.    Mexico,  1901. 

Mateos  Alarc6n,  M. :  De  las  excepciones.  Mexico.  Diario  de  Jurispruduncia. 
V.  3,  p.  383. 

Same:  Tratado  sobre  las  acciones.    lb.,  v.  4,  p.  24. 

Same:  El  juicio  de  jactancia.  Estudio  sobre  el  artlculo  23  del  C6digo  de 
procedimientos  civiles.    lb.,  v.  13,  p.  320. 

Same:  Codigo  de  procedimientos  civiles  del  Distrito  federal  y  Territorio  de  la 
Baja  California,  concordado.    Mexico,  1904. 

Mejia,  Alfonso:  Prontuario  de  procedimientos  mercantiles.  Puebla, 
1902. 

Montiel  y  Duarte,  Isidoro:  Registro  analltico  y  critico  del  c6digo  de  pro- 
cedimientos civiles.    Mexico,  1877. 

Ortega,  Rafael:  Cuestiones  del  orden  civil  o  del  mercantil  que  caen  bajo  el 
conocimiento  de  los  Tribunales  Federales.  Rev.  de  Leg.  y  Jurisp.  1902. 
2d  semst.,  p.  270. 

Pallares,  Jacinto:  El  Poder  judicial.  Tratado  completo  de  la  organizaci6n, 
competencia  y  procedimientos  de  los  tribunales  de  la  repiiblica  mexicana. 
Mexico,  1874. 

Pena  y  Pena,  Manuel:  Lecciones  de  prdctica  forense  mexicana.  M6xico, 
1850.    4v. 

Polo,  Angel  M . :  C6digo  de  procedimientos  del  Estado  de  Puebla,  puesto  en 
orden  alfabetico,  en  forma  de  diccionario  con  adicion  de  la  definici6n  de  las 
palabras  mds  usuales  en  el  foro.    Mexico,  1892. 

Preciat,  Eduardo:  La  caucion  "judicatum  solvi"  segun  el  derecho  civil,  el 
mercantil  y  el  constitucional.    Mexico.    Diar.  de  Jurisp.,  v.  14,  p.  239. 

Lozano,  Antonio  de  J.,  and  Villamar,  Aniceto:  Procedimiento  mercantil 
mexicano.    Mexico,  1901. 

Roa  Barcena,  Rafael:  Manual  razonado  de  prdctica  civil  forense  mexicana, 
3d  ed.    Mexico,  1869. 

Rodriguez,  Agustin:  Casaci6n  civil,  breves  apuntes.    Mexico,  1903. 


LEGAL    PROCEDURE  693 

Sanchez  Gavito,  Indalecio:  Teorfa  del  amparo  en  negocios  judiciales  del 
orden  civil.    Rev.  de  Leg.  y  Jur.    Mexico,  1897.    2d  sems.,  p.  272. 

Uribe,  Carlos:  La  naturaleza  de  la  acci6n  de  nulidad  en  los  contratos  y  sus 
efectos  respecto  de  terceros.    Ih.,  1899.    1st  sems.,  p.  494. 

Vega,  Fernando :  De  la  excepci6n  de  divisi6n.  Novedad  de  nuestra  legisla- 
ci6n  sobre  este  punto.    El  Derecho.    Mexico,  1893,  p.  577. 

Vera  Estanol,  Jorge:  Indicaci6n  motivada  de  las  reformas  que  debe  sufrir  el 
c6digo  de  procedimientos  civiles  del  Distrito  Federal  en  materia  contenciosa. 
lb.,  V.  5,  p.  576. 

Same:  Cuestiones  del  orden  civil  o  mercantil  que  caen  bajo  el  conocimiento  de 
los  Tribunales  Federates.    lb.,  p.  291. 

Verdugo,  Agustin:  Ca,\ici6n  judicatum  solid  y  la  responsabilidad  que  por  ella 
adquiere  el  fiador.    76.,  1895,  p.  229. 

Same:  Providencias  precautorias  mercantiles.  El  Derecho.  Mexico,  1896, 
p.  115. 

Villalobos,  Francisco  J.:  Enjuiciamiento  comercial.    Mexico,  1873. 

Zayas,  Pablo:  Tratado  elemental  de  procedimientos  en  el  ramo  civil.  Mex- 
ico, 1872. 

Vega,  Fernando:  Los  procedimientos  de  apeo  no  constituyen  un  juicio  que 
deba  terminar  por  sentencia  de  los  tribunales  comunes.    Mexico,  1903. 

Panama. — Gonzdlez:  C6digo  judicial  panameno.    Panama,  1914. 

Peru. — Calle,  Juan  Jose:  Reglamento  de  jueces  de  paz  anotado  y  concordado 
con  las  leyes  que  lo  modifican  y  formulario  de  procedimientos.    Lima,  1915. 

Same:  C6digo  de  procedimientos  civiles.    Lima,  1914. 

Eguiguren:  Ley  orgd,nica  del  poder  judicial  y  codigo  de  procedimientos 
civiles.    Lima,  1912. 

Lama,  Miguel  Antonio  de  la:  C6digo  de  procedimientos  civiles  anotado  y 
concordado,  with  appendix.    Lima,  1914. 

Same:  Ley  organica  del  poder  judicial  con  introducci6n,  anotaciones  y 
apendices.    Lima,  1912. 

Romero,  J.  Guillermo:  Estudios  de  legislaci6n  procesal,  v.  L    Lima,  1914. 

Salvador. — Arriola,  Doroteo  Jose:  Nociones  de  derecho  jurisdiccional  civil  y 
criminal.    San  Salvador,  1868.    2  v. 

Alvarado  Herm6genes,  y  Sudrez,  Belisario  U.:  C6digo  de  procedimientos 
civiles  de  la  Republica  del  Salvador,  con  todas  sus  reformas  intcrcaladas  en  el 
texto.    San  Salvador,  1900. 

Trigueros,  Jose,  Ruiz,  Antonio  y  Castellanos,  Jacinto:  C6digo  de  procedi- 
mientos civiles.    New  ed.    San  Salvador,  1893. 

Los  debates  judiciales  (periodical)  por  R.  Manuel  Castro  y  Jos6  Leiva.  San 
Salvador,  1904. 

Uruguay. — Beltrdn,  Washington:  Fallos  de  la  alta  corte  de  Justicia,  v.  L 
Montevideo,  1911. 

Barbeito,  L.  P.:  El  escribano  uruguayo.    Montevideo,  1898. 

Gallinal,  Rafael:  Estudios  sobre  el  c6digo  de  procedimiento  civil.  Monte- 
video, 1907-1916.    5v. 

Gargao,  Eduardo:  Manual  te6rico-prdctico  del  escribano.  Montevideo, 
1905. 

Gim^nez,  Jos6  A.:  La  tramitaci6n  de  juicios.  Manual  dc  abopada  i)r;lctica. 
Montevideo,  1894-1895.    2  v. 


694  LATIN-AMERICAN  COMMERCIAL  LAW 

Lagarmilla,  Eugenio  J.:  Comentario  al  c6digo  de  procedimiento  civil.  De 
los  abogados,  procuradores,  actuaries  y  alguaciles.    Montevideo,  1905. 

Lagarmilla,  Alejandro:  Estudios  sobre  el  codigo  de  procedimiento  civil. 
Juicio  de  "ab  intestato"  y  herencia  yacente.  Beneficio  de  la  separaci6n  de  pa- 
trimonios.  Apertura  del  testamento  cerrado.  Informaci6n  "ad  perpetuam" 
Entrega  de  la  cosa.    2d  ed.    Montevideo,  1915. 

Same:  Las  acciones  en  materia  civil,  te6ria  de  las  acciones,  de  la  reivindica- 
ci6n,  acci6n  confesoria  y  negatoria.    Montevideo,  1904. 

L6pez  Lomba,  Ram6n:  Legislaci6n  comparada  sobre  organizaci6n  judicial, 
v.  I,  Montevideo,  1903. 

Riestra  Solano,  A.:  Vade  mecum  del  notario.    Montevideo,  1905. 

Requesne,  Ram6n:  Manual  te<5rico-prdctico  del  c6digo  de  procedimiento 
civil.    Montevideo,  1886.    2  v. 

Somosa,  Antonio:  Manual  te(5rico  prd,ctico  del  escribano  uruguayo.  Mon- 
tevideo, 1885. 

Viisquez  Acevedo,  Alfredo:  Concordancias  y  anotaciones  del  c6digo  de 
procedimiento  civil.    Del  juicio  ejecutivo.    Montevideo,  1900. 

Vdzquez  Antonio:  Manual  del  escribano.    Montevideo,  1904. 

Vd,zquez,  Landelino:  Anotaciones  sobre  la  alta  Corte  de  Justicia.  Monte- 
video, 1902. 

Venezuela. — Arcaya,  Pedro  M.:  Estudio  critico  de  las  excepciones  de 
inadmisibilidad.    Caracas,  1913. 

Feo,  Ram6n  F. :  Estudios  sobre  el  c6digo  de  procedimiento  civil  venezolano. 
Caracas,  1904.    3  v. 

Sanofo,  Luis:  Exposici6n  del  c6digo  de  procedimiento  civil.    Caracas,  1876. 

Procedure  in  countries  of  federal  system. 

It  has  already  been  observed  that  four  of  the  Latin- 
American  Republics,  namely,  Argentina,  Brazil,  Mexico  and 
Venezuela,  have  adopted  the  federal  system  of  government 
in  their  political  constitutions,  modelled  upon  the  Constitu- 
tion of  the  United  States.  In  those  countries,  consequently, 
there  are  both  federal  courts  and  state  courts,  both  the 
Central  Government  and  the  states  having  power  to  enact 
their  corresponding  codes  of  procedure.  It  is  well,  however, 
to  notice  that  the  powers  of  the  federal  Congress  in  this 
respect  differ  somewhat  in  each  of  the  four  countries  men- 
tioned. 

In  Argentina  ^  while  the  federal  Congress  has  power  to 
enact  the  civil,  commercial,  penal  and  mining  codes,  the 
provisions  of  these  codes  must  be  enforced  either  by  the 
federal  or  provincial  courts,  according  as  things  or  persons 
may  come  within  their  respective  jurisdictions.    The  federal 

1  Constitution,  Art.  67,  sections  11,  12,  14,  17,  27,  28. 


LEGAL   PROCEDURE  695 

Congress  also  has  power  to  enact  laws  on  bankruptcy,  to 
provide  by  special  laws  for  the  organization  and  the  adminis- 
tration of  the  government  of  the  national  territories;  to 
estabhsh  federal  courts  inferior  to  the  Supreme  Court  of 
justice;  and  to  enact  all  the  laws  and  regulations  which  may 
be  deemed  necessary  to  carry  into  effect  the  powers  and 
privileges  granted  by  the  Constitution. 

The  Constitution  of  Brazil  -  gives  the  federal  Congress 
power  to  enact  the  law  of  federal  procedure;  to  organize  the 
federal  courts  according  to  the  Constitution;  to  legislate  in 
regard  to  the  municipal  organization  of  the  federal  district; 
to  regulate  extradition  between  the  states ;  and  to  enact  such 
laws  and  regulations  as  may  be  necessary  for  the  exercise  of 
the  powers  belonging  to  the  Union  and  necessary  for  carrying 
the  Constitution  into  effect. 

The  powers  of  the  Mexican  ^  Congress  to  legislate  in 
reference  to  the  administration  of  justice  have  been  derived 
from  the  general  power  to  enact  all  laws  necessary  to  carry 
into  effect  the  powers  vested  by  the  Constitution  in  the 
federal  branches  of  the  government. 

Finally,  in  Venezuela,^  also,  the  powers  of  the  Congress 
have  been  derived  from  the  general  authorization  given  by 
the  Constitution  to  that  body  to  enact  laws  necessary  for  the 
enforcement  of  the  constitution,  and  to  create  federal  courts 
to  assist  the  national  Supreme  Court  to  administer  federal 
justice. 

Constitution  of  federal  courts. 

The  federal  courts  are  organized  somewhat  analogously  to 
the  state  courts. 

In  Argentina  ^  the  constitution  only  prescribes  that  the 
federal  judicial  power  shall  be  vested  in  a  Supreme  Court 
and  in  such  inferior  courts  as  Congress  may  establish.  The 
justices  of  the  Supreme  Court  and  of  the  inferior  federal 

2  Art.  34,  sections  5,  23,  2G,  30,  31  to  34. 

5  Art.  72,  sections  6,  10,  21,  30. 
*Art.  58,  sections  1,  3,  7,  and  Art.  92. 

6  Art.  94. 


69G  LATIN-AMERICAN  COMMERCIAL  LAW 

courts  are  appointed  by  the  president  for  life  during  good 
behavior,  with  the  concurrence  of  the  Senate,  and  they  can- 
not be  removed  except  after  judicial  conviction.^ 

The  Argentine  federal  courts  were  organized  by  laws  27  of 
October,  16,  1862,  and  48  of  August  25, 1863,  amended  by  law 
4055  of  January,  1902,  which  divides  the  federal  jurisdiction 
into  three  instances  or  grades.  The  first  instance  consists 
of  the  district  judges  (juezes  de  seccion),  of  whom  there  is  one 
in  each  province,  except  in  Buenos  Aires  and  Santa  Fe, 
where  there  are  two.    There  are  twenty-two  in  all. 

The  second  instance,  as  a  rule,  consists  of  the  federa. 
Courts  of  Appeal,  of  which  there  are  now  five  in  the  Republicl 
Each  court  has  three  judges  and  a  fiscal  or  attorney  general 
who  looks  after  the  interests  of  the  government  and  the 
public  welfare.  These  courts  have  appellate  jurisdiction  of 
cases  from  the  district  courts,  and  final  jurisdiction  in  all 
cases  where  a  special  appeal  to  the  Supreme  Court  is  not 
provided  for. 

The  court  of  last  resort  is  the  federal  Supreme  Court,  which 
consists  of  five  justices  and  an  attorney  general  sitting  as  a 
judge.  The  court  has  original  jurisdiction  of  certain  cases, 
and  appellate  jurisdiction  from  the  Courts  of  Appeal. 

There  are  also  justices  of  the  peace  in  federal  territories 
who  take  cognizance  of  civil  and  commercial  cases  when  the 
amount  in  dispute  does  not  exceed  100  pesos. 

In  Brazil,  law  3084  of  November  5,  1898,  governs  the 
organization  of  the  federal  courts.  It  pro\ddes  for  inferior 
judges  of  first  instance  in  each  state  ^  and  two  in  the  federal 
district,  called  district  judges  {Juizes  de  Secqao).  They  are 
appointed  by  the  president  of  the  Repubhc  from  three 
candidates  proposed  by  the  Supreme  Court.^  There  is  also  a 
federal  Supreme  Court  with  its  seat  in  the  federal  district, 
the  capital  of  the  country.  In  the  smaller  districts  of  the 
states,  comarcas,  there  are  minor  substitute  district 
judges. 

The  federal  Supreme  Court  is  composed  of  fifteen  justices 
appointed  for  life  by  the  president  of  the  Republic  with  the 

6  Art.  96.  '  Art.  54.  »  Art.  55. 


LEGAL    PROCEDURE  697 

approval  of  the  »Senate,  during  good  behavior,  and  removable 
only  upon  a  judicial  conviction.^ 

In  Mexico  federal  justice  is  administered  by  the  Supreme 
Court  of  the  nation,  composed  of  nine  justices,  according  to 
the  Constitution  of  1917  (formerly  fifteen)  three  circuit 
courts,  and  a  district  judge  for  each  state  and  federal 
territory,  except  the  state  of  Tamaulipas  and  the  Federal 
District,  which  have  two.  The  administration  of  federal 
justice  and  the  procedure  before  the  federal  courts  are 
governed  by  the  code  of  federal  procedure  of  December  26, 
1908.  The  justices  of  the  Supreme  Court,  according  to  the 
Constitution  of  1857,  are  elected  by  the  people  for  a  period  of 
six  years. ^°  The  present  justices,  according  to  the  Constitu- 
tion of  1917,  are  to  keep  their  positions  until  1923;  thereafter 
they,  as  well  as  the  circuit  and  district  justices,  are  to  be 
elected  for  life  during  good  behavior.  ^^ 

In  Venezuela,  the  federal  judicial  power  is  vested  in  a 
Supreme  Court  called  Corte  Federal  y  de  Casacian,  and  other 
inferior  courts  which  were  to  have  been  established  by  law ; 
thus  far,  however,  these  inferior  courts  have  not  been 
established,  the  state  courts,  in  the  meantime,  exercising 
the  powers  which  would  ordinarily  vest  in  the  federal  courts 
of  first  instance.  The  Corte  Federal  y  de  Casacidn  is  com- 
posed of  seven  justices  elected  by  the  Congress  for  a  period  of 
seven  years.  ^- 

The  Fiscal.  Attached  to  the  federal  Supreme  Courts  there 
is  an  officer  called  Fiscal,  or  Attorney  General  (Procurador 
General) ,  who  has  agents  attached  to  all  other  federal  courts ; 
a  corresponding  officer,  exercising  functions  and  assisted  by 
subordinate  agents  in  the  local  courts,  is  attached  to  the 
state  courts.  The  functions  of  the  Fiscal  or  Procurador  will 
be  discussed  hereafter. 

Jurisdiction  of  federal  courts. 

In  Argentina  ^^  the  Supreme  Court,  as  well  as  the  inferior 

9  Arts.  55  to  57.  '"  Arts.  9!  ami  92.  "  Art.  94. 

12  Arts.  92,  94,  ami  law  of  June  19,  1917. 
"Arts.  100  ami  101. 


698  LATIN-AMERICAN  COMMERCIAL  LAW 

federal  courts,  have  jurisdiction  in  all  cases,  except  those  of 
impeachment,  involving  matters  to  be  governed  by  the 
Constitution,  the  federal  laws,  or  foreign  treaties;  cases 
concerning  ambassadors,  pubHc  ministers  and  foreign 
consuls,  admiralty  cases  and  cases  of  maritime  jurisdiction; 
cases  in  which  the  nation  is  a  party,  and  those  between  two 
or  more  provinces  or  between  one  province  and  the  citizens 
of  another,  or  between  citizens  of  different  provinces,  or 
between  a  province  or  its  citizens,  against  a  foreign  citizen 
or  state. 

In  all  these  cases  the  Supreme  Court  has  appellate  juris- 
diction, according  to  rules  estabhshed  by  the  Congress;  but 
in  cases  concerning  ambassadors,  ministers  and  foreign 
consuls,  and  in  those  to  which  a  province  is  a  party,  the 
jurisdiction  of  the  court  is  original  and  exclusive;  ^'^  in  other 
cases,  its  jurisdiction  is  appellate.  The  jurisdiction  of  the 
federal  Supreme  Court  is  governed  by  the  law  of  August  25, 
1863,  and  January  8,  1902. 

Brazil  ^^  devoted  the  third  section  of  its  Constitution  to 
the  rules  governing  the  federal  judiciary,  which  consists  of  a 
federal  Supreme  Court,  sitting  in  the  capital  of  the  Republic, 
and  of  as  many  inferior  federal  courts  and  tribunals  as  the 
Congress  may  create.  ^® 

The  federal  Supreme  Court  is  composed  of  fifteen  justices, 
appointed  under  the  provisions  of  article  48,  No.  12,  from 
among  the  citizens  of  notable  learning  and  reputation, 
eUgible  to  the  Senate. 

The  federal  justices  hold  office  for  life,  being  removable 
only  after  judicial  conviction.  Their  salaries  are  fixed  by 
law  and  cannot  be  diminished.      The  Senate  tries  impeach- 

"Art.  3.  15  Arts.  55,  59. 

i*Art.  60.  The  federal  judiciary  was  organized  by  law  of  November  14,  1890 
but  so  many  amendatory  and  additional  decrees  were  afterward  enacted, 
that  on  November  20,  1894,  the  government  was  authorized  to  consohdate 
all  these  provisions,  and  it  was  done  by  decree  3084  of  November  5,  1898. 
Jose  Tavares  Bastos  has  edited  this  decree  with  annotations  and  an  appendix 
of  supplementary  acts  relating  to  procedure  in  federal  courts.  Tavares  Bastos, 
Jose:  Decreto  No.  3084  de  5  de  novembro  de  1898  Consohdagao  das  leis  refer- 
entes  a  justica  federal.     Rio  de  Janeiro,  J.  Ribeirodos  Santos,  1914-15,  2  v. 


LEGAL    PROCEDURE  699 

ments  of  the  members  of  the  federal  Supreme  Court  and  the 
federal  Supreme  Court,  those  of  the  lower  federal  courts. 
The  federal  Supreme  Court  has  jurisdiction  as  follows: 

1.  Original  and  exclusive  jurisdiction  of  (a),  prosecu- 
tions against  the  President  of  the  Republic  for  common 
crimes,  and  the  Cabinet  Ministers  in  the  cases  specified 
in  article  52;  (6),  cases  against  diplomatic  ministers  for 
common  crimes  and  in  cases  of  impeachment;  (c),  ques- 
tions and  conflicts  between  the  Union  and  the  states,  or 
between  the  states  one  with  another;  (d),  cases  and 
controversies  between  foreign  nations  and  the  Union, 
or  between  foreign  nations  and  the  states;  (e),  conflicts 
between  the  judges  of  federal  courts  one  with  another, 
or  between  these  and  judges  of  the  states,  as  also 
conflicts  between  the  judges  and  courts  of  one  state  and 
the  judges  and  courts  of  another  state. 

2.  Jurisdiction  on  appeal  of  questions  passed  upon  by 
the  lower  federal  courts  and  tribunals,  as  well  as  those 
mentioned  in  section  1  of  article  59  and  in  article  60. 

3.  On  review  of  criminal  decided  cases,  if  to  the 
benefit  of  the  condemned  parties. 

An  appeal  ^"  to  the  federal  Supreme  Court  can  be  taken 
from  final  judgments  of  the  state  courts: 

(a)  "UTien  the  validity  or  application  of  the  federal 
laws  or  treaties  is  called  in  question  and  the  decision  of 
the  state  court  is  against  the  same. 

(6)  WTien  the  validity  of  state  laws  or  acts  alleged  to 
be  contrary  to  the  Constitution  or  the  federal  laws  is 
contested,  and  the  state  court  has  decided  in  favor  of 
the  validity  of  the  acts  or  laws  in  question. 
In  cases  which  involve  the  application  of  the  laws  of  the 
states,  the  federal  court  must  consult  the  practice  of  the 
local  tribunals,  and,   vice  versa  the  state   court  must  con- 
sider that  of  the  federal  courts  when  the  interpretation  of  the 
laws  of  the  Union  is  involved. 

The  federal  judges  and  courts  have  original  jurisdiction 
of: 

"Art.  59. 


700  LATIN-AMERICAN  COMMERCIAL  LAW 

(a)  Suits  in  which  any  of  the  parties  bases  his  claim 
or  defense  on  some  provision  of  the  federal  Constitution ; 

(b)  Suits  against  the  Government  of  the  Union  or  the 
National  Treasury,  founded  on  pro\'isions  of  the 
Constitution,  laws  and  regulations  of  the  Executive 
power,  or  on  contracts  entered  into  with  the  Govern- 
ment; (c).  Claims  for  compensation,  recovery  of  prop- 
erty, indemnification  for  damages  or  any  other  claims 
presented  by  the  Government  of  the  Union  against 
private  individuals  or  vice  versa;  (d).  Suits  between  one 
state  and  the  citizens  of  another,  or  between  citizens  of 
different  states,  when  the  respective  state  laws  are 
different ;  (e) ,  Suits  between  foreign  states  and  Brazilian 
citizens;  (/),  Actions  instituted  by  foreigners,  founded 
on  contracts  with  the  federal  Government  or  on  conven- 
tions or  treaties  between  the  Union  and  other  nations; 
(g),  Questions  of  maritime  law  or  relating  to  navigation, 
whether  of  the  ocean,  or  of  the  rivers  and  lakes  of  the 
country;  (h),  Questions  of  international  criminal  or  civil 
law;  (i),  Political  crimes. 

Judgments  and  decrees  of  the  federal  judges  are  enforced 
by  federal  officers,  and  the  local  police  are  bound  to  assist 
when  called  upon  to  do  so. 

The  federal  courts  in  Mexico  ^^  must  take  cognizance  of: 
(a) ,  controversies  arising  out  of  the  application  and  enforce- 
ment of  the  federal  laws,  excepting  when  their  application 
affects  private  rights  only,  in  which  case  the  regular  local 
courts  of  the  state,  the  federal  district  and  territories  must 
assume  jurisdiction  respectively;  ^^  (6),  cases  pertaining  to 

^^  The  Constitution  of  1917  in  art.  104,  amending  art.  97  of  the  Consti- 
tution of  1858  provides  that  when  the  controversies  above  referred  to  affect 
only  private  rights,  the  regular  local  courts  of  the  states,  the  federal  district 
and  territories  shall,  at  the  election  of  the  plaintiff,  assume  jurisdiction.  Ap- 
peal may  be  had  from  aU  judgments  of  first  instance  to  the  next  higher  tri- 
bunal of  the  same  courts  in  which  the  case  was  first  heard.  Appeal  may  be 
taken  from  judgments  of  second  instance  to  the  Supreme  Court  of  justice,  which 
appeal  must  be  prepared,  submitted  and  prosecuted  in  accordance  with  the 
procedure  provided  by  law. 

'5  Art.  97  of  the  Constitution  of  1857  and  art.  105  of  the  Constitution  of 
1917  give  the  Supreme  Court  exclusive  jurisdiction  of  all  controversies  arising 


LEGAL   PROCEDURE  701 

admiralty  law;  (c),  cases  to  which  the  federal  government 
may  be  a  party;  {d),  cases  arising  between  two  or  more  states; 
(e) ,  cases  arising  between  a  state  and  one  or  more  citizens  of 
another  state;  (/),  civil  or  criminal  cases  which  may  arise  out 
of  treaties  with  foreign  powers;  {g),  cases  concerning  diplo- 
matic agents  and  consuls. 

The  Supreme  Court  has  original  jurisdiction  in  cases  c  and 
d  above. -° 

The  Supreme  Court  ^^  also  has  power  to  settle  questions  of 
conflict  of  jurisdiction  between  federal  courts,  between 
federal  and  state  courts,  and  between  courts  of  different 
states. 

The  Corte  Federal  y  de  Casacion  in  Venezuela  ^^  has  juris- 
diction of:  (a),  cases  instituted  against  diplomatic  officers, 
when  permitted  by  international  law;  (6),  claims  against  the 
nation;  (c),  casacion  (annulment  of  judgment  on  appeal)  in 
the  form  and  terms  established  by  law;  (d),  maritime  prize 
cases;  (e),  controversies  arising  out  of  contracts  or  negotia- 
tions entered  into  by  the  president  of  the  Republic ;  (/) ,  peti- 
tions for  the  enforcement  of  foreign  judgments;  (g),  suits  to 
annul  titles  to  mines  or  national  or  municipal  lands,  and 
controversies  arising  out  of  the  refusal  of  the  competent 
authority  to  grant  such  titles. 

The  law  of  June  19,  1917,  governs  the  jurisdiction  and 
procedure  of  the  federal  courts.  By  article  8  it  extends  such 
jurisdiction,  among  other  cases,  to  the  following:  (a),  all 
controversies  arising  out  of  acts  of  the  federal  executive, 
cognizance  of  which  is  not  assigned  to  any  other  authority; 
(6),  cases  of  expropriation  based  on  public  utility,  when  the 
law  so  provides ;  (c) ,  cases  to  which  foreign  consuls  or  agents, 
in  the  exercise  of  their  functions  in  the  Republic,  are  a  party; 
(d),  cases  referring  to  the  navigation  of  interstate  or  inter- 
between  two  or  more  states,  between  the  governing  powers  of  any  state  as 
to  the  constitutionality  of  their  acts,  between  one  or  more  states  anrl  the  fed- 
eral government,  and  in  all  cases  to  which  the  federal  government  may  be  a 
party. 

«•  Art.  99,  Constitution  of  1857,  and  art.  106,  Constitution  of  1017. 

"  Art.  98,  Constitution  of  1857,  and  art.  105,  Constitution  of  1917. 

22  Art.  98. 


702  LATIN-AMERICAN  COMMERCIAL  LAW 

national  rivers;  (e),  cases  in  which  the  nation  is  concerned,  if 
cognizance  thereof  is  not  assigned  to  another  tribunal  by  the 
Constitution  or  by  another  law. 

There  must  naturally  be  other  courts  than  the  Supreme 
Court  to  take  cognizance  in  first  instance  of  questions  of 
federal  jurisdiction;  but  as  the  law  has  failed  to  provide  for 
the  establishment  of  such  courts,  the  law  of  June  19,  1917, 
prescribes  that  the  inferior  state  judges  are  empowered  to 
decide  such  cases,  so  long  as  the  law  does  not  create  the 
inferior  federal  courts. 

UNCONSTITUTIONALITY   OF   LEGISLATION 

Power  to  declare  a  law  unconstitutional. 

In  parliamentary  countries  without  a  written  constitution, 
the  legislature  is  supreme  and  there  can  be  no  question  as  to 
whether  a  law  is  or  is  not  constitutional,  as  is  the  case  in 
England;  but  in  countries  having  a  written  constitution  not 
enacted  by  the  regular  legislature,  the  latter  must  be  kept 
within  its  constitutional  sphere  in  order  to  preserve  the 
constitution.  Yet  to  confer  on  another  branch  of  the 
government  the  power  to  declare  legislation  unconstitutional, 
would  seem  to  destroy  the  theory  of  the  separation  of 
powers.  The  dilemma  has  been  solved  in  Latin-America  by 
the  adoption  of  different  systems,  as  follows: 

First  system.  The  judiciary  is  called  upon  to  partici- 
pate in  the  enactment  of  laws  by  passing  upon  the 
constitutionality  of  bills  which  are  objected  to  by  the 
executive,  and  passage  of  which  is  insisted  upon  by  the 
legislature.  This  system  has  been  adopted  by  Panama 
and  Colombia.  Article  105  of  the  Constitution  of 
Panama  and  article  90  of  the  Constitution  of  Colombia 
provide  that  if  the  executive  objects  to  a  bill  on  the 
ground  of  unconstitutionality,  and  the  National  As- 
sembly insists  upon  its  passage,  the  bill  must  be  referred 
to  the  Supreme  Court,  which  must  render  a  decision 
upon  its  constitutionality  within  six  days.  If  the 
action  of  the  assembly  is  sustained  by  the  court,  the 


LEGAL    PROCEDURE  703 

executive  must  approve  and  promulgate  the  bill  as  a 
law;  if  the  bill  is  pronounced  unconstitutional,  it  fails 
entirely. 

Article  92  of  the  judicial  code  of  Panama  of  August  22, 
1916,  provides  that  if  the  court  allows  the  period  of  six  days 
to  elapse  without  making  a  decision,  the  constitutionality  of 
the  bill  is  presumed. 

With  respect  to  legislation  looking  to  amendments  in  the 
civil  and  procedural  codes,  in  Colombia,  and  in  any  of  the 
codes,  in  Honduras,  Nicaragua  and  San  Salvador,  it  is 
provided  that  the  Supreme  Court  shall  be  heard  before  its 
final  enactment.  2^ 

Second  system.  The  judiciary  has  power  to  declare 
generally  and  for  the  future  that  a  law  is  unconstitu- 
tional, whenever  a  special  case  calls  for  such  declaration. 

Bolivia,  Brazil,  Colombia,  Cuba,  Santo  Domingo,  Uru- 
guay and  Venezuela  have  adopted  this  system. 

According  to  article  III  of  the  Constitution  of  Bolivia  the 
Supreme  Court  has  power  to  take  original  cognizance  of 
mere  questions  of  law  wherein  the  contention  relies  upon  the 
unconstitutionality  of  any  law,  decree  or  regulation. 

Brazil  ^^  has  given  power  to  the  federal  Supreme  Court, 
as  has  been  stated,  to  review  by  way  of  appeal  the  final 
judgments  of  state  courts,  when  the  validity  or  the  appli- 
cability of  federal  laws  or  treaties  is  called  in  question,  and 
the  decision  of  the  state  court  has  been  against  such  validity 
or  applicability.  Brazil  provides,  furthermore,--^  that  the 
federal  judges  must  assume  jurisdiction  whenever  the  valid- 
ity of  laws  or  acts  of  a  state,  alleged  to  be  in  conflict  with 
the  Constitution  of  the  federal  laws,  are  drawn  in  question, 
and  the  state  courts  have  decided  in  favor  of  their  validity. 

Finally,  decree  No.  848  of  October  11,  1890,  provides  that 
the  federal  Supreme  Court  has  jurisdiction,  by  way  of  appeal, 
from  judgments  of  state  courts  whenever  such  judgments 
deny  the  validity  or  the  application  of  laws  enacted  by  the 

"Colombia,  art.  84;  Honduras,  art.  83;  Nicaragua,  art.  71;  and  San  Sal- 
vador, art.  79. 

"  Art.  59,  paragraph  III.  "  art.  60. 


704  LATIN-AMERICAN  COMMERCIAL  LAW 

federal  Congress,  or  deny  the  validity  of  acts  of  any  federal 
authority,  acting  in  behalf  of  the  Union.  ^^ 

The  Constitution  of  Colombia  -''  amended  by  law  No.  3  of 
1910,  empowers  the  Supreme  Court  to  pass  finally  upon  the 
validity  of  every  legislative  enactment,  disapproved  by  the 
Executive  or  objected  to  by  any  citizen  as  unconstitutional, 
and  upon  the  validity  or  nullity  of  any  departmental  ordi- 
nances suspended  by  the  government  or  challenged  before 
the  court  by  private  parties.  ^^  Colombia,  then,  has  both 
systems. 

In  Cuba,  article  83,  paragraph  4  of  the  Constitution 
empowers  the  Supreme  Court  to  pass  upon  the  constitution- 
ality of  a  law,  decree  or  regulation  whenever  the  question  is 
raised  by  a  party.  Article  6  of  the  law  of  March  31,  1913, 
which  regulates  this  power  of  the  Supreme  Court  reads: 

''The  unconstitutionality  of  a  law,  decree  or  regulation 
may  serve  as  a  basis  for  Casacion,-^  notwithstanding  that 
such  unconstitutionality  was  not  raised  in  argument."  ^° 

In  Santo  Domingo  "  the  Court  of  Justice  has  jurisdiction 
to  decide,  in  case  of  conflicting  laws,  which  of  them  must  be 
observed;  thus  the  court  is  empowered  to  declare  that  a  law 
which  conflicts  with  the  constitution  shall  not  be  enforced. 

In  Uruguay,  the  high  court  of  justice  has  original  juris- 

^  Brazil,  Riveiro  v.  Silva  Avila,  December  9,  1914,  n.  1833,  Revista  do  Su- 
'p-emo  Tribunal,  vol.  3,  first  part,  1915,  p.  334.  Crespo  de  Oliveiro  v.  Com- 
pagnie  Frangaise  du  Pont  de  Rio  Grande  do  Sul,  December  30,  1915,  ih.,  vol. 
5,  September  to  December,  1915,  p.  541. 

2^  Art.    151. 

28  See  also  art.  8  of  law  No.  81  of  1910. 

28  Casacion  is  a  remedy  intended  to  establish  a  uniform  construction  of  the 
law  by  the  courts,  and  therefore  is  a  matter  of  public  welfare,  more  than  of 
private  relief  sought  by  a  party.  This  pecuUarity  is  responsible  for  the  general 
rule  that  no  issues  can  be  raised  before  the  court  of  casacion  other  than  those 
presented  by  the  parties  to  the  lower  courts  which  had  cognizance  of  the  case. 
The  provision  of  the  law  of  Cuba  breaks  with  the  tradition  of  the  casacion  by 
allowing  the  Supreme  Court  to  pass  upon  issues  of  constitutionality  not  raised 
below. 

30  Decisions  of  Aug.  20,  1903;  Gaceta  of  Aug.  27;  June  1,  1905;  Gaceta  of  the 
22d;Sept.  14,  1909;  Gaceta  of  the  22d;  March  22,  1911;  Caceto  of  the  29th; 
March  28,  1912;  Goceta  of  April  10;  March  26,  1912;  Gaceta  of  May  4;  Janu- 
ary 12,  1912;  Gacela  of  April  10;  and  March  26,  1912;  Gaceta  of  May  7th. 

"  Art.  69,  paragraph  IV,  Constitution. 


LEGAL   PROCEDURE  705 

diction  to  try  all  cases,  without  exception,  arising  out  of 
violations  of  the  Constitution.  ^^ 

The  most  comprehensive  of  the  constitutional  provisions 
of  this  second  group  is  that  of  article  98  of  Venezuela.  ^'^  It 
gives  the  Corte  Federal  y  de  Casacion  jurisdiction  to  declare 
the  nullity  of  national  or  state  laws  which  conflict  with  the 
Constitution;  to  declare  which  law,  decree  or  resolution  is 
binding  in  case  federal  or  state  enactments  are  in  conflict;  to 
declare  the  nullity  of  one  or  more  articles  of  a  law  when  they 
are  at  variance  with  other  articles  of  the  same  law,  or  the 
nullity  of  the  laws  or  decrees  of  the  federal  government  which 
encroach  upon  the  autonomy  of  the  states,  as  well  as  of  acts 
of  state,  legislative  or  municipal  councils  which  infringe  the 
fundamental  principles  of  taxation  established  by  the  federal 
Constitution. 

Third  system.  The  judiciary  is  invested  with  power 
to  enforce  the  Constitution,  by  disregarding  laws  which 
conflict  with  it,  but  without  making  any  general 
declaration  concerning  the  unconstitutionality  of  such 
laws. 
This  is  the  system  of  Argentina,  Haiti,  Honduras,  Mexico, 
Nicaragua  and  San  Salvador. 

Article  31  of  the  Argentina  Constitution  provides  that  the 
Constitution  itself,  the  national  law  enacted  in  accordance 
with  it  and  treaties  with  foreign  nations  are  the  supreme  law 
of  the  country,  which  must  be  obeyed  as  against  state  or 
local  laws. 

And  article  3  of  law  No.  27  of  October  13,  1862,  declares 
that  one  of  the  objects  of  the  national  courts  is  to  enforce  the 
federal  Constitution,  disregarding  in  its  decisions  all  provi- 
sions of  any  other  national  power  which  may  conflict  with  it. 
The  courts  ^"^  never  act  ex  officio,  but  only  on  the  petition  of 
an  interested  party.  ^^ 

"  Art.  119,  Constitution  of  December  18,  1917. 

"  Art.  98,  paragraphs  X,  XI,  XII. 

"  Art.  2  of  the  law  of  October  13,  1862. 

'^  The  federal  courts  have  jurisdiction  of  cases  in  which  the  constitution- 
ality of  a  provincial  law  is  drawn  in  question.  Septemljcr  G,  1913,  Junsp.  de 
los  Trib.  Nac.,  September,  1913,  p.  13,  Oct.  31,  1884,  Municipio  de  la  Capital 


706  LATIN-AMERICAN  COMMERCIAL  LAW 

In  Haiti  ^^  as  well  as  in  Honduras  ^'^  the  courts  must  refuse 
to  apply  or  enforce  an  unconstitutional  law  or  executive 
regulation  or  decree  not  in  accordance  with  the  Consti- 
tution. 

The  powers  of  the  federal  judiciary  in  Mexico  have  given 
rise  to  much  discussion,  and  an  abundant  legal  literature. 
Custom  and  legal  tradition  seek  to  create  a  powerful  central 
judiciary,  unifying  the  law  and  restraining  the  local,  and 
not  always  impartial  authority  of  the  state  judiciary;  at 
the  same  time  local  interests  seek  to  carry  to  an  extreme 
their  imitation  of  the  federal  system  of  the  United  States. 
Both  tendencies  have  successively  prevailed,  and  the  con- 
test has  centered  around  the  following  articles  of  the  Con- 
stitution of  1857. 

Article  101:  ''The  federal  courts  shall  take  cogniz- 
ance of: 

''(a)  All  controversies  arising  out  of  laws  or  acts 
of  the  authorities  which  violate  any  personal  guar- 
anties ; 

"(b)  All  controversies  arising  out  of  laws  or  acts 
of  the  federal  authorities  which  limit  or  encroach 
upon  the  sovereignty  of  the  states; 

"  (c)  All  controversies  arising  out  of  laws  or  acts 
of  the  state  authorities  which  invade  the  sphere  of 
the  federal  authorities." 

Article  102:  ''All  cases  mentioned  in  the  foregoing 
article  shall  be  prosecuted  by  the  injured  party  in 
accordance  with  the  judicial  forms  and  procedure 
established  by  law;  the  judgment  shall  always  be  so 
drawn  as  to  affect  exclusively  private  individuals,  and 

V.  Elortondo,  Fallos  de  la  Sup.  Corte  de  Just,  de  la  Nacion,  vol.  33,  p.  162, 
December  3,  1889,  Arcelus  v.  Gomez,  ib.,  vol.  XLII,  p.  274.  April  9,  1891. 
Botti  V.  del  Coro.  ib.,  vol.  XLIII,  p.  224.  July  11,  1893,  Doldalo  v.  Munoz 
Rodriguez  y  Cia,  ib.,  vol.  LII,  p.  413.  December  5,  1901,  Gibs  v.  Provincia  de 
Mendoza,  ib.,  vol.  XCIII,  p,  219.  June  7,  1902,  Tarrasc6n  y  Cia.  v.  Provincia 
de  Santa  Fe,  *.,  vol.  XCV,  p.  100.  Sept.  11,  1902,  Proto  v.  Provincia  de  Santa 
Fe,  Ib.  vol.  XCVI,  p.  86.  March  26,  1904,  Las  Palomas  Produce  Co.,  Ltd.,  v. 
Provincia  de  Buenos  Aires,  ib.,  vol.  XCIX,  p.  36. 

36  Art.  147,  Constitution.  "  Art.    106. 


LEGAL   PROCEDURE  707 

shall  confine  itself    to  affording    them   redress  in  the 

special  case  arising,  but  it  shall  not  pronounce  a  general 

declaration  as  to  the  law  or  the  act  constituting  the 

basis  of  the  complaint." 

These  are  the  rules  which  have  established  the  jurisdiction 

of  the  federal  courts  in  Mexico,  but  in  order  to  evaluate 

their  importance  it  is  necessary  to  take  into  consideration 

articles  14  and  16  of  the  Constitution.    They  provide,  among 

other  things,  that  no  person    shall    be  tried  or  sentenced 

except  under  laws  previously  enacted,  exactly  applicable  to 

the  case,  and  that  no  one  shall  be  molested  in  his  person, 

family,  residence,  papers  or  possessions,  except  by  virtue  of 

an  order  issued  in  writing  by  the  competent  authority,  setting 

forth  the  legal  ground  upon  which  the  measure  is  taken. 

Two  questions  arose  early,  namely: 

(a)  if  no  person  is  to  be  sentenced  except  under  laws 
exactly  applicable  to  the  case,  could  a  party  to  a  civil 
suit  apply  for  redress  to  the  federal  courts  whenever 
he  considered  that  the  law  had  not  been  exactly  applied 
to  his  case? 

(h)  Is  a  person  who  obtained  his  position  through 

electoral  fraud,  a  competent  authority  who  could  issue 

the  order  referred  to  in  article  16? 

Upon  the  solution  of    the  first  question  depended  the 

extension  of  the  power  of  the  federal  courts.    If  the  answer 

was  affirmative  the  Supreme  Court  was  the  general  revisor 

of  the  decisions  of  state  courts,  and  the  judicial  sovereignty 

of  the  states  disappeared.    Under  the  influence  of  Vallarta, 

who  was  the  Chief  Justice  of  the  Supreme  Court  of  Mexico, 

the  court  refused  thus  to  extend  its  jurisdiction;  but  after 

Vallarta  left  office  the  centralizing  forces  had  their  way,  the 

Constitution  was  amended  and  the  federal  Supreme  Court 

was  given  power  to  pass  upon  all  final  judgments  when  one 

of  the  parties  to  the  suit  considered  that  the  law  had  not 

been  exactly  applied.  •"'^ 

'*  In  reference  to  this  particular  matter  of  amparo  (the  legal  term  designat- 
ing the  special  proceedings  by  which  the  federal  courts  give  redress  for  the 
violation  of  a  constitutional  guaranty)  in  civil  affairs,  we  may  point  out  aa 


708  LATIN-AMERICAN  COMMERCIAL  LAW 

The  other  question  involves  consequences  of  far-reaching 
character,  because,  if  the  federal  courts  were  to  determine 
the  legitimacy  of  the  authorities  of  the  country,  drawing 
into  question  their  creation  and  conditions  of  appointment, 
then  the  Supreme  Court  would  be  the  political  arbiter  of 
the  nation  and  other  constitutional  powers  w^ould  be  merely 
dependents  thereof,  Vallarta  in  this  case  again  placed  the 
weight  of  his  authority  on  the  side  of  the  limitation  of  the 
powers  of  the  federal  judiciary  by  confining  it  to  its  proper 
functions,  and  after  a  contest  lasting  for  many  years  and 
filled  with  exciting  episodes,  the  court  was  unanimous  in 
following  the  path  laid  out  by  its  Chief  Justice.  ^^ 

the  most  noticeable  decisions,  those  of  October  18,  1871,  May  14,  1874,  July  26, 
1878  (amparo  Rosales)  and  July  4,  1879  (amparo  Larrache). 

39  Article  103  of  the  Constitution  framed  by  the  constitutionalists  of  Quere- 
taro,  in  1917,  reproduces  the  text  of  article  101  of  the  Constitution  of  1857; 
but  in  other  articles  the  tendency  to  centralize  the  judiciary  is  evident  and 
now  every  commercial  suit  may  be  brought  before  the  federal  courts.  We 
may  quote  article  107  of  the  Constitution  of  Queretaro  corresponding  to  102 
of  the  Constitution  of  1857.  In  most  cases  the  provisions,  which  are  taken 
from  the  code  of  civil  procedure  in  federal  matters,  are  raised  to  the  character 
of  constitutional  principles: 

Article  107.  "All  controversies  mentioned  in  Article  103  shall  be  prose- 
cuted by  the  injured  party  in  accordance  with  the  judicial  forms  and  proce- 
dure which  the  law  shall  establish,  subject  to  the  following  conditions: 

1.  The  judgment  shall  always  be  so  drawn  as  to  affect  exclusively  private 
individuals,  and  shall  confine  itseK  to  affording  them  redress  in  the  special 
case  to  which  the  complaint  refers;  but  it  shall  make  no  general  statement  as 
to  the  law  or  the  act  that  may  have  formed  the  basis  for  the  complaint. 

2.  In  civil  or  penal  suits,  excepting  those  mentioned  in  Clause  IX  hereof, 
the  writ  of  "amparo"  shall  issue  only  against  final  judgments  when  no  other 
ordinary  recourse  is  available  by  which  these  judgments  may  be  modified  or 
amended,  if  the  violation  of  the  law  shall  have  occurred  in  the  judgment,  or 
if,  although  committed  during  the  course  of  the  trial,  objection  was  duly 
noted  and  protest  entered  against  the  denial  of  reparation,  and  provided 
further  that,  if  committed  in  first  instance,  it  shall  have  been  invoked  in  second 
instance  as  a  violation  of  the  law.  Notwithstanding  the  foregoing  provision, 
the  Supreme  Court  may  in  penal  cases  waive  any  defects  in  the  petition  when 
there  has  been  a  manifest  violation  of  the  law  which  has  left  the  petitioner 
without  recourse,  or  when  he  has  been  tried  by  a  law  not  strictly  applicable 
to  the  case,  provided  failure  to  take  advantage  of  this  violation  has  been  merely 
an  oversight. 

3.  In  civil  or  penal  suits  the  writ  of  "amparo"  shall  issue  only  if  substantial 
portions  of  the  rules  of  procedure  have  been  violated,  and  provided  further 
that  the  said  violation  shall  deprive  the  petitioner  of  means  of  defense. 


LEGAL   PROCEDURE  709 

Article  92  of  the  Nicaraguan  Constitution  provides  that 
among  the  powers  of  the  Supreme  Court  is  that  of  applying 
the  laws  to  the  concrete  cases  presented  to  it  for  decision, 
interpreting  them  to  that  end,  according  to  the  spirit  of  the 

4.  In  addition  to  the  case  mentioned  in  the  foregoing  paragraph,  the  writ 
of  "amparo"  shall  issue  only  on  a  final  judgment  in  a  civil  suit — provided 
the  requirements  set  forth  in  Clause  II  hereof  have  been  complied  with — when 
the  judgment  shall  be  contrary  to  the  letter  of  the  law  applicable  to  the  case 
or  contrary  to  its  legal  interpretation,  when  it  includes  persons,  actions,  de- 
fenses or  things  which  have  not  been  the  object  of  the  suit,  or  finally  when  aU 
these  have  not  been  included  either  through  omission  or  express  refusal. 
^^Tien  the  writ  of  "amparo"  is  sought  against  mesne  judgments,  in  accordance 
with  the  provisions  of  the  foregoing  clause,  these  rules  shall  be  observed,  as 
far  as  applicable. 

5.  In  penal  suits,  the  authorities  responsible  for  the  violation  shaU  stay  the 
execution  of  final  judgment  against  which  the  writ  of  "amparo"  has  been 
sought;  for  this  purpose  the  petitioner  shall  within  the  period  set  by  law,  give 
notice,  under  oath,  to  the  said  authorities  of  the  interposition  of  this  recourse, 
accompanying  it  with  two  copies  of  the  petition,  one  of  which  shaU  be  delivered 
by  the  opposing  party  and  the  other  filed. 

6.  The  execution  of  a  final  judgment  in  civil  suits  shall  only  be  stayed  when 
the  petitioner  .shall  give  bond  to  cover  the  damages  occasioned  thereby,  unless 
the  other  party  shall  give  a  counter  bond,  (1)  to  guarantee  that  the  normal 
conditions  and  relations  previously  existing  be  restored,  and  (2)  to  pay  the 
corresponding  damages,  in  the  event  of  the  granting  of  the  "amparo."  In  such 
event  the  interposition  of  the  recourse  of  "amparo"  shall  be  communicated 
as  provided  in  the  foregoing  clause. 

7.  If  a  writ  of  "amparo"  be  sought  against  a  final  judgment,  a  certified 
copy  of  such  portions  of  the  record  as  the  petitioner  may  desire  shall  be  re- 
quested from  the  authority  responsible  for  the  violation ;  to  this  there  shall  be 
added  such  portions  as  the  other  party  may  desire  and  a  clear  and  succinct 
statement  by  the  said  authority  of  the  justification  of  the  act  protested;  note 
shall  be  made  of  this  on  the  record. 

8.  When  a  writ  of  "amparo"  is  sought  against  a  final  judgment,  the  peti- 
tion shall  be  brought  before  the  Supreme  Court;  this  petition,  together  with 
the  copy  required  by  Clause  VII,  shall  be  either  presented  to  the  Supreme 
Court  or  sent  through  the  authority  responsible  for  the  violation  or  through 
the  District  Court  of  the  corresponding  state.  The  Supreme  Court  shall 
render  judgment  without  any  other  formality  or  procedure  than  the  petition, 
the  document  presented  by  the  other  party  and  that  of  the  Attorney  General 
or  the  Public  Attorney  he  may  name  in  his  stead,  and  shall  comprise  no  other 
legal  question  than  that  contained  in  the  complaint. 

9.  When  the  acts  of  an  authority  other  than  the  judicial  are  involved  or 
the  acts  of  the  judiciary  exercised  outside  of  the  suit  or  after  the  termination 
thereof,  or  acts  committed  during  the  suit  whose  execution  is  impossible  of 
reparation,  or  which  affect  persons  not  parties  to  the  suit,  the  writ  of  "amparo" 
shall  be  sought  before  the  District  Court  within  whose  jurisdiction  is  located 


710  LATIN-AMERICAN  COMMERCIAL  LAW 

Constitution,  and,  under  its  own  responsibility,  to  refuse  to 

apply  them  when  they  are  contrary  to  the  fundamental  law. 

San  Salvador  has  established  the  "amparo''  or  writ  of 

habeas  corpus  as  established  in  Mexico,  and  the  Supreme 

the  place  where  the  act  protested  was  committed  or  attempted;  the  procedure 
in  this  case  shall  be  confined  to  the  report  of  the  authority  and  to  a  hearing, 
the  call  for  which  shall  be  issued  in  the  same  order  as  that  calling  for  the  report. 
This  hearing  shall  be  held  at  as  early  a  date  as  possible,  the  testimony  of  both 
parties  offered,  arguments  heard  which  shall  not  exceed  one  hour  for  each 
side,  and  finally  the  judgment  which  shall  be  pronounced  at  the  same  hearing. 
The  judgment  of  the  District  Court  shall  be  final,  if  the  interested  parties  do 
not  appeal  to  the  Supreme  Court  within  the  period  set  by  law  and  in  the 
manner  prescribed  by  Clause  VIII. 

In  case  of  a  violation  of  the  guarantees  of  articles  16,  19,  and  20,  recourse 
shall  be  had  through  the  appellate  court  of  the  court  committing  the  breach 
or  to  the  corresponding  District  Court.  An  appeal  against  the  decision  of  any 
of  these  courts  may  be  taken  to  the  Supreme  Court. 

If  the  district  judge  shall  not  reside  in  the  same  locality  as  the  official  guilty 
of  the  violation,  the  judge  before  whom  the  petition  of  "amparo"  shall  be 
submitted  shall  be  determined  by  law;  this  judge  shall  be  authorized  to  sus- 
pend temporarily  the  execution  of  the  act  protested,  in  accordance  with  the 
terms  established  by  law. 

10.  Any  official  failing  to  suspend  the  execution  of  the  act  protested  when 
in  duty  bound  to  do  so,  or  when  he  accepts  an  insufficient  or  improper  bond, 
shall  be  turned  over  to  the  proper  authorities;  the  civil  and  penal  liability 
of  the  official  shall  in  these  cases  be  a  joint  liabUity  with  the  person  offering 
the  bond  and  his  surety. 

11.  If  after  the  granting  of  an  "amparo"  the  guilty  official  shall  persist 
in  the  act  or  acts  against  which  the  petition  of  "amparo"  was  filed,  or  shall 
seek  to  render  of  no  effect  the  judgment  of  the  federal  authority,  he  shall  be 
forthwith  removed  from  office  and  turned  over  for  trial  to  the  corresponding 
District  Court. 

12.  Wardens  and  jailors  who  fail  to  receive  a  duly  certified  copy  of  the 
formal  order  of  commitment  within  the  seventy-two  hours  granted  by  article  19, 
reckoned  from  the  time  the  accused  is  placed  at  the  disposal  of  the  court, 
shall  bring  this  fact  to  the  attention  of  the  court  immediately  upon  expiration 
of  this  period;  and  if  the  proper  order  be  not  received  within  the  next  three 
hours  the  accused  shall  be  set  at  Uberty. 

Any  official  who  shall  violate  this  provision  and  the  article  referred  to  in 
the  foregoing  paragraph  shall  be  immediately  turned  over  to  the  proper  au- 
thorities. Any  official  or  agent  thereof  who,  after  an  arrest  has  been  made, 
shall  fail  to  place  the  accused  at  the  disposition  of  the  court  within  the  next 
twenty-four  hours  shall  himself  be  turned  over  to  the  proper  authority. 

If  the  detention  be  effected  outside  the  locality  in  which  the  court  is  situated, 
there  shall  be  added  to  the  period  mentioned  in  the  preceding  sentence  the 
time  necessary  to  travel  from  the  said  locality  to  that  where  the  detention 
took   place. 


LEGAL    PROCEDURE  711 

Court  of  the  nation  has  jurisdiction  thereof /°  The  juris- 
diction of  the  court  therefore  is  Hmited  to  cases  in  which  a 
private  individual  asserts  that  a  constitutional  guaranty  has 
been  infringed  to  his  detriment. 

Fourth  system.     This  includes  those  countries  which 

do  not  expressly  invest  any  authority  w4th  the  powder 

to  pass  upon  the  constitutionality  of  legislation.    These 

countries  are  Chile,  Costa  Rica,  Ecuador,  Guatemala, 

Paraguay  and  Peru. 

The  Constitution  of  Chile  does  not  invest  its  judiciary 

with  the  power  of  deciding  the  constitutionality  of  a  law, 

nor  has  it  any  clear  declaration  on  this  subject.    Conflicts 

of  jurisdiction  have  occurred  between  the  judiciary  and  the 

executive. 

Costa  Rica  ""^  and  Guatemala  ^-  leave  the  details  of  the 
organization  of  the  national  judiciary  to  secondary  laws, 
and  article  8  of  the  Costa  Rican  law  of  March  29,  1887, 
provides  that  judges  shall  not  apply  laws,  decrees  or  regu- 
lations which  conflict  with  the  Constitution. 

The  Constitution  of  Ecuador  by  implication  invests  the 
Supreme  Court  with  the  power  to  pass  upon  the  constitu- 
tionality of  laws,  for  according  to  article  132  the  constitu- 
tion is  the  supreme  law  of  the  Republic,  and  no  secondary 
law,  decree,  rule,  order,  provision  or  public  treaty  whatso- 
ever, which  may  be  found  in  opposition  or  at  variance  with 
its  text,  shall  have  any  effect  whatever;  and,  although  no 
special  body  is  invested  with  the  power  to  declare  that  a 
law  infringes  the  Constitution,  it  must  be  assumed  that 
the  judiciary,  by  virtue  of  its  natural  functions,  is  the  power 
which  must  refuse  to  apply  a  law  found  unconstitutional. 
Paraguay  is  silent  on  the  matter  of  the  unconstitution- 
ality of  legislation.  The  only  indication  of  the  idea  of  the 
framers  of  the  Constitution  is  found  in  article  118  which 
provides  that  no  law  shall  be  applied  to  any  case  if  not 
enacted  before  the  date  of  occurrence  of  the  facts  out  of 
which  the  case  arose,  and  in  article  120  which  provides  that 

<«  Articles  37  and  102,  paragraph  U. 

*'  Art.  119  c.  "2  Art.  93  c. 


712  LATIN- AMEBIC  AN  COMMERCIAL  LAW 

the  justices  of  the  Superior  Court  shall  promise  under  oath, 
to  be  administered  by  the  President  of  the  Republic,  faith- 
fully to  fulfill  their  duties  and  administer  justice,  lawfully 
and  well  and  "in  conformity  with  the  Constitution." 

Equally  silent  is  the  Constitution  of  Peru,  article  24  of 
which,  referring  to  acts  of  an  unconstitutional  character, 
provides  that  the  legislature,  at  the  end  of  each  constitu- 
tional period,  must  examine  the  administrative  acts  of  the 
Chief  Executive,  and  approve  them  if  they  are  in  conformity 
with  the  Constitution  and  the  laws;  otherwise  the  Chamber 
of  Deputies  must  submit  to  the  Senate  appropriate  articles 
of  impeachment. 

Article  95,  paragraph  5,  provides  that  the  Council  of 
State  has  power  to  take  cognizance  of  conflicts  of  jurisdiction 
among  the  administrative  authorities  inter  se,  and  of  the 
administrative  authorities  with  the  courts  of  justice. 

This  power  together  with  that  of  the  Council  to  have  the 
President  submit  to  it  all  acts  passed  by  the  Senate  and 
Chamber  of  Deputies  which  are  sent  to  him  for  approval, 
is  the  nearest  approach  in  Peru  to  the  power  to  declare 
laws  unconstitutional. 

CIVIL   AND   COMMERCIAL   COURTS 

In  dealing  with  the  method  of  organization  of  the  courts 
and  their  jurisdiction  in  Latin- American  countries  having  a 
federal  system,  reference  will  be  made  to  the  courts  of  the 
capital  of  the  respective  Republics,  unless  otherwise  expressly 
stated;  and  it  is  necessary,  moreover,  to  bear  in  mind  what 
has  already  been  said  in  regard  to  the  power  of  the  federal 
Congress  in  those  countries  to  enact  laws  and  codes,  in  order 
to  determine  the  applicability  of  those  enactments. 

Argentina. 

The  administration  of  justice  in  Buenos  Aires,  the  capital 
of  Argentina,  is  governed  by  laws  No.  1893,  of  November  12, 
1886,  No.  2860  of  November  16,  1891,  as  amended  by  laws 
No.  2860  of  January  3,  1898,  No.  3670  of  January  1,  1898, 


LEGAL   PROCEDUKE  713 

and  No.  7055  of  August  19,  1910.    According  to  these  laws 
civil  and  commercial  jurisdiction  is  divided  as  follows: 

(a)  Alcaldes  or  ward  justices,  appointed  by  the 
municipality;  they  have  jurisdiction  of  cases  invohdng 
not  over  50  pesos; 

(6)  Jueces  de  paz  (justices  of  the  peace),  of  whom 
there  are  sixteen  in  the  capital.  They  must  be  lawyers, 
in  contradistinction  to  the  territorial  justices  of  the 
peace,  and  their  jurisdiction  in  civil  and  commercial 
cases  is  confined  to  those  involving  from  50  pesos  up  to 
500  pesos;  in  cases  of  desalojo  (ejectment  of  a  tenant), 
when  the  monthly  rent  does  not  exceed  200  pesos  or 
when  the  lease  is  not  written;  and  final  jurisdiction  on 
appeals  from  the  alcaldes. 

(c)  Camaras  de  Paz,  of  which  there  are  two,  with 
jurisdiction :  (a)  of  appeals  from  decisions  of  the  jueces 
de  paz  above  100  pesos  and  (6)  of  questions  of  jurisdic- 
tion below,  and  of  complaints  of  delay  in  administering 
justice  by  the  justices  of  the  peace. 

The  jueces  de  paz  and  the  members  of  a  Camara  de 
paz  are  appointed  by  the  President  of  the  Republic 
with  the  consent  of  the  Senate,  the  former  for  three  and 
the  latter  for  nine  years,  both  being  re-eligible; 

(d)  Jueces  de  Mercado,  or  market  judges,  one  for  each 
market  place  of  the  capital,  and  the  members  of  the 

(e)  Tribunal  de  Mercado  de  segunda  instancia,  both 
appointed  by  the  Executive  from  among  merchants  of 
the  respective  market  places.  The  jurisdiction  of  these 
courts  is  as  follows:  the  jueces  de  mercado  take  cogni- 
zance in  first  instance  of  cases,  whatever  their  amount, 
provided  the  parties  agree  upon  the  existence  of  a 
contract  and  the  question  involves  market  dealings 
concerning  the  delivery  of  cattle,  grain  or  fruit,  or  the 
weight  of  freight  or  measure  thereof. 

The  Tribunal  de  Mercado  takes  cognizance  of  appeals 
from  decisions  of  the  jueces  de  mercado  in  cases  above 
100  pesos. 

(/)  Jueces  de  lo  Civil,  who  have  jurisdiction  in  first 


714  LATIN-AMERICAN  COMMERCIAL  LAW 

instance  of  all  cases  governed  by  civil  law  involving 
2,000  pesos,  their  decisions  being  subject  to  appeal; 

{g)  Jueces  de  Comercio,  who  have  jurisdiction  in  first 
instance  of  all  cases  over  500  pesos  governed  by  the  code 
of  commerce  or  commercial  law.  Their  judgment  is 
subject  to  appeal. 

These  two  kinds  of  judges  are  appointed  by  the 
President  of  the  Republic  with  the  concurrence  of  the 
Senate,  for  life,  during  good  behavior; 

ih)  Camaras  de  Apelacion.     The  appellate  court  is 

divided  into  three  chambers,  one  for  civil  matters,  one 

for  commercial  matters,  and  one  for  criminal  cases.    In 

1910,  a  second  civil  chamber  was  added.     They  take 

cognizance  of  appeals  from  judgments  of  the  Jueces  de 

lo  civil  and  Jueces  de  comercio,  and  of  complaints  against 

the  latter  for  delaying  or  denying  justice. 

The  Ministerio  Publico  '^^  is  represented  by  a  fiscal  in  the 

Camaras  de  Apelacion  and  by  fiscal  agents  before  the  judges 

of  first  instance  and  the  justices  of  the  peace. 

Bolivia. 

The  Bolivian  law  of  December  31,  1857,  with  subsequent 
amendments,  as  compiled  bj^  Dr.  Samuel  Oropeza,  and 
approved  by  decree  of  July  16,  1878,  and  law  of  Decem- 
ber 12,  1914,  governs  the  organization  of  the  courts  and 
their  functions. 

The  courts  having  jurisdiction  in  civil  and  commercial 
matters  are  divided  as  follows: 

(a)  Alcaldes  de  Barrio  y  de  Campo  (justices  of  bor- 
roughs  and  country  places),  who  take  cognizance  of 
claims  of  an  amount  not  greater  than  4  pesos  or  bolivi- 
anos in  cash  or  8  pesos  in  goods.'**  (A  boliviano  is 
$0.3893  U.  S.  currency.) 

(b)  Alcaldes  parroquiales  (parochial  judges).  For 
every  center  of  population  not  exceeding  500  inhabi- 
tants there  must  be  an  alcalde  parroquial  appointed  by 

■*'  See  infra,  for  the  discussion  of  the  functions  of  the  Ministerio  Publico. 
"  Arts.  250,  254  of  law  of  December  31,  1857. 


LEGAL    PROCEDURE  715 

the  municipal  council  from  a  list  of  three  names  pre- 
sented by  the  jueces  instructores.  These  alcaldes  have 
jurisdiction  of  claims  to  the  amount  of  16  pesos,  with  an 
appeal  to  the  superior  judges. '^^ 

(c)  Jueces  instructores  (delegated  judges),  appointed 
by  the  Supreme  Court  from  a  list  of  three  persons 
proposed  by  the  district  courts.  These  judges  take 
cognizance  of  claims  from  60  to  200  bolivianos  in  an 
oral  suit,  with  appeal  to  the  jueces  de  partido,  and  from 
100  to  500  bolivianos,  in  written  form,  with  like  appeal. 
In  both  cases  their  decisions  are  subject  to  annulment 
by  the  district  court.  "^^ 

(d)  the  jueces  de  partido,  are  also  appointed  by  the 
Supreme  Court  in  the  same  manner  as  the  jueces 
instructores;  they  take  cognizance  in  first  instance  of  all 
cases  not  assigned  by  the  law  to  other  courts,  and  of 
appeals  from  decisions  of  the  inferior  courts;  '^'^  when 
the  amount  of  a  complaint  exceeds  $500  the  case 
belongs  to  the  jurisdiction  of  the  jueces  de  partido. 

(e)  Cortes  de  distrito  (district  courts).  The  Republic 
is  divided  into  eight  districts,  namely:  Sucre,  La  Paz, 
Cochabamba,  Potosi,  Oruro,  Santa  Cruz,  Tarija  and 
Cobija.  Each  district  has  a  Corte  de  Distrito  except 
Cobija  and  Tarija,  where  there  are  only  superior  judges. 
The  district  judges  are  elected  by  the  Senate  from  a 
list  of  three  persons  proposed  by  the  Supreme  Court. 
These  courts  are  appellate  courts,  and  have  cognizance 
of  alleged  conflicts  of  jurisdiction  between  the  jueces  de 
partido  or  between  the  delegated  judges  (instructores) 
of  different  provinces,  or  between  regular  and  special 
judges;  ^^  and  finally 

(/)  the  Corte  Suprema,  composed  of  seven  justices, 
each  appointed  by  the  chamber  of  deputies  from  a  list 
of  three  persons  proposed  by  the  Senate.     The  Corte 

«  Arts.  237,  242  *. 

«  Arts.  224,  227,  229,  ib. 

«  Arts.  203,  207,  209,  215,  ib.,  and  14  and  18  of  decree  of  August  10,  1877. 

«  Arts.  187,  190,  191,  ib.,  and  30  and  31  of  law  of  October  24,  1871. 


716  LATIN- AMEBIC  AN  COMMERCIAL  LAW 

Suprema  has  jurisdiction,  in  civil  and  commercial 
matters,  of  all  petitions  for  the  annulment  for  error  in 
form  or  in  law  of  judgments  rendered  by  the  district 
courts;  of  conflicts  of  jurisdiction  between  those  courts, 
and  of  all  questions  arising  out  of  contracts  or  conces- 
sions entered  into  by  the  Executive.  ^^ 

Brazil. 

In  Brazil  the  administration  of  justice  in  the  Federal 
District  is  governed  by  decree  No.  1030  of  November  14, 
1890,  according  to  which  civil  and  commercial  jurisdictions 
are  divided  as  follows: 

(a)  the  pretores  or  justices  of  the  peace  of  which  there 
are  21  in  the  federal  district  take  cognizance  of  cases  up 
to  5,000$  (equivalent  to  about  $1,250.  U.  S.  currency), 
except  when  the  fisc  or  public  treasury  is  involved.  ^° 
(6)  the  tribunal  civil  e  criminal  composed  of  one 
president,  two  vice-presidents  and  nine  judges.  The 
tribunal  is  divided  into  three  chambers  {camaras) :  one 
criminal,  another  civil  and  another  commercial.  The 
commercial  chamber  has  jurisdiction  in  first  instance  of 
cases  above  5,000$  and  in  second  instance  on  appeals 
from  the  decisions  rendered  by  the  pretores .^"^ 

(c)  the  corte  de  appellagdo,  which  is  divided  into  two 
sections,  criminal  and  civil:  The  civil  section  takes 
cognizance  in  second  and  last  instance  of  decisions 
rendered  by  the  Tribunal  civiU^ 

Chile. 

In  Chile  the  courts  are  governed  by  the  law  of  October  15, 
1875,  as  amended  or  supplemented  by  laws  of  March  4,  1897, 
which  organized  the  consular  service;  of  September  16,  1884, 
on  penalties  for  misdemeanors;  of  December  21,  1865, 
containing  the  tariff  of  judicial  fees;  of  December  30,  1886, 
article  9  of  which  established  the  sanitary  poHce;  of  Octo- 

"Arts.  49,  50,  51,  ib. 

^  Art.  50  of  Decree  No.  1030  of  Nov.  14,  1890. 

"  Arts.  82,  83  and  102,  ib.  ^2  Art.  135. 


LEGAL    PROCEDURE  717 

ber  25,  1877,  on  certified  copies;  of  December  22,  1891, 
which  organized  the  municipalities;  of  August  9,  1894,  which 
created  the  special  judge  of  the  slaughter  house  in  Santiago; 
of  December  31,  1897,  which  authorized  the  municipality  of 
Valparaiso  to  create  a  special  slaughter-house  judge;  of 
January  10,  1884,  which  made  marriage  a  civil  transaction; 
of  January  19,  1889,  providing  new  qualifications  for  a 
juez  de  letras  and  another  of  the  same  date  providing  for  the 
division  of  the  Supreme  Court  and  creating  the  Appellate 
Court  at  Santiago. 

There  is  a  district  judge  in  every  district  of  the  Republic 
with  jurisdiction  of  cases  not  exceeding  50  pesos. ^^  In  every 
subdelegacion  there  is  a,  juez  subdelegado,  who  has  jurisdiction 
of  cases  above  50  pesos  and  not  exceeding  200  pesos,  subject 
to  appeal  and  casacion  (annulment  for  error). ^^  In  every 
department  of  the  Republic  there  is  a  juez  de  letras,'"'"  who 
has  cognizance  of  cases  of  non-contentious  jurisdiction  and 
of  all  other  civil  or  commercial  disputes  involving  over  200 
pesos,  of  appeals  from  decisions  of  the  jueces  subdelagados, 
and  in  third  instance,  jurisdiction  in  casacion  of  judgments 
of  the  jueces  subdelegados.^^ 

There  are  seven  courts  of  appeal,  in  the  cities  of  Tacna, 
La  Serena,  Valparaiso,  Santiago,  Talco,  Concepcion  and 
Valdivia.^^ 

Judges  of  the  courts  of  appeal  have  original  jurisdiction 
of  civil  or  commercial  cases  in  which  the  President  of  the 
Republic,  members  of  the  cabinet,  intendants  of  provinces, 
governors  of  the  departments,  Chilean  diplomatic  agents, 
diplomatic  representatives  of  other  countries  before  the 
Chilean  government,  the  archbishop,  the  bishops  or  other 
eccesiastical  officials  are  parties.  These  courts  have  appel- 
late jurisdiction  in  cases  decided  in  first  instance  by  the 
district  judges;  and  they  have  exclusive  jurisdiction  for  the 

"  Art.  13,  law  of  October  15,  1875.  "  Art.  33,  ib. 

"  Law  of  January  31,  1888. 
^  Art.  37,  law  of  October  15,  1875. 

"  Art.  55,  ib.,  as  amended  by  laws  of  October  8,  1898,  January  14,  1899,  and 
July  28,  1888. 


718  LATIN-AMERICAN  COMMERCIAL  LAW 

remedy  of  annulment  of  judgment  {casacion)  against  deci- 
sions rendered  by  the  district  judges. ^^ 

Appeals  in  the  above-mentioned  cases  in  which  the  judges 
of  appeal  have  original  jurisdiction  go  to  the  corresponding 
chamber  of  the  court,  excluding  the  judges  who  took  cogni- 
zance in  first  instance.  ^^ 

The  Corte  Suprema,  which  is  the  highest  in  the  judicial 
hierarchy,  is  composed  of  ten  judges,  one  being  the  chief 
justice  and  chairman  of  the  court.  It  has  jurisdiction  in 
casacion  of  judgments  of  the  Cortes  de  Apelacion.^'^ 

Colombia. 

In  Colombia,  article  1  of  law  No.  100  of  1892  pro- 
vides that  the  administration  of  justice  is  vested  in:  (a) 
a  Supreme  Court,  (b)  superior  courts,  (c)  superior  judges, 
{d)  circuit  judges,  (e)  ^'attaching"  judges  (jueces  ejecutores), 
and  (/)  municipal  judges.  According  to  articles  17,  20,  35, 
36,  of  law  No.  3  of  1910  the  Supreme  Court  is  composed  of 
nine  justices,  four  elected  by  the  Senate,  and  five  by  the 
Chamber  of  Deputies  from  a  list  of  three  presented  by  the 
President  of  the  Republic;  the  justices  are  appointed  for  five 
years  and  may  be  reappointed. 

The  Supreme  Court  has  jurisdiction  of  controversies 
concerning  diplomatic  agents  and  maritime  prize  cases, 
controversies  arising  out  of  agreements  made  by  the  national 
executive,  unless  otherwise  stipulated,  cases  of  conflicting 
jurisdiction  or  other  matters  arising  among  the  provinces 
(departmentos)  and  cases  of  revision  or  annulment  for  error 
of  judgments  of  other  courts." 

The  territory  of  the  Republic  is  divided  into  districts. 
In  each  district  there  is  a  superior  court  [Tribunal  Superior), 
whose  justices  are  appointed  by  the  Supreme  Court  from  a 
list  of  three  names  presented  by  the  corresponding  provin- 
cial assembly.     The  superior  courts  have  original  jurisdic- 

58  Art.  67,  law  of  October  15,  1875. 
83  Art.  4  of  the  c.  p. 

80  Arts  102,   107,   117,  of  law  of  October   15,  1875,  and  art.  4  of  the  law 
promulgated  on  August  28,  1902. 

81  Art.  40  of  law  81  of  1910. 


LEGAL    PROCEDURE  719 

tion  of  cases  to  which  the  nation  is  a  party,  except  cases 
within  the  original  jurisdiction  of  the  Supreme  Court,  and 
appellate  jurisdiction  of  all  cases  of  which  the  district  or 
circuit  judges  have  original  jurisdiction,  of  decisions  of  the 
collectors  of  taxes,  and  of  awards  of  arbitrators.*^- 

The  district  judges,  of  which  there  must  be  one  in  the 
capital  of  each  judicial  district,  are  also  appointed  by  the 
corresponding  superior  court  and  have  jurisdiction  of  civil 
and  commercial  cases  involving  more  than  300  pesos.^^ 

In  every  municipal  district  there  are  as  many  municipal 
judges  as  the  municipal  council  may  appoint.  They  have 
jurisdiction  of  cases  of  minor  importance  {menor  cuantia) 
that  is  to  say,  municipal  judges  in  the  capital  of  a  judicial 
district,  cases  less  than  300  pesos,  judges  in  the  capital  of  a 
circuit,  200  pesos,  and  those  of  other  places,  100  pesos.^* 

Costa  Rica. 

In  Costa  Rica  the  administration  of  justice  is  governed 
by  law  of  March  29,  1887,  according  to  which  the  judici- 
ary has  jurisdiction  of  all  cases,  whether  civil,  criminal 
or  contencioso-administrativo  (cases  between  individuals  and 
administrative  authorities),  whatever  their  nature  and 
the  character  of  persons  concerned. 

The  jurisdiction  is  divided  among:  (a)  Alcaldes,  (b)  judges 
of  first  instance  (jueces  de  primera  instancia)  and  arbitrators, 
(c)  military  courts  and  judges,  and  {d)  appellate  and  casa- 
cion  divisions  {solas  de  apelacion  y  salas  de  casacion)  of  the 
Corte  Suprema,  and  (e)  the  full  bench.  The  Supreme  Court 
is  composed  of  eleven  justices  in  three  chambers:  three 
justices  constituting  the  appellate  division  in  civil  cases; 
three  justices  in  criminal  cases;  and  five  justices,  acting 
as  the  division  of  casacion.  The  justices  of  the  Corte  Su- 
prema and  the  judges  of  first  instance  are  appointed  for  a 
period  of  four  years.  The  alcaldes  have  civil  and  commercial 
jurisdiction  of  claims  not  exceeding  250  colones  ($125.  U.  S. 

«2  Arts.  7  of  law  No.  169  of  1890  and  74  of  the  Code  of  Justice. 
«»  Art.  113,  Code  of  Justice,  and  art.  1  of  law  No.  4!)  of  1907. 
"  Art.  116,  of  the  Code  of  Justice  and  1  of  law  No.  40  of  1907. 


720  LATIN-AMERICAN  COMMERCIAL  LAW 

currency) ;  and  the  judges  of  first  instance,  of  claims  invol- 
ving over  250  colones,  as  well  as  of  appeals  from  final  judg- 
ments of  the  alcaldes  and  of  cases  of  conflicting  jurisdiction 
between  alcaldes. 

The  appellate  division  of  the  Corte  Suprema  takes  cogni- 
zance, (a)  of  conflicts  of  jurisdiction  between  judges  or 
between  judges  and  administrative  authorities;  (6)  of  re- 
fusals of  the  justices  of  the  court  to  hear  a  certain  case,  and 
of  challenges  of  these  justices;  (c)  of  cases  of  criminal  or 
civil  liability  incurred  by  judges  of  first  instance,  charges 
against  governors,  members  of  the  public  board  of  account- 
ants, and  municipalities;  and  (d)  of  appeals  from  the  judges 
of  first  instance.^^ 

The  casacion  division  of  the  court  takes  cognizance, 
(a)  of  all  cases  of  annulment  and  revision  of  judgments 
for  error,  (6)  of  questions  of  jurisdiction  between  the  ap- 
pellate division,  and  (c)  of  the  execution  of  foreign  judg- 
ments.^^ 

The  functions  of  the  full  Corte  Suprema  are,  among  others, 
(a)  to  appoint  inferior  judges,  and  (6)  to  take  cognizance 
of  the  writ  of  habeas  corpus.^"^ 

Cuba. 

In  Cuba  the  administration  of  justice  is  governed 
by  Arts.  81  to  90  of  the  Constitution,  by  royal  decree  of 
January  5,  1891,  and  royal  order  of  July  30,  1892,  and  by 
the  law  of  judicial  organization  of  1909,  according  to  which 
there  is  a  Tribunal  Supremo,  six  Audiencias,  one  each  in 
Havana,  Puerto  Principe,  Santiago  de  Cuba,  Santa  Clara, 
Matanzaz  and  Pinar  del  Rio,  judges  of  the  first  instance, 
and  municipal  judges. ^^  The  municipal  judges  (juzgados 
municipales)  have  jurisdiction  of  cases  not  exceeding  350 
pesos  (or  U.  S.  dollars),  except  in  cases  of  great  urgency 

65  Art.  66,  law  of  March  29,  1887. 

66  Art.  48,  ih.  See  Beeche,  Oct.  Estudios  de  derecho  constitutional.  San 
Jos6,   1910. 

67  Arts.  51,  53,  ih. 

^  Arts.  2  and  4  of  royal  decree  of  January  5,  1891. 


LEGAL   PROCEDUBE  721 

when  they  may  take  the  necessary  measures  and  report  to 
the  judge  of  proper  jurisdiction,  with  appeal  to  the  court 
of  first  instance;  the  judges  of  the  first  instance  (juzgados 
de  primera  instancia)  have  original  jurisdiction  of  cases 
between  individuals  involving  over  350  pesos,  with  appeal 
to  the  audiencias;  the  audiencias  are  courts  of  appeal  in 
commercial  cases  and  have  original  jurisdiction  of  claims 
against  the  state  and  of  conflicting  jurisdiction  between 
judges  of  first  instance.^^  The  Supreme  Court,  among 
other  powers,  has  jurisdiction  of  cases  of  annulment  of 
judgment  {casacidn),  of  conflicts  of  jurisdiction  between 
audiencias  or  between  courts  not  having  a  common  superior; 
of  cases  to  which  the  state,  on  the  one  side,  and  the  provinces 
or  municipalities  on  the  other,  are  parties;  and  of  cases  in 
which  the  constitutionality  of  a  law,  decree  or  regulation 
is  questioned  by  any  party.^° 

Ecuador. 

In  Ecuador,  civil  and  commercial  procedure  is  gov- 
erned by  the  code  promulgated  on  June  12,  1907.  All 
cases  involving  not  over  200  sucres  (about  $96.  U.  S.  cur- 
rency) are  suits  of  minor  importance  (juicios  de  menor  cuan- 
tia),  cognizance  of  which  vests  in  the  parochial  judges  {jueces 
parroquiales)  ^^  with  a  right  of  appeal,  unless  the  amount 
claimed  is  less  than  30  sucres. ^^  Cases  above  200  sucres  are 
within  the  jurisdiction  of  the  Alcaldes  municipales  del  cantdn 
(district  judges). ^^ 

The  law  provides  for  five  forms  of  recourse  against  judg- 
ments rendered  in  first  instance,  namely:  (a)  appeal,  (6) 
third  instance,  (c)  nullity,  (d)  as  of  fact  (de  hecho),  and  (e) 
of  denial  of  justice  {queja)?"^ 

There  cannot  be  a  third  instance  in  cases  involving  1,000 
sucres  or  less.  When  recourse  to  the  third  instance  lies  the 
Corte  Suprema  takes  cognizance  thereof.  Nullity,  which 
must  be  demanded  when   the  appeal  or  third  instance  is 

89  Arts.  183,  185,  186,  ib.  "">  Art.  83  c. 

"  Art.  478  c.  p.  "  Art.  376  c.  p. 

"  Art.  456  c.  p.  ">*  Art.  371  c.  p. 


722  LATIN-AMERICAN  COMMERCIAL  LAW 

entered,  lies  for  violations  of  legal  formalities  in  the  pro- 
ceedings.^^ The  de  facto  remedy  {recurso  de  hecho)  Ues,  when 
the  court  to  which  an  appeal  or  a  petition  for  annulment 
of  a  decision  has  been  directed,  does  not  consider  the  appeal 
pertinent.  It  must  be  exercised  within  three  days  after  the 
judge  or  court  has  denied  an  appeal  or  third  instance.''^  The 
queja  lies  when  a  judge  or  court  delays  or  refuses  to  admin- 
ister justice  in  a  case;  the  Congress  takes  cognizance  of  this 
remedy  when  it  is  directed  against  the  justices  of  the  Corte 
Suprema.'''' 

Guatemala. 

In  Guatemala  the  code  of  civil  procedure  promulgated 
March  8,  1877,  divides  jurisdiction  among:  (a)  municipal 
judges,  who  take  cognizance  of  cases  involving  up  to  200 
pesos;  (6)  the  judges  of  first  instance  (jueces  de  primera 
instancia)  with  jurisdiction  of  cases  over  200  pesos;  (c)  the 
Tribunal  Supremo  de  Justicia,  which  takes  cognizance  of 
appeals,  third  instance,  and  extraordinary  remedies  estab- 
lished by  lawJ^  Law  of  July  20,  1877,  governs  the  commer- 
cial courts  and  procedure;  commercial  cases  belong  to  the 
jurisdiction  of  a  special  judge  in  the  capital  of  the  Repub- 
lic, and  to  that  of  the  judges  of  first  instance  in  the  depart- 
ments. 

Honduras. 

In  Honduras  the  law  of  February  8,  1906,  organizes  the 
judiciary  and  provides  that  in  every  municipality  there 
shall  be:  (a)  a.juez  de  paz  and  a  substitute  in  the  capitals  of 
departments;  where  there  are  more  than  four  thousand 
inhabitants  there  must  be  two  jueces  de  paz  and  two  substi- 
tutes, designated  by  popular  election  for  one  year;  they  do 
not  receive  compensation  for  their  services,  and  have 
jurisdiction  of  cases  not  exceeding  200  pesos.  In  addition, 
there  are  also  alcaldes  auxiliares  who  have  cognizance  of 

"  Arts.  398  to  421  c.  p.  ™  Art.  422  c.  p. 

"  Arts.  430  to  436  c.  p. 

'8  Arts.  6,  1234,  1832,  1843,  1859,  1878,  1893  c.  p. 


LEGAL    PROCEDURE  723 

cases  not  above  10  pesos;  "  (6)  jueces  de  letras,  or  first  in- 
stance judges  in  the  capital  of  each  department,  with 
jurisdiction  of  cases  above  200  pesos  or  of  cases  the  amount 
of  which  is  indefinite.  They  review  or  revise  the  decisions  of 
the  jueces  de  paz,  and  act  also  as  notaries  public  with  all 
rights  and  obhgations  as  such.^°  (c)  four  courts  of  appeal, 
as  follows :  two  in  Tegucigalpa,  one  in  Comayagua  and  one  in 
Santa  Barbara;  they  are  courts  of  first  instance  for  com- 
plaints against  the  jueces  de  letras,  and  are  courts  of  appeal 
from  judgments  of  the  jueces  de  letras  or  arbitrators;  ^^  (d) 
the  Corte  Suprema  de  Justicia,  which  has  original  jurisdiction 
of  cases  of  casacion  and  is  a  court  of  last  instance  in  reviewing 
the  judgments  of  the  lower  courts.  It  has  power  to  dictate 
autos  acordados  or  regulating  provisions  of  a  general  character 
binding  for  the  future,  and  other  provisions  in  aid  of  the 
enforcement  of  the  law.^^ 

Haiti. 

In  Haiti  the  courts  are  divided  into  three  grades,  namely: 
(a)  first  instance,  which  corresponds  to  the  French  justices  of 
the  peace  [juges  de  paix).  There  is  a  juge  de  paix  in  each 
town,  and  the  president  can  establish  others  in  wards  and 
parishes  where  he  deems  it  desirable;  (6)  second  and 
last  instance,  which  corresponds  to  the  ci\'il  courts  {tri- 
hunaux  civils);  and  (c)  the  courts  of  casacion  {tribunal  de 
cassation)  P 

Mexico. 

In  Mexico  the  administration  of  justice  is  organized  in  the 
Federal  District  and  national  territories  in  accordance  with 
the  law  of  September  9,  1903,  and  its  regulation  of  Novem- 
ber 30,  1903.  With  respect  to  civil  and  commercial  proce- 
dure jurisdiction  is  divided  among:  {a)  jueces  menores  (minor 
judges)  who  take  cognizance  of  cases  involving  up  to  500 
pesos  ($250.  U.  S.  currency) ;  ^^  (6)   in  places  where  there  are 

''Arts.  16,  21,  26,  34,  ih.  «« Arts.  38,  40,  41,  49,  ih. 

81  Arts.  50,  55,  ib.  »-  Arts.  74,  80,  83,  ib. 

«'  Law  of  June  9,  1835,  arts.  7,  29,  46. 
s*  Art.  25,  law  of  September  9,  of  1903. 


724  LATIN-AMERICAN  COMMERCIAL  LAW 

no  jueces  menores  and  the  population  exceeds  two  hundred, 
there  is  ajuez  de  paz,  who  has  jurisdiction  of  cases  above  50 
pesos,  and  must,  furthermore,  undertake  all  proceedings 
entrusted  to  him  by  the  superior  judges;  ^^  (c)  jueces  de  lo 
civil  (judges  in  civil  matters)  who  have  jurisdiction  of  all 
civil  and  commercial  cases  above  500  pesos  whether  conten- 
tious or  not  ^^  as  well  as  those  of  no  pecuniary  value;  (d)  the 
Tribunal  Superior  de  Justida,  divided  into  five  salas  or 
chambers,  which,  acting  together,  constitute  the  Tribunal 
plena  or  full  court,  whose  functions  are  principally  adminis- 
trative. The  first  chamber  takes  cognizance  of  conflicts  of 
jurisdiction  between  judges  of  the  Federal  District  and 
Territories,  and  of  cases  of  casacion  against  judgments  of 
local  courts  of  the  Federal  District  and  national  Territories.^^ 
The  second  and  third  chambers  have  jurisdiction  of  appeals 
from  judgments  of  the  civil  courts  of  the  cities  of  Mexico, 
Tacubaya,  Tlalpam,  Xochimilco,  Partido  Norte  of  Lower 
California,  and  the  Territory  of  Quintana  Roo.*^  The 
fourth  and  fifth  chambers  take  cognizance  of  appeals  from 
judges  of  criminal  jurisdiction. 

Nicaragua. 

■  The  code  of  civil  procedure  of  Nicaragua  promulgated 
May  12,  1871,  was  so  frequently  amended,  that  it  became 
difficult  to  determine  its  applicability.  For  that  reason  an 
official  arrangement  of  the  code  was  made  and  published 
October  27,  1884,  and  amended  by  law  of  March  9,  1885. 
According  to  this  code  the  jueces  de  paz  or  alcaldes  have 
jurisdiction  of  cases  involving  not  more  than  200  pesos;  they 
can  also  take  cognizance,  like  the  judges  of  first  instance,  of 
cases  of  no  definite  amount,  such  as  the  discharge  of  guard- 
ians and  the  like,  as  well  as  cases  of  non-contentious  juris- 
diction, and  cases  exclusively  within  the  cognizance  of  judges 
of  first  instance,  when  the  matter  requires  great  promptness 
to  prevent  irreparable  loss.^^  The  judges  of  first  instance 
have  original  jurisdiction  of  cases  in  which  the  complaint 

»5  Arts.  15  and  18,  ib.  ^  Art.  39,  ib.  «>  Art.  79,  ib. 

88  Art.  80,  ib.  ^^  Art.  430  c.  p. 


LEGAL    PROCEDURE  725 

exceeds  200  pesos  and  of  cases  in  which  no  material  thing  is 
demanded;  and  appellate  jurisdiction  from  decisions  of  the 
jueces  de  paz.^^  The  Tribunal  Superior  has  appellate  juris- 
duction  from  the  courts  of  first  instance,  and  original 
cognizance  of  conflicts  of  jurisdiction  between  judges."  It 
also  has  jurisdiction  in  third  instance  or  sUplica,  as  well  as  of 
the  de  facto  remedy  (recurso  de  hecho)  when  an  appeal  has  been 
denied,  and  of  complaint  (queja)  for  violations  of  substantial 
requisites  of  procedure.^^ 

Panama. 

The  Codigo  Judicial  of  Panama  provides  for  the  organiza- 
tion of  the  courts  and  for  civil,  commercial  and  criminal 
procedure.  It  was  adopted  by  law  of  August  21,  1916,  and 
is  the  most  modern  law  of  procedure  in  Latin- America. 

At  the  head  of  the  judiciary  is  the  Corte  Suprema  with  five 
justices  appointed  by  the  president  of  the  Republic,  for  a 
period  of  four  years.  Its  jurisdiction  in  civil  or  commercial 
matters  is  limited  to:  (a)  cases  in  which  a  diplomatic  agent 
of  a  foreign  country  in  Panama  is  a  party,  and  international 
law  permits;  (6)  cases  of  maritime  or  river  navigation  and 
maritime  prizes;  (c)  claims  arising  out  of  contracts  entered 
into  by  the  old  state  of  Panama  or  the  former  department  of 
Panama,  or  by  the  national  executive  with  the  municipalities 
or  individuals,  provided  there  is  no  stipulation  in  the  con- 
tract to  the  contrary;  (d)  petitions  for  the  annulment  of 
decisions  rendered  in  cases  in  which  the  court  has  original 
jurisdiction;  (e)  petitions  for  therevisionof  other  judgments. 
The  court  takes  cognizance  on  appeal:  (a)  of  cases  which 
a  juez  superior  or  a  juez  de  circuito  has  decided,  in  which  re- 
course on  appeal  or  in  fact,  i.  e.,  when  an  appeal  is  denied, 
or  a  consultation  is  proper;  (b)  of  judgments  of  the  circuit 
judges  in  non-contentious  matters;  (c)  of  appeals  from  the 
decrees  of  the  manager  of  the  National  Bank  or  tax  collectors 
invested  with  power  to  compel  payments  in  ''executive" 
proceedings  in  matters  of  larger  amount.     The  court  as  a 

^  Arts.  452,  466,  ib.  »i  Arts.  820  and  1009,  ib. 

«2  Arts.  856,  885,  936,  ib. 


726  LATIN-AMERICAN  COMMERCIAL  LAW 

Sala  de  Acuerdo  passes  on  conflicts  of  jurisdiction  between 
superior  and  circuit  judges. 

For  judicial  purposes,  the  Republic  of  Panama  is  divided 
into  the  following  circuits:  Bocas  del  Toro,  Code,  Colon, 
Chiriqui,  Herrera,  Los  Santos,  Veraguas  and  Panama,  in 
each  of  which  there  is  a  cu'cuit  judge,  except  in  Panama 
where  there  are  four,  and  in  Col6n,  Bocas  del  Toro  and  Chir- 
iqui where  there  are  two.  Circuit  judges  are  appointed  for 
four  years.  They  have  original  jurisdiction  of  cases  above 
150  balboas  (equivalent  to  $150.  U.  S.  currency)  and  in 
non-contentious  jurisdiction,  of  petitions  for  annulment  of 
judgment,  and  of  those  to  which  the  nation  is  a  party,  when 
they  are  not  within  the  jurisdiction  of  the  Corte  Suprema; 
and  of  petitions  in  annulment  of  provisions  and  other  acts  of 
municipal  councils,  and  conflicts  of  jurisdiction  between 
municipal  judges.  They  have  appellate  jurisdiction  from 
the  district  courts  in  cases  exceeding  $10.00  gold.^^ 

There  is  a  municipal  judge  in  every  district  except  in 
Panama,  where  there  are  four,  and  in  Col6n,  where  there  are 
two;  they  have  original  jurisdiction  of  cases  involving  over 
ten  and  less  than  150  balboas,  except  in  Panama  City,  where 
they  have  jurisdiction  up  to  250  balboas;  they  take  cogni- 
zance of  cases  where  there  is  no  claim  of  competition  with  the 
circuit  judges,  priority  in  starting  the  proceeding  determin- 
ing the  preference  of  the  two  jurisdictions.^^ 

There  is  in  every  corregimiento  (ward)  a  justice  of  peace 
who  has  cognizance  of  cases  not  exceeding  ten  balboas.^^ 

Paraguay. 

In  Paraguay  the  organization  and  functions  of  the  courts 
are  governed  by  laws  of  September  28,  1898,  and  Novem- 
ber 10,  1898,  the  latter  referring  to  the  procedure  before  jus- 
tices of  the  peace.     There  are  three  grades  of  judges: 

1.  Justices  of  the  peace,  who  have  jurisdiction  of  civil  and 
commercial  cases  not  exceeding  500  pesos,  and  of  lease  or 
hiring  of  a  thing  whenever  the  total  amount  claimed  does 

9'  Arts.  45  to  53,  55,  83,  89,  123,  127,  136  to  138,  1137  c.  p. 

9^  Arts.  155,  1137  c.  p.  «*  Arts.  156  to  160  c.  p. 


LEGAL    PROCEDURE  727 

not  exceed  1,000  pesos  and  the  monthly  rental  is  not  above 
500  pesos,  and  of  ejectment  of  tenants  or  rescission  of  leases 
when  the  rental  is  not  above  500  pesos.  Decisions  of  justices 
of  the  peace  are  subject  to  appeal  to  the  judge  of  first  instance 
when  the  complaint  involves  over  50  pesos. 

2.  There  are  in  Paraguay  two  judges  of  first  instance  for 
commercial  cases  and  six  for  civil  cases.  These  judges  have 
original  jurisdiction  of  all  cases  not  expressly  assigned  to  the 
jueces  de  paz,  with  the  understanding  that  the  commercial 
judges  take  exclusive  cognizance  of  commercial  cases,  and 
appellate  jurisdiction  as  above  mentioned. 

3.  Judgments  of  the  judges  of  first  instance  {Jueces  de 
Primera  Instancia)  are  reviewed  by  the  higher  chamber  of 
appeal,  and  in  commercial  cases,  by  the  Camara  de  Apelacion 
en  lo  criminal  y  comercial. 

Peru. 

In  Peru  the  law  of  December  15,  1911,  provides  in  accord- 
ance with  article  125  of  the  Constitution,  that  the  adminis- 
tration of  justice  is  confided  to:  (a)  the  Corte  Suprema; 
(6)  the  Cortes  Superior es;  (c)  the  judges  of  first  instance, 
and  {d)  the  jueces  de  paz. 

The  Corte  Suprema  has  original  jurisdiction  of  petitions 
for  annulment  of  judgments,  and  takes  cognizance  on  appeal 
of  cases  within  the  original  jurisdiction  of  the  Cortes  Supe- 
rior es.^^ 

There  are  Cortes  Superiores  in  the  departments  of  Lima, 
Piura,  Loreto,  La  Libertad,  Ancachas,  Cajamarca,  Arequipa, 
Cuzco,  Puno  and  Ayacucho.  They  have  original  jurisdiction 
of  conflicts  of  jurisdiction  between  judges  of  the  same  depart- 
ment or  between  such  judges  and  other  authorities  of  the 
department.  They  take  cognizance  of  appeals  from  decisions 
of  the  judges  of  first  instance  or  of  arbitrators.^^ 

The  judges  of  first  instance  have  original  jurisdiction  of 
cases  not  assigned  by  the  law  to  any  other  judicial  authority, 
and  of  conflicts  of  jurisdiction  between  jueces  de  paz  of  their 

^  Art.  54  of  law  of  December  15,  1911. 
«'  Art.  80,  ib. 


728  LATIN-AMERICAN  COMMERCIAL  LAW 

corresponding  district,  and  on  appeal,  from  decisions  of  the 
latter.98 

The  jueces  de  paz  have  jurisdiction  of  cases  not  above  20 
pounds  sterUng  or  when  the  case  concerns  a  matter  not 
assessable  in  money;  ^^  they  can  substitute  for  notaries  in 
places  where  there  are  none.^°° 

San   Salvador. 

In  San  Salvador  the  law  of  April  21,  1898,  governs  the 
courts  and  their  functions.  It  divides  the  judicial  power  in 
civil  and  commercial  cases  among  several  courts,  as  follows: 
(a)  the  Corte  Suprema  de  Justicia;  (h)  Cdmara  de  Tercera 
Instancia;  (c)  five  Cdmaras  de  Segunda  Instanda;  (d)  judges 
of  first  instance;  and  (e)  Jueces  de  paz.'^^'^ 

The  capital  of  the  Republic  is  the  seat  of  the  Cdmara  de 
Tercera  Instancia  and  of  two  Cdmaras  de  Segunda  Instancia. 
These  three  chambers  together  form  the  Corte  Suprema  de 
Justicia,  which  is  the  highest  court. ^''- 

The  other  three  chambers  of  second  instance  are  located 
in  the  cities  of  Cojutepeque,  San  Miguel  and  Santa  Ana, 
respectively. 

The  Corte  Suprema  de  Justicia,  among  other  functions, 
takes  cognizance:  (a)  of  conflicts  of  jurisdiction  between 
judges  of  any  class;  (6)  of  the  writ  of  habeas  corpus  (amparo), 
according  to  the  Constitution;  (c)  of  applications  for  the 
enforcement  of  foreign  judgments. ^"^ 

The  chamber  of  third  instance  has  jurisdiction  of  the 
remedy  of  suplica  or  annulment  of  decrees  of  the  chambers 
of  second  instance  and  of  refusals  of  members  of  such  cham- 
bers to  hear  a  given  case.^°** 

The  chambers  of  second  instance  have  jurisdiction  on 
appeal  from  judgments  of  first  instance,  and  of  charges  and 
challenges  against  those  judges. ^°' 

The  judges  of  first  instance  have  cognizance  of  cases 

98  Art.  93,  *.  59  Arts.  296,  303  and  935  c.  p.  k"  Art.  400  c.  p. 

loi  Art.  1  of  the  law  of  April  21,  1898. 

102  Art.  2,  ib.  i"'  Art.  30,  ib.  i"*  Art.  32,  ib. 

i<»Art.  33,  ih. 


LEGAL    PROCEDURE  729 

above  200  pesos  ($79.56  U.  S.  currency)  and  of  cases  not 
assessable  in  money,  and  jurisdiction  on  appeal  from  deci- 
sions of  the  jueces  de  paz.^^^  The  jueces  de  paz  have  juris- 
diction of  cases  not  exceeding  200  pesos. 

Santo  Domingo. 

In  Santo  Domingo  the  law  now  governing  the  adminis- 
tration of  justice  was  promulgated  June  21,  1895.  The 
alcaldes,  the  lowest  in  rank  of  the  judges,  have  jurisdiction 
limited  to  the  amount  of  100  pesos  gold,  with  an  appeal 
when  the  case  involves  not  less  than  25  pesos  gold,  but 
not  otherwise.  ^°^ 

The  judges  of  first  instance,  which  are  also  commercial 
courts  or  consulados,  have  original  jurisdiction  of  cases  not 
within  the  cognizance  of  the  alcaldes,  and  appellate  juris- 
diction from  decisions  of  the  alcaldes,  as  above  mentioned.  ^''^ 

The  Suprema  Corte  de  Justicia,  composed  of  a  president 
or  chief  justice  and  four  associate  justices,  is  a  court  of  ap- 
peal from  the  judges  of  first  instance  and  possesses  original 
jurisdiction  of  cases  against  diplomatic  agents  when  inter- 
national law  permits.  It  can  also,  like  the  Congress,  announce 
general  statements  on  the  interpretation  of  the  law.^°^ 

Uruguay. 

The  new  Constitution  of  Uruguay  provides  ^'^^  that  the 
judicial  power  shall  be  vested  in  the  high  court  of  jus- 
tice, the  court  or  courts  of  appeal,  and  the  courts  of 
first  instance  in  the  manner  established  by  law.  According 
to  the  law  of  May  3,  1881,  the  Executive  was  directed  by 
the  Congress  to  appoint  a  commission  of  five  lawyers  to 
present  a  bill  fixing  the  jurisdiction  and  procedure  of  such 
high  court,  but  it  has  not  so  far  been  created,  and  the  admin- 
istration of  justice,  therefore,  is  still  governed  by  article  86 
of  the  code  of  civil  procedure  of  January  17,  1878,  which 
provides  for:  (a)  Tenientes   alcaldes;  (b)  jueces  ds  paz;  (c) 

"»  Arts.  473,  499  c.  p.  '"''  Art.  54,  law  of  June  21,  1S95. 

">'  Arts.  48,  70,  ib.  '^  Arts.  14  and  15,  ib.  and  09  c.  p. 

'">  Art.  115  of  the  new  constitution  of  ()ctol)or  15,  1917. 


730  LATIN-AMERICAN  COMMERCIAL  LAW 

jueces  letrados  departmentales ;  (d)  jueces  letrados  de  lo  dtril 
and  jueces  letrados  de  comer cio;  and  (e)  tribunales  de  apela- 
cion.  Subsequently,  by  law  of  July  5,  1892,  a  juzgado  de 
hacienda  (fiscal  judge)  was  created  who,  besides  his  own 
jurisdiction,  must  in  certain  cases  substitute  for  jueces  let- 
rados in  Montevideo,  the  capital. 

The  tenientes  alcaldes,  also  called  jueces  de  distrito,  take 
cognizance  of  complaints  not  over  20  pesos. ^^^  (Uruguayan 
peso=S1.03  U.  S.  currency.) 

The  jueces  de  paz  of  cities,  towns  or  villages  where  there 
is  no  juez  letrado,  have  jurisdiction  of  civil  and  commercial 
cases  and  of  probate  not  exceeding  1,000  pesos,  of  ejectment 
of  tenants  when  the  rental  is  not  above  100  pesos  and  of 
certain  minor  cases.  When  the  jueces  de  paz  reside  in  cities, 
towns  or  villages  where  there  is  a  juez  letrado,  their  juris- 
diction is  reduced  to  cases  involving  200  pesos  or  less  and 
50  pesos  rental  in  case  of  ejectment  of  tenants  of  urban 
realty.  In  the  capital  of  the  Republic,  the  jueces  de  paz  have 
no  jurisdiction  in  commercial  cases."- 

In  Monetvideo  there  are  a  ju£Z  letrado  departmental,  three 
jeuces  letrados  de  lo  civil  and  two  jueces  letrados  de  commercio. 
In  each  department  of  the  Republic  there  is  a  juez  letrado 
departmental.  The  juez  letrado  departmental  in  Montevideo 
has  original  jurisdiction  of  civil  cases  above  200  pesos  up  to 
2,000  pesos,  of  cases  of  divorce,  nullity  of  marriage  and  pro- 
bate. The  jeuces  letrados  departmentales  of  other  places  have 
jurisdiction  of  civil  and  commercial  cases  above  the  maximum 
amount  fixed  for  the  jurisdiction  of  the  jueces  de  paz,  cases 
of  nullity  of  civil  marriage,  divorce  and  probate  matters. 

The  jueces  letrados  de  lo  civil  in  Montevideo  have  juris- 
diction of  civil  cases  above  2,000  pesos,  and  in  other  places 
above  the  maximum  fixed  for  justices  of  the  peace. 

The  jueces  de  comer  cio  have  original  jurisdiction  of  all 
commercial  cases  above  20  pesos  within  the  limits  of  their 
districts  and  appellate  jurisdiction  from  the  juices  depart- 
mentales in  the  districts  outside  Montevideo. 

The  jueces  departmentales  and  the  jueces  letrados  de  lo  civil 

1"  Art.  87  c.  p.  "^  Arts.  88  to  90  c.  p. 


LEGAL    PROCEDURE  731 

have  jurisdiction  on  appeal  from  the  jueces  de  paz  of  the 
respective  departments.  ^^-^ 

The  tribunaUs  de  apelacion,  of  which  there  are  two,  have 
jurisdiction  on  appeal  from  judgments  of  the  jueces  depart- 
mentales.^^'^ 

Venezuela. 

The  judicial  hierarchy  in  Venezuela  is  arranged  as  fol- 
lows: (a)  jueces  de  parroquia;  (b)  juez  de  departmento  or 
juez  de  distrito,  the  former  title  being  used  in  the  Federal 
District;  (c)  jueces  de  primer  a  instancia;  (d)  Tribunal  Su- 
perior; (e)  Corte  Suprema. 

The  parochial  judges  have  jurisdiction  of  cases  up  to 
400  bolivars  (about  $100.  U.  S.  currency);  the  district  or 
departmental  judges,  from  400  to  4,000  bolivars;  the  first 
instance  judges  have  original  jurisdiction  of  cases  above 
4,000  bolivars,  with  separate  judges  in  civil  and  in  commer- 
cial cases;  the  Tribunal  Superior  of  each  state  has  jurisdiction 
of  appeals  from  the  inferior  judges,  and  the  federal  Corte 
Suprema  has  jurisdiction,  as  already  stated,  of  cases  in 
which  the  federal  law  or  federal  authorities  or  diplomatic 
agents  are  concerned  and  of  casacion  for  error  in  law  of 
judgments  in  cases  commenced  in  the  court  of  first  instance. 

A  peculiar  feature  of  the  law  of  Venezuela  is  that  in  cases 
of  greater  amount,  that  is,  above  4,000  bolivars,  any  of  the 
parties  to  a  suit  is  entitled  to  have  a  court  of  associated 
judges  throughout  the  various  instances  in  the  case.  If 
the  court  consists  of  a  single  judge  the  parties  can  ask,  be- 
fore the  hearings  begin,  that  two  associated  judges  be  ap- 
pointed to  sit  with  the  regular  judge. ^^^ 

Other  court  officials. 

The  other  officials  concerned  in  a  suit,  besides  the 
judges  and  the  parties,  are  the  representative  of  the 
Ministerio  Publico,  the  secretaries,  the  recording  clerks 
and  minor  officers,  the  lawyers   and    the  procuradores  (at- 

1"  Arts.  91  to  100  c.  p.  i"  Art.  101  c.  p. 

"*  Arts,   668,  669  c.  p.,  95  c.  p. 


732  LATIN-AMEEICAN  COMMERCIAL  LAW 

torneys  in  fact).  The  Ministerio  Publico  in  Latin- Amer- 
ica is  an  institution  created  with  a  view  to  promoting  the 
enforcement  of  laws  concerning  the  general  welfare  and  has 
a  threefold  function,  namely:  (a)  as  a  fiscal,  it  represents 
and  defends  in  court  the  interests  of  the  national,  state  or 
local  treasury  in  all  cases  arising  out  of  the  collection  of 
customs  and  duties,  and  the  rights  of  the  state  considered 
as  a  legal  entity  subject  to  civil  law;  (6)  as  a  pubhc  prose- 
cutor, it  demands  the  application  of  the  criminal  law  against 
persons  suspected  of  crime;  (c)  as  attorney  general,  it 
represents  in  court  the  interests,  whether  moral  or  material, 
of  the  community,  it  supervises  the  measures  for  the  pro- 
tection of  minors  and  the  appointment  of  guardians  for 
incompetent  persons;  it  must  be  heard  in  proceedings  for 
the  approval  of  the  yearly  accounts  rendered  by  guardians; 
it  is  a  party  to  suits  for  divorce  or  annulment  of  marriage 
and  to  those  designed  to  safeguard  the  interests  of  absentees 
whose  whereabouts  are  unknown  or  whose  death  is  presumed. 
In  some  countries  like  Brazil  and  Cuba  the  Procurador 
General  acts  as  a  legal  advisor  to  the  government. 

Notwithstanding  the  importance  and  pubhc  character 
of  the  functions  of  the  Ministerio  Publico,  its  representatives 
are  not  judicial  members  of  the  coiu-ts;  they  cannot  even 
advise  the  judges.  They  are  one  of  the  parties  to  those 
suits  in  which  the  interests  of  the  public  or  of  the  persons 
above  mentioned  are  involved;  they  therefore  appear  in 
court  as  plaintiffs  or  defendants,  they  can  answer  complaints, 
make  replication,  produce  any  kind  of  evidence,  present 
arguments  and  use  against  adverse  judgments  the  same 
methods  of  recourse  which  the  law  grants  to  the  parties. 

The  secretaries  or  clerks  of  the  courts  are  charged  sub- 
stantially with  the  following  functions:  (a)  to  state  in  the 
documents  produced  by  the  parties  the  day  and  hour  when 
the  papers  were  filed  or  presented ;  (b)  to  make  note,  in  simi- 
lar manner,  of  the  date  on  which  the  parties  take  and  return 
documents;  (c)  to  attend  the  sessions  of  the  court  and  to 
draw  the  decrees  or  resolutions  issued  by  the  judge  in  the 
pending  cases;  (d)  to   inform   the   judge   or  court,  without 


LEGAL    PROCEDURE  733 

delay,  of  any  petitions  made  by  the  parties  or  of  communica- 
tions sent  by  other  officials;  {e)  to  legalize  with  their  signa- 
tures the  proceedings,  rulings,  orders  or  judgments  which 
pass  through  their  hands;  (/)  to  keep  in  their  custody  the  file 
of  proceedings  and  documents  in  each  case,  being  directly 
liable  for  their  loss  or  injury;  {g)  to  keep  in  good  order  all 
books  provided  for  by  law  and  regulations;  {h)  to  keep  the 
seal  of  the  court;  (i)  to  draw  the  memorandum  of  judicial 
acts,  and  declarations  of  witnesses  or  parties  to  a  suit; 
{j)  to  issue  certified  copies  of  documents  and  papers  in  their 
custody,  when  so  directed;  {k)  to  fulfill  any  other  obligations 
the  law  may  impose  upon  them. 

The  recording  clerks  {actuarios  or  escrihanos  de  diligencias) 
are  charged  with:  (a)  serving  process  on  the  parties;  (b) 
notifying  interested  parties  of  the  judicial  decrees,  rulings, 
and  judgments;  (c)  supervising  (or  executing)  attachments 
or  provisional  remedies,  requests  of  payment,  and  ejectment 
of  tenants.  Where  the  law  does  not  provide  for  a  re- 
cording clerk  his  functions  devolve,  as  a  rule,  upon  the 
secretary. 

Lawyers. 

Lawyers  are  learned  in  the  science  of  jurisprudence,  and 
are  authorized  by  the  government  to  practice  law,  give  legal 
advice  and  plead  in  court. 

Contingency  fees. 

A  lawyer  before  taking  a  case,  must  agree  with  his  client 
on  the  amount  of  his  compensation.  He  has  entire  liberty 
in  fixing  fees  and  there  is  not,  as  a  rule,  any  prohibition 
against  accepting  contingency  fees  {pacio  de  cuotalitis).  The 
Spanish  traditions  are  not,  however,  favorable  to  such 
stipulations.  Law  14,  tit.  6,  Part  3,  and  law  22,  tit.  22,  lib.  5, 
of  the  Novissima  Recopilacion  condemn  such  an  agreement 
and  declare  it  void.  This  legal  tradition  may  be  responsible 
for  the  fact  that  even  in  countries  in  which  the  principle  of 
liberty  of  transactions  is  not  limited  in  the  case  of  profes- 
sional men,  there  is  a  preference  among  lawyers  of  good 


734  LATIN-AMERICAN  COMMERCIAL  LAW 

standing  not  to  enter  into  any  agreement  for  contingency 
fees. 

In  case  the  fees  are  not  stipulated  at  the  beginning,  the 
lawyer  must  keep  them  within  the  legal  tariff,  if  there  is  any, 
or  within  the  usual  custom  or  equitable  basis,  and  the  client 
may  object  to  the  bill  and  demand  a  reduction  by  the  judge, 
or  submit  the  matter  to  arbitration. 

In  Argentina  lawyers  are  prohibited  to  share  in  any  way 
with  the  parties  in  the  outcome  of  the  suit,  and  any  stipula- 
tion directly  or  indirectly  producing  that  effect  is  nuU."^ 

There  does  not  appear,  however,  to  be  any  serious  objec- 
tion to  an  arrangement  between  client  and  attorney  by  which 
the  attorney  is  to  receive  one  certain  sum  if  he  w^ins,  and 
another  certain  sum  if  he  loses.  It  is  often  the  case  that 
attorneys  and  clients  enter  into  a  preliminary  contract  as  to 
the  attorney's  fees,  but  the  most  reliable  attorneys  object  to 
a  preliminary  contract.  On  the  whole  it  may  be  said  that  the 
better  class  of  attorneys  may  be  relied  upon  not  to  over- 
charge. Fees  for  litigation  are  comparatively  small,  running 
from  2  to  15  per  cent  of  the  amount  in  dispute  in  commercial 
cases,  depending  upon  the  amount  involved  and  the  diffi- 
culties of  the  litigation. 

Moreover,  every  contract  by  which  a  person  ha^dng  a 
right  of  action  requires  the  attorney  to  give  hun  a  part  of  his 
fees,  and  every  contract  by  which  an  attorney  and  a  procura- 
tor agree  to  divide  their  fees  in  a  given  case  is  null  and  void. 
This  does  not  affect  an  agreement  between  an  American  and 
an  Argentine  attorney,  by  which  the  former  receives  a  part 
of  the  fee  for  sending  his  case  for  further  action  to  the 
Argentine  attorney,  and  vice  versa. 

In  Bolivia  lawyers  are  forbidden :  (a)  to  receive  any  share 
of  the  thing,  subject-matter  of  the  suit;  (5)  to  stipulate  for  a 
certain  amount  or  thing  in  consideration  of  success  in  the 
suit;  and  (c)  to  stipulate  to  prosecute  the  case  at  their  own 
expense.  Aside  from  these  prohibitions,  lawyers  are  free  to 
stipulate  for  their  fees,  and  if  they  do  not,  the  court  must 

"'  Law  No.  3094  of  August  21,  1894,  and  art.  931  c.  p.  of  the  province  of 
Buenos  Aires. 


LEGAL    PROCEDURE  735 

make  the  allowance,  in  case  one  of  the  parties  is  ordered  to 
pay  costs.  ^^^ 

In  Brazil,  while  contingency  fees  are  apparently  strictly 
prohibited/ ^^  the  matter  is  not  really  definitely  settled,  for 
lawyers,  though  not  the  better  class,  do  occasionally  take 
cases  on  such  a  basis,  and  they  can  collect  their  fees.  There 
is  a  very  old  tariff  of  lawyers'  fees,  but  it  is  hardly  observed 
in  any  case,  lawyers'  services  being  generally  a  matter  of 
contract.  The  following  basis  of  contract  between  client 
and  attorney  appears  to  meet  with  approval:  a  specific  sum 
is  fixed  as  a  fee  if  the  case  is  won,  and  another  specific  sum  if 
the  case  is  lost,  usually  arranged  by  dropping  the  last  of  the 
three  payments  made  by  the  client  to  his  counsel,  namely, 
at  the  time  of  retainer,  at  the  beginning  of  the  suit,  and  after 
final  judgment.  This  differs,  of  course,  from  a  contract  for  a 
percentage  of  the  amount  won  in  the  litigation,  a  contract  in 
general  disfavor  in  Brazil. 

In  Chile,^^^  Colombia, ^-'^  Cuba,^^^  Ecuador,  Uruguay  ^^^ 
and  Venezuela,^ -^  lawyers  can  freely  enter  into  agreements 
for  their  fees  with  clients;  should  there  not  be  such  stipula- 
tion, the  lawyer  may  present  his  bill,  and  if  the  party  objects 
to  the  amount,  the  court  or  arbitrators  (reguladores)  ap- 
pointed by  the  court  must  pass  upon  the  matter.  In  Vene- 
zuela the  objecting  party  must  raise  the  issue  within  ten 
days  after  the  request  for  payment  of  the  judicial  costs. 

In  Costa  Rica  ^^^  a  tariff  of  judicial  costs  permits  lawyers 
and  attorneys  in  fact  to  receive  as  fees  10  per  centum  upon 
the  amount  of  the  claim,  when  it  is  not  above  1,000  colones; 
from  that  sum  up  to  20,000  colones,  5  per  centum,  and  on  any 
excess  23^^  per  centum.    In  cases  of  smaller  amount,  they  can 

"'  Arts.  287,  302  c.  p.  and  circular  of  the  Supreme  Court  of  November  1, 
1889;  Gaceta  Jmlicial  No.  593,  p.  15,  law  of  December  19,  1905,  art.  5. 

"*  Art.  468,  Consolidagao  das  Leis  Civis,  by  Texeira  de  Freitas. 

"9  Arts.  404  of  law  of  October  15,  1875,  and  2158  c.  c. 

'2"  Tribunal  Superior  del  Dist.  Jud.  de  Panama,  December  15,  1892.  Regis- 
tro  Jud.  de  Panama,  vol.  VI,  p.  90. 

121  Art.  7,  order  500  of  1900. 

122  Art.  146  c.  p. 

12'  Art.  76  c.  p.  and  law  of  June  25,  1910,  arts.  22  and  23. 
12^  Arts.  1085  to  1087  c.  p. 


736  LATIN-AMERICAN  COMMERCIAL  LAW 

charge  five  colones  when  the  claim  is  for  25  colones  or  less, 
and  10  per  centum  on  the  excess.  Lawyers'  fees  may  be 
charged  by  the  winner  as  costs.  The  contingency  fee  is 
permitted. 

In  Guatemala, ^^^  Honduras,^^^  Mexico  ^^^  and  Panama,^"^^ 
fees  can  be  freely  fixed.  In  the  absence  of  agreement  between 
the  lawyer  and  the  client,  they  are  fixed  according  to  tariffs. 
Article  643  of  the  code  of  Panama  provides  that  when  an 
association  of  lawyers,  or  the  majority  of  reliable  lawyers  of  a 
locality,  have  established  a  tariff  for  lawyers'  fees,  the  court 
must  take  that  tariff  as  a  basis  for  the  computation  of 
lawyers'  fees,  being  permitted  to  vary  it  not  over  25  per  cent. 

In  Nicaragua  ^^^  lawyers  are  always  obliged  to  confine 
themselves  to  the  tariffs  in  the  collection  of  their  fees. 

125  Art.  120  c.  p.  "6  Art.  12  c.  p.  i"  Art.  2408  c.  p. 

128  Art.  642  c.  p.  "9  Art.  87  c.  p. 


CHAPTER  XLI 

Legal  Procedure 
rules  of  general  application 

Contentious  and  non-contentious  jurisdiction. 

A  person  may  apply  to  the  courts  for  two  different  pur- 
poses: (1)  because  he  wishes  to  obtain  judicial  aid  in  the 
determination  of  a  contested  difference  with  another  person 
or  in  the  enforcement  of  an  obligation  or  duty  resting  upon 
such  person  with  respect  to  the  plaintiff.  In  these  cases  a 
litigation  is  initiated  between  the  two  parties,  the  judge  or 
court  determining  the  merits  of  the  controversy  and  aiding 
in  the  enforcement  of  the  rights  of  the  successful  party.  The 
judge  or  coui't  acts  in  such  case  in  the  exercise  of  what  is 
known  as  contentious  jurisdiction  {jurisdiccion  contenciosa) , 
and  the  procedure  is  called  via  dedarativa;  or  (2)  because  the 
applicant  wishes  the  judge  or  court  to  authenticate  some  act 
and  place  the  seal  of  judicial  authority  upon  it,  as  in  the 
adoption  of  a  person  as  a  son,  the  filing  of  testamentary 
memoranda  in  the  notarial  protocols,  voluntary  judicial 
pubhc  sales,  etc.  The  judge  or  court  in  these  cases  acts  in 
the  exercise  of  non-contentious  jurisdiction  {jurisdiccion 
voluntaria)  and  the  procedure  is  called  ma  de  autorizacion. 

A  controversy,  however,  may  arise  in  a  non-contentious 
proceeding;  in  that  event  the  character  of  the  action  auto- 
matically changes,  and  a  litigation  begins  in  order  prelimi- 
narily to  determine  the  rights  of  the  parties. 

The  rules  applying  to  these  two  types  of  jurisdiction  will 
be  discussed  presently. 

Questions  of  jurisdiction. 

The  parties  to  the  action  must  appear  before  a  judge  of 
competent  jurisdiction.     The  following  general  rules  usu- 

737 


738  LATIN-AMERICAN  COMMERCIAL  LAW 

ally  determine  the  competency  of  a  judge:  In  real  actions 
concerning  realty  the  judge  of  competent  jurisdiction  is 
the  judge  of  the  place  where  the  property,  subject-matter 
of  the  litigation  or  proceeding,  is  situated;  in  real  actions 
concerning  a  chattel,  it  is  the  judge  of  the  place  where  it  is 
located  or  of  the  domicil  of  the  defendant,  at  the  election 
of  the  plaintiff.  When  the  action  is  personal  and  arises 
out  of  a  contract,  the  judge  of  the  designated  place  of  per- 
formance has  jurisdiction;  if  there  is  no  contract  or  stipu- 
lation concerning  performance,  the  judge  of  the  domicil  of 
the  defendant  has  jurisdiction.  The  judge  having  juris- 
diction of  the  principal  obligation  also  takes  cognizance  of 
the  corresponding  dependent  actions,  such  as  that  of  guar- 
anty or  pledge. 

In  matters  of  personal  status  the  domicil  of  the  person 
concerned  fixes  the  jurisdiction;  in  probate  cases  involving 
a  last  will  or  intestacy  the  judge  of  the  last  domicil  of  the 
decedent  is  vested  with  jurisdiction,  unless  there  is  a  single 
heir,  in  which  case  the  judge  of  the  domicil  of  such  heir 
prevails.  ^ 

In  Brazil  commercial  actions  must  be  brought  before  the 
judge  of  the  domicil  of  the  defendant.^ 

In  Ecuador,^  Guatemala,"*  Peru  ^  and  San  Salvador,® 
the  judge  of  the  domicil  of  the  defendant  is  to  be  preferred, 
but  the  plaintiff  may  choose,  as  a  rule,  between  the  judge 
of  the  defendant's  domicil  and  the  judge  of  the  place  where 
the  real  action  is  to  be  brought  or  where  the  obligation  is 
to  be  performed. 

In  Mexico  ^  the  judge  of  the  domicil  of  the  defendant  is 
always  preferred,  in  the  absence  of  any  stipulation  to  the 
contrary. 

1  Argentina  c.  c.  p.;  of  the  province  of  Buenos  Aires,  arts.  1  to  12;  Bolivia, 
arts.  18,  19,  20,  law  of  Dec.  31,  1857;  Brazil,  decree  No.  737  of  Nov.  25,  1850, 
arts.  60  to  64;  Chile,  arts.  212  to  226  of  law  of  Oct.  15,  1875;  Colombia,  158 
to  169  c.  p.;  Cuba,  62,  63  c.  p.;  Mexico,  185,  186  to  209  c.  p.;  Nicaragua,  23  to 
35  c.  p.;  Uruguay,  28  to  43,  60  c.  p. 

2  lb.,  art.  60.  *  Arts.  34  to  37  c.  p.  <  Arts.  84  to  94  c.  p. 

6  Arts.  40  to  50  c.  p.      « Arts.  33  to  40  c.  p. 

7  Arts.  185,  186  to  209  c.  p. 


RULES    OF    GENERAL    APPLICATION  739 

Waiver  of  jurisdiction. 

The  defendant  may  waive  the  privilege  of  being  sued  be- 
fore the  judge  of  proper  jurisdiction  provided  the  forum 
to  which  the  parties  submit  is  of  the  same  or  corresponding 
category  and  character  as  the  proper  judge  or  court.  A  case 
within  the  jurisdiction  of  a  municipal  judge,  for  example, 
cannot  be  submitted  to  a  judge  of  first  instance,  or  vice 
versa;  but  if  a  judge  of  first  instance  of  a  certain  place  is 
competent,  the  case  may  be  submitted  to  the  judge  of  first 
instance  of  another  place. 

The  waiver  of  jurisdiction  can  be  made  in  either  of  two 
ways:  expressly  {sumision  expresa),  or  tacitly  {sumision 
tdcita) .  The  waiver  is  tacit  on  the  part  of  the  plaintiff  when 
he  institutes  the  action  before  the  improper  judge,  and  on 
the  part  of  the  defendant  when  he  answers  the  complaint  or 
enters  any  dilatory  pleading  without  reserving  the  privilege 
of  raising  the  question  of  jurisdiction  in  proper  time  and  form. 

The  question  of  jurisdiction  can  be  raised  in  two  forms: 
by  a  petition  inhihitoria,  requesting  the  competent  judge 
to  ask  the  judge  without  jurisdiction  to  stop  all  proceedings 
in  the  matter  and  to  send  the  papers  to  him;  or  by  a  petition 
decUnatoria,  requesting  the  judge  without  jurisdiction  to 
transfer  all  the  proceedings  to  the  competent  judge.^ 

Challenges. 

Judges,  whatever  their  rank  or  hierarchy,  assessors  of 
inferior  judges,  secretaries,  recording  clerks,  and  other 
judicial  officials  may  be  challenged  by  legitimate  parties 
to  actions  or  by  persons  having  a  right  to  be  parties.  In 
no  case  can  the  challenge  be  interposed  after  the  parties 
have  been  cited  to  hear  the  rendering  of  judgment  in  first 
instance  or  after  the  hearing  of  the  case  has  begun  before 
the  courts  of  higher  grade. 

8  Argentina,  428  to  441  c.  p.;  Chile,  104  to  117  c.  p.;  Colombia,  771  to  784 
c.  p.;  Cuba,  72  c.  p. ;  Costa  Rica,  10  to  16  c.  p.;  Ecuador,  912  to 918  c.  p.;  Guate- 
mala, 326  to  350  c.  p.;  Honduras,  25  to  43  c.  p.;  Mexico,  162  c.  p.;  Nicaragua, 
1005  to  1015  c.  p.;  Peru,  56  to  69  c.  p.;  Uruguay,  754  to  769  c.  p.;  Venezuela, 
105  to  116  c.  p. 


740  LATIN-AMERICAN  COMMERCIAL  LAW 

The  challenge  can  be  made  in  two  ways:  {a)  for  cause 
stated  and  proved;  or  (6)  peremptorily,  without  allegation 
of  cause. 

Spain, 9  Bolivia, ^°  Chile, ^^  Colombia, ^^  Costa  Rica,!^ 
Haiti, ^^  Honduras,^^  Nicaragua,^''  Panama, ^^  Peru,^^  Uru- 
guay ^^  and  Venezuela,  ^°  only  admit  challenges  when  made 
for  cause  stated  and  proved. 

In  Argentina  ^^  inferior  judges  can  be  challenged  by  the 
plaintiff  without  allegation  of  cause,  but  only  at  the  time 
of  filing  the  complaint;  and  by  the  defendant,  only  before 
or  at  the  time  of  filing  his  answer.  This  privilege  can  only 
be  used  once.  The  justices  of  the  Supreme  Court  or  of  the 
appellate  courts  can  also  be  challenged  peremptorily,  within 
twenty-four  hours  after  the  llamamiento  de  autos,  that  is 
to  say,  after  the  case  has  been  called  for  hearing.  Apart 
from  these  cases  judges,  whatever  their  rank,  can  only  be 
challenged  for  legal  cause. 

In  Ecuador,  judges  can  only  be  challenged  for  legal 
cause,  but  each  of  the  parties  can  challenge  peremptorily, 
within  twenty-four  hours  after  the  appointment  is  noti- 
fied, one  assessor,  one  clerk  of  court,  and  in  every  instance, 
one  expert,  one  interpreter  and  one  recording  clerk;  addi- 
tional officials  can  be  challenged  by  the  parties  for  cause 
only.  22 

In  Guatemala  the  parties  may  only  challenge  a  judge  or 
official  assessor  for  legal  cause;  but  they  can  challenge  with- 
out such  requisite  two  non-official  assessors,  before  they  are 
called  to  assist  the  judge,  and  two  recording  clerks. ^^ 

In  Mexico  each  party  has  a  right  to  challenge  peremp- 

9Art.  188  c.  p.  1° Art.  1456  c.  p.  "Art.  118  c.  p. 

12  Art.  755  c.  p. 

A  litigant  who  acquiesces  by  silence  in  the  jurisdiction  of  a  judge  who  made 
it  known  that  there  existed  a  ground  for  challenge,  waives  thereby  the  right  to 
challenge  him  afterwards.  Colombia,  Corte  Sup.  de  Just.,  March  27,  1913; 
Gaceta  Jud.,  vol.  XXI,  p.  318. 

"  Arts.  19,  20,  c.  p.  i*  Arts.  22,  375  c.  p.  "  Art.  62  c.  p. 

18  Art.  965  c.  p.  and  law  of  Aug.  15,  1859. 

"  Art.  994  c.  p.  ^^  Art.  78  c.  p.  "  Art.  795  c.  p. 

2«  Art.  117  c.  p.  "  Arts.  .396,  .397  c.  p. 

22  Arts..  919,  924,  925  c.  p.      =3  Arts.  65,  68,  69  c.  p. 


RULES    OF    GENERAL   APPLICATION  741 

torily  one  judge  of  first  instance,  one  municipal  judge,  and 
one  justice  of  the  peace,  one  clerk  and  one  assessor;  a  justice 
of  the  Tribunal  Supremo  can  only  be  challenged  for  cause.  ^^ 

In  San  Salvador,^^  judicial  officials  without  jurisdiction, 
as,  for  example,  clerks  of  courts,  can  be  challenged  peremp- 
torily, but  officials  possessed  of  jurisdiction  can  only  be 
challenged  for  cause. 

The  legal  causes  for  challenge  are  those  which  are  likely 
to  impair  the  impartiality  of  the  challenged  official,  for 
example,  (a)  to  be  a  relative  by  affinity  or  consanguinity 
within  the  fourth  civil  degree  of  any  of  the  litigants;  (b) 
to  have  like  kinship  within  the  second  degree  to  the  attorney 
of  any  of  the  parties  to  the  action;  (c)  to  be  or  to  have  been 
charged  by  any  of  the  parties  as  the  principal,  accomplice 
or  accessory  in  a  crime,  or  as  principal  in  a  misdeameanor ; 
(d)  to  have  been  counsel  for  any  of  the  parties,  to  have  made 
a  report  on  the  case  as  an  attorney  or  to  have  been  connected 
with  it  as  a  public  prosecutor  or  as  an  expert  or  witness;  (e) 
to  be  or  to  have  been  the  guardian,  or  to  have  been  under 
the  guardianship  of  any  person  who  is  a  party  to  the  action; 
(/)  to  be  or  to  have  been  the  public  or  private  accuser  in  a 
charged  offense  of  the  challenging  party;  (g)  to  have  a  direct 
or  indirect  interest  in  the  action,  or  in  another  similar  action; 
(h)  to  be  an  intimate  friend  or  an  avowed  enemy  of  any  of 
the  parties. 

Consolidation  of  actions     (Acumulacion  de  acciones). 

The  plaintiff  may  consolidate  in  his  complaint  as  many 
causes  of  action  as  he  may  have  against  the  defendant,  al- 
though they  proceed  from  different  origins,  provided  that 
said  actions  are  not  incompatible  with  each  other. 
They  are  incompatible: 

(a)  when  they  are  mutually  exclusive  or  antagonistic, 
to  such  an  extent  that  the  pressing  of  one  prevents  the 
advance  of  the  other  or  renders  it  invalid; 

(6)  when  the  judge  who  is  to  take  cognizance  of  the 
principal  action  has  no  authority,   by  reason  of  the 

"Art.  237  c.  p.  26  .^rts.  1127,  1128  c.  p. 


742  LATIN- AMERICAN  COMMERCIAL  LAW 

matter  or  the  amount  in  litigation,  to  take  cognizance 
of  the  consolidated  actions; 

(c)  when  according  to  law  the  causes  of  action  must 

be  heard  and  decided  in  different  actions.  ^^ 

In  Mexico  the  law  ^^  makes  it  compulsory  to  consolidate 

in  a  single  complaint  all  causes  of  action  against  the  same 

person,  provided  they  are  not  contradictory.     By  pressing 

one  or  more  the  others  are  extinguished. 

Consolidation   of    records   of    proceedings    (Acumulacion 
de  autos). 
Consolidation   of   records   of  proceedings   may   only   be 
ordered  at  the  request  of  a  party  to  the  action;  it  is  proper 
in  the  following  cases: 

(a)  when  the  judgment  to  be  rendered  in  one  of  the 
actions,  the  consolidation  of  which  is  requested,  would 
give  rise  to  a  plea  of  former  judgment  or  res  judicata 
in  the  other; 

(6)  when  an  action  on  the  same  cause  is  already  pend- 
ing (litispendencia)  in  another  court  of  proper  juris- 
diction; 

(c)  when  bankruptcy  or  insolvency  proceedings  are 
pending  and  the  property  of  the  bankrupt  or  insolvent 
person  is  the  subject  of  the  action  instituted; 

(d)  when  testamentary  or  intestacy  proceedings  are 
pending  and  the  property  of  the  estate  is  the  subject 
of  the  action  instituted,  provided  the  action  is  declared 
to  be  subject  to  consolidation  with  such  proceedings; 

(e)  when  the  unity  of  the  action  would  be  destroyed 
if  the  action  should  be  prosecuted  separately.  ^^ 

^  Spain,  153,  154  c.  p.;  Argentina,  89  c.  p.;  Bolivia,  123  c.  p.;  Chile,  18  c.  p.; 
Colombia,  269  c.  p.;  Costa  Rica,  132  c.  p.;  Ecuador,  101,  102  c.  p.;  Guatemala, 
545  c.  p.;  Honduras,  45  c.  p.;  Nicaragua,  159  c.  p.;  Panama,  309,  310  c.  p.; 
Peru,  247,  249  c.  p. ;  San  Salvador,  190  c.  p.;  Uruguay,  287  c.  p.;  Venezuela, 
244  c.  p. 

27  Art.  22  c.  p. 

■»  Spain,  160  to  162  c.  p.;  Chile,  95  c.  p.;  Colombia,  785,  786  c.  p.;  Costa  Rica, 
130  c.  p.;  Ecuador,  131  c.  p.;  Guatemala,  5109  c.  p.;  Honduras,  53  c.  p.;  Mexico, 
873,  874  c  .  p. ;  Nicaragua,  128  c.  p. ;  Panama,  1007  c.  p. ;  Peru,  250  c.  p. ;  San  Sal- 
vador, 550  c.  p.;  Uruguay,  770,  771  c.  p.;  Venezuela,  229,  230  c.  p. 


RULES    OF    GENERAL   APPLICATION  743 

Judicial  periods  of  time. 

Judicial  acts  and  proceedings  must  take  place  within  the 
periods  fixed  by  law.  In  the  computation  of  these  periods 
three  systems  have  been  adopted,  namely: 

System  of  Spain.  Judicial  periods  of  time  commence 
to  run  on  the  day  following  the  service  of  summons, 
citation  or  notification,  and  the  last  day  of  said  period 
and  holidays  are  not  computed.  ^^ 

System  of  Argentina.  Judicial  periods  commence 
to  run  from  and  on  the  day  of  notification.  Legal  holi- 
days do  not  count.  ^° 

System  of  Mexico.  As  a  rule,  judicial  periods  of  time 
commence  to  run  on  the  day  following  the  service  of 
summons,  citation  or  notification.  Periods  which  can- 
not be  extended  when  composed  of  several  days,  begin 
to  run  from  the  day  of  the  notification,  which  is  com- 
puted as  complete  no  matter  what  hour  the  notification 
was  served." 

Extension  of  judicial  periods  of  time. 

Periods  of  time,  the  extension  of  which  is  not  expressly 
forbidden  by  law,  may  be  extended.  In  order  to  obtain 
an  extension  it  is  necessary:  (a)  that  it  be  requested  before 

An  "executory"  action  against  a  bankrupt  based  merely  upon  real  rights, 
must  not  be  consolidated  with  the  bankruptcy  proceedings,  when  the  property 
burdened  is  not  among  the  assets  of  the  bankrupt,  even  though  he  burdened 
such  property  and  the  debt  is  listed  among  his  liabilities.  Colombia,  Corte 
Sup.  de  Just.,  Aug.  11,  1891;  Gaceta  Jud.,  vol.  VI,  p.  262. 

The  consolidation  of  "executory  "  proceedings  is  proper  when  the  action  in 
both  cases  emanates  from  contracts  of  a  real  nature,  involves  the  whole  prop- 
erty of  the  debtor  and  the  same  things  have  been  attached  in  the  two  suits. 
Cuba,  Trib.  Sup.,  Jan.  15,  1903;  Gaceta  of  Jan.  27,  1903. 

28  Spain,  303  c.  p. 

^  Argentina,  51  c.  p.;  Chile,  68,  69  c.  p.;  Colombia,  507  c.  p.;  Costa  Rica,  11 
c.  p.;  Ecuador,  346  c.  p.;  Guatemala,  388  c.  p.;  Honduras,  120,  121  c.  p.;  Nicar- 
agua, 170  c.  p.;  Peru,  170  c.  p.;  San  Salvador,  204  c.  p.;  Venezuela,  164  c.  p. 

Periods  consisting  of  hours  run  during  the  night  hours.  Colombia,  Corte 
Sup.  de  Just.,  Oct.  23,  1887;  Gaceta  Jud.,  vol.  1,  p.  353. 

Judicial  periods  of  time  are  suspended  when  for  any  reason  whatever  the 
court  adjourns.  Colombia,  Corte  Sup.  de  Just.,  Jan.  18.  1888;  Gaceta  Jud., 
vol.  II,  p.  36. 

"Mexico,   1075,  1077. 


744  LATIN-AMERICAN  COMMERCIAL  LAW 

the  expiration  of  the  period;  (6)  that  good  cause  therefor 
be  shown  to  the  satisfaction  of  the  court.  Periods  of  time 
cannot  be  extended  {improrrogahles,  pereniorios)  when  the 
law  expressly  declares  that  after  the  lapse  of  a  given  time, 
no  action,  answer,  remedy,  or  claim  shall  be  litigated. ^^-^^ 

According  to  the  codes  of  Chile  ^^  and  Honduras  ^^  the 
periods  are  established  by  the  law  or  by  the  judge;  the  latter 
can  be  extended,  but  not  the  former. 

In  Colombia,  ^^  Ecuador  ^^  and  Guatemala,  ^^  all  time 
periods  can  be  extended  when  there  is  good  reason  therefor. 

In  Peru  ^^  and  Venezuela  ^°  the  periods  of  time  established 
by  law  cannot,  as  a  rule,  be  extended,  except  when  the  law 
expressly  grants  such  extension  or  are  suspended  when  there 
is  a  reason  which  makes  it  necessary. 

Notices    (notificadones)  J    citations    {citaciones)    and    sum- 
mons (emplazamientos) . 
Notice  is  the  act  of  making  known  to  a  party  the  decrees, 
rulings  or  judgments  of  the  judge  or  court. 

Citation  is  the  order  of  a  judge  or  court  directing  a  person 
to  appear  in  court  for  a  certain  act  or  to  attend  a  judicial 
proceeding. 

Summons  is  the  act  of  a  judge  or  court  calling  upon  a 
party  to  state  his  defense. 

A  notice  must  be  given  by  the  clerk,  secretary  or  official 
authorized  thereto,  who  reads  the  order  at  length  to  the 
person  served.  Proof  of  service  must  be  made  in  the  pro- 
ceedings, and  the  notice  must  be  signed  by  the  clerk. 

In  Spain,"  Bolivia,^-  Brazil, ^^   Costa  Rica,''''  Ecuador, ''^ 

»"«  Spain,  306,  310  c.  p.;  Argentina,  41,43,  46  c.  p.;  Costa  Rica,  114,  116 
c.  p.;  Mexico,  1077  c.  p. 

3^  Arts.  70,  71  c.  p.  ^^  Art.  123  c.  p. 

'» Arts.  506,  507,  508  c.  p.  ^^  Arts.  356,  357,  359  c.  p. 

'8  Art.  389  c.  p.  '» Arts.  173  to  176  c.  p. 

«  Art.  165  c.  p.  -  "  Arts.  262  to  269,  279  c.  p. 

*2  Arts.  46,  47  c.  p.  «  Arts.  39  to  59,  ib. 

**  Arts.  96  to  106  c.  p.  «  Arts.  103  to  120  c.  p. 


RULES    OF    GENERAL    APPLICATION  745 

Guatemala,'^''  Haiti, ^^  Honduras/^  Nicaragua/^  Peru  ^°  and 
San  Salvador,''^  all  notices  must  be  given  personally  to  the 
parties,  whether  they  appear  in  the  clerk's  office  or  the 
clerk  goes  to  their  residence,  except  in  case  of  default.  When 
the  residence  of  the  person  upon  whom  service  is  to  be  made 
is  known,  and  on  the  first  attempt  he  is  not  found,  what- 
ever the  cause  and  the  time  of  absence,  the  service  is  made 
by  wi'it  (cedula)  containing:  (a)  a  statement  of  the  character 
and  object  of  the  action  or  matter,  and  the  names  and  sur- 
names of  the  litigants;  (5)  a  true  copy  of  the  order  or  resolu- 
tion which  is  to  be  served;  (c)  the  name  of  the  person  upon 
whom  notice  is  served,  with  the  reasons  for  making  it  by 
writ;  {d)  a  statement  of  the  hour  at  which  said  person  was 
sought  and  not  found  at  his  residence,  and  the  date  and 
signature  of  the  process-serving  clerk.  This  writ  must  be 
delivered  to  the  nearest  relative,  member  of  the  household  or 
servant  over  fourteen  years  of  age,  who  may  be  found  within 
the  dwelling  of  the  person  to  be  served,  and  if  no  one  be  found 
there,  delivery  must  be  made  to  the  nearest  neighbor  found. 

When  the  residence  of  the  person  to  be  served  is  unknown, 
or  when  his  whereabouts  are  unknown  by  reason  of  change 
of  residence,  a  statement  thereof  is  made,  and  the  judge 
must  provide  that  service  be  made  by  posting  the  writ  at 
the  usual  public  place,  and  by  publishing  it  in  the  official 
newspapers. 

All  notices  not  served  in  accordance  with  the  provisions 
of  the  law  are  void.  Nevertheless,  when  the  person  obeys 
the  order  the  proceeding  has  the  same  effect  as  if  the  service 
had  been  legally  made. 

The  system  of  serving  notices  is  practically  the  same  in 
all  the  Latin- American  countries. ''^ 

«  Arts.  491,  510  c.  p.  «  Arts.  9,  78  c.  p. 

«  Arts.  93  to  110  c.  p.  «  Arts.  164,  183  c.  p. 

50  Arts.  136  to  164  c.  p.  "  Arts.  212,  215  c.  p. 

"  Spain,  262  to  269,  279  c.  p.;  Bolivia,  47,  48  c.  p.;  Brazil,  .39  to  59,  *.;  Costa 
Rica,  96  to  106  c.  p.;  Ecuador,  103  to  120  c.  p.;  Guatemala,  491  to  510  c.  p.; 
Peru,  136  to  164  c.  p.;  Sari  Salvador,  212  to  215  c.  p. 

It  is  not  necessary  to  the  validity  of  a  citation  to  appear  in  court  that  a 
period  of  24  hours  elapse  between  the  citation  and  the  appearance;  what  the 
law  prohibits  is  that  the  citation  be  made   for  appearance  within  the  space 


746  LATIN-AMERICAN  COMMERCIAL  LAW 

In  Argentina, '^^  Chile, ^^  Colombia, ^^  Mexico  (Federal  Dis- 
trict) -'^  and  Uruguay,^''  notwithstanding  that  the  parties 
reside  in  the  same  place  as  the  court  and  their  residence  is 
known,  notices  are  not  always  to  be  made  personally  by 
the  clerk  or  officer  in  charge  thereof.  As  a  rule  personal 
notice  is  only  served  on  persons  who  attend  at  the  office  in 
which  the  notice  is  usually  given;  if  they  fail  to  atteud,  the 
notice  is  given  by  means  of  a  writ  posted  in  the  proper  place 
or  by  means  of  an  order  printed  in  an  official  newspaper. 
An  exception  to  this  rule  is  made  in  cases  of  special  impor- 
tance, e.  g.,  a  summons  to  answer  a  complaint;  a  citation  to 
appear  in  order  to  state  whether  certain  asseverations  made 
by  a  party  to  the  action  and  referring  to  acts  of  the  cited 
person,  are  or  are  not  true  (absolver  posiciones) ;  notice  of  an 
order  giving  a  party  a  certain  time  to  produce  evidence 
before  the  judge  (auto  de  apertura  del  termino  de  prueba); 
notice  of  a  final  judgment  or  of  one  having  such  effect;  and 
other  judicial  decrees  or  orders  expressly  stated  to  require 
service  of  personal  notice. 

The  difference  between  the  method  of  serving  a  mere 
notice  and  serving  a  summons  or  citation  is  that  in  the  two 
latter  cases  the  notice  includes  the  order  of  the  judge  to 
appear  in  court  or  in  any  other  place  at  a  stated  time. 

Letters  requisitorial  {supplicatorio)^  Letters  rogatory  {ex- 
horto)y  Letters  mandatory  (carta-orden  or  oficio). 
Judges  and  courts  are  obliged  to  aid  each  other  in  the 
execution  of  all  judicial  process. 

of  time  between  sunrise  and  sunset,  that  is,  within  the  same  day. 
Brazil,  Accordao  do  Trib.  de  Just,  de  S.  Paulo,  of  1893;  Gaceta  Jur.  de  S.  Paulo, 
vol.  12,  p.  142.  Accordaos  da  Rel.  de  Orro  Preto,  Dec.  1,  1894,  and  Feb.  26, 
1896,  0  Forum,  vol,  1,  p.  446. 

"  Arts.  31,  33,  36  to  40  c.  p.  of  the  Federal  Capital. 

When  the  nation  or  a  minor  is  concerned  in  a  suit,  notice  of  the  final  judg- 
ment must  be  served  upon  the  defender  of  minors  or  upon  the  Fiscal  Procura- 
tor; otherwise  all  proceedings  which  take  place  after  such  omission  are  void. 
Buenos  Aires,  Cam.  la  de  Apel.  Civil,  June  23,  1914,  Jurisp.  de  los  Tribs.  Nacs., 
June,  1914,  p.  227. 

"  Arts.  41  to  61  c.  p.  "  Arts.  31,  32,  law  105  of  1890. 

^  Arts.  81  to  85  c.  p.  "  Arts.  162  c.  p. 


RULES    OF    GENERAL   APPLICATION  747 

When  a  judicial  order  is  to  be  executed  at  a  place  other 
than  that  of  trial  of  the  action,  or  by  a  court  or  judge  other 
than  the  one  making  the  order,  whether  it  is  in  the  country 
of  the  judge  or  in  a  foreign  country  the  judge  must  commit 
the  execution  thereof  to  the  proper  judge  by  means  of  letters 
requisitorial  (suplicatorio) ,  letters  rogatory  (exhorto),  or 
letters  mandatory  (carta-orden  or  oficio).  Letters  requisi- 
torial are  issued  when  a  judge  applies  to  a  court  or  judge  of 
higher  rank;  letters  rogatory  when  they  are  addressed  to 
one  of  equal  rank;  and  letters  mandatory  when  directed  to 
a  subordinate  judge  or  courts.  The  judge  or  court  ordering 
the  execution  of  judicial  process  cannot  address  for  this 
purpose  judges  or  courts  of  lower  rank  who  are  not  his  sub- 
ordinates, but  must  deal  directly  with  their  superiors  who 
exercise  a  jurisdiction  equal  to  his  own,  and  in  case  the 
order  is  to  be  executed  in  a  foreign  country  the  judge  sends 
his  request  through  the  Department  of  Justice  to  that  of 
Foreign  Relations  for  proper  diplomatic  action. 

The  judge  or  court  to  whom  letters  requisitorial,  rogatory 
or  mandatory  are  addressed  in  proper  form,  if  his  own  juris- 
diction is  not  affected  thereby,  orders  the  proper  steps  for 
the  execution  of  the  request  made  therein,  within  the  period 
fixed  in  the  letters  themselves,  or  as  soon  as  possible.  After 
the  commission  is  fulfilled  the  letters  are  returned  to  the 
requesting  judge  by  the  same  channels  through  which  they 
were  received. 

WTien  service  of  summons  or  any  other  judicial  proceeding 
is  to  be  made,  effected  or  performed  in  a  foreign  country,  the 
letters  rogatory  are  transmitted  through  diplomatic  chan- 
nels, or  in  the  manner  and  method  prescribed  by  treaties, 
and  in  the  absence  of  treaties,  as  prescribed  by  general 
pro\'isions  of  law  or  administrative  practice.  In  any  case, 
principles  of  reciprocity  are  observed.  ^^ 

^  Spain,  284  to  300  c.  p.;  Argentina,  78  c.  p.;  law  No.  44  of  Aug.  12,  1863, 
concerning  the  method  of  authenticating  public  documents  must  he  con- 
sulted in  this  respect;  Bolivia,  130  c.  p.;  Chile,  74  to  80  c.  p.;  Colombia,  196 
c.  p.  (art.  206  c.  p.  expressly  authorizes  judges  or  courts  to  use  the  telegraph 
for  requesting  the  execution  of  orders  or  decrees  issued  by  them);  art.  40  of 
law  105  of  1890;  Costa  Rica,  103,  121  to  129  c.  p.;  Ecuador,  109  c.  p.;  Guate- 


74S  LATIN-AMERICAN  COMMERCIAL  LAW 

Default  {rebeldia). 

By  default  is  meant  the  non-appearance  of  a  plaintiff 
or  defendant  in  court  or  the  non-user  of  a  right,  power 
or  privilege  in  a  suit  within  the  period  fixed  therefor 
by  the  judge  or  by  the  law.  As  to  when  and  how  a  party  may 
be  considered  in  default,  the  laws  differ  according  to  the 
following  systems: 

First  system.  In  Spain,  ^^  Argentina,^"  Costa  Rica  " 
and  Panama,^-  after  the  expiration  of  time  periods 
incapable  of  extension,  rights  which  could  have  been 
exercised  within  the  time  limit  are  forfeited  without 
entry  of  default  {acusar  rebeldia)  being  necessary,  except 
when  the  period  was  granted  for  appearance  in  court,  in 
which  case,  as  well  as  when  the  period  can  be  extended, 
entry  of  default  is  necessary. 

Second  system.  In  Bolivia,^^  judgment  by  default 
occurs:  (a)  when  the  defendant,  after  being  served  with 
a  summons,  fails  to  appear  in  court  within  the  period 
allowed  therefor;  (h)  when,  after  notice  of  the  complaint 
was  served  upon  him,  he  failed,  to  take  the  file  of  the 
judicial  record  with  him  in  order  to  answer;  (c)  when; 
after  having  taken  the  file,  he  fails  to  answer  or  enter  any 
plea.  In  the  first  and  third  cases  the  defendant  is 
declared  in  default  on  petition  of  the  plaintiff.    In  the 

mala,  503,  504  c.  p.;  Haiti,  79  c.  p.;  Honduras,  107  c.  p.;  Mexico,  76  to  80  c.  p.; 
Nicaragua,  26,  27,  1078  c.  p.;  Panama,  525  c.  p.  (Panama  also  provides  for 
the  use  of  the  telegraph  for  the  execution  of  judicial  orders  outside  the  territory 
where  the  judge  or  court  issuing  the  orders  resides);  Peru,  157,  158  c.  p.;  San 
Salvador,  1220  c.  p.;  Uruguay,  72  c.  p.;  Venezuela,  440,  443,  444  c.  p. 

Letters  rogatory  (exhortos)  addressed  by  a  national  court  to  a  provincial 
court,  in  which  the  former  asks  to  have  the  original  proceedings  of  a  suit  sent 
up  ad  effcclum  videndi,  that  is  to  say,  for  the  single  purpose  of  taking  note 
thereof  for  information,  as  authorized  by  art.  13  of  the  national  law  No.  48, 
must  be  complied  with  by  the  requested  court,  notwithstanding  that  the 
provincial  law  does  not  give  him  authority  thereto.  Buenos  Aires,  Corte  Sup. 
de  Just,  de  la  Nac,  July  4,  1914,  Jurisp.  de  los  Tribs.  Noes.,  July,  1914,  pp.  3 
and  6. 

°9Art.  312  c.  p. 

°°  Art.  45  c.  p.  of  the  Fed.  Cap.  to  which  reference  wUl  be  made  hereinafter. 

"  Art.  118  c.  p.  82  Arts.  348,  536  c.  p. 

«'Arts.  411  to  417  c.  p. 


RULES    OF    GENERAL    APPLICATION  749 

second  case  an  additional  period  is  granted  and  if  not 
used,  the  defendant  is  declared  in  default  at  the  request 
of  the  plaintiff.  Should  the  defendant  subsequently 
enter  an  appearance  before  final  judgment  is  rendered, 
he  must  pay  costs  and  may  continue  the  proceedings  in 
the  status  and  under  the  conditions  as  of  the  time  of  his 
appearance. 

Third  system.  In  Chile,^^  \Yhen  a  period  has  expired 
without  a  party  having  exercised  the  right  for  which  the 
period  was  granted,  the  right  is  deemed  to  have  been 
exercised,  at  the  request  of  the  other  party  or  ex-officio 
when  the  law  permits,  and  the  court  must  then  provide 
what  is  proper  for  the  continuation  of  the  suit. 

Fourth  system.  In  Costa  Rica,''^  Ecuador  ^^  and 
Nicaragua,^^  when  the  defendant  does  not  enter  an 
appearance,  after  service  of  summons  upon  him,  he  is  de- 
clared in  default,  on  petition  of  the  plaintiff,  and  he  will 
not  be  given  consideration  in  the  further  proceedings, 
unless  he  subsequently  appears  and  pays  costs,  in  which 
event  he  can  go  on  with  the  proceedings  from  that  point. 

Fifth  system.  In  Guatemala,''^  a  person  who  disobeys 
a  judicial  order  must  be  declared  in  default  {rehelde). 
If  the  disobedience  is  reiterated,  he  is  deemed  contuma- 
cious (contumaz).  Only  at  the  request  of  the  opposing 
party  can  one  of  the  litigants  be  declared  in  default  or 
contumacious.  Default  takes  place:  (a)  when  the 
person  on  whom  a  citation  was  served  fails  to  appear 
within  the  period  prescribed;  (6)  when  a  summons  or  a 
copy  of  a  paper  is  served  upon  a  party  and  he  fails  to  take 
it  or  returns  it  without  any  statement.  Contumacy 
takes  place  in  the  two  cases  above  mentioned  after  a 
default  has  been  declared.  The  contumacy,  when  no 
good  reason  for  disobedience  is  shown,  produces  the 
following  effects:  (a)  a  waiver  of  a  right  which  sliould 
have  been  advanced  or  availed  of  during  the  prescribed 

"  Art.  81  c.  p.  "  Arts.  119,  120  c.  p. 

«« Art.  119  c.  p.  "  Arts.  506,  .507,  lOSG,  1087  c.  p. 

88  Arts.  416  to  423  c.  p. 


750  LATIN- AMERICAN  COMMERCIAL  LAW 

period  is  presumed;  (6)  the  thing,  subject-matter  of  the 
suit,  or  its  equivalent,  must  be  deposited  through  the 
court,  when  a  party  so  requests;  (c)  the  burden  of  proof 
lies  on  the  person  in  contumacy,  in  case  he  appears  after 
a  first  instance  judgment,  which  is  not  res  judicata  {que 
no  ha  causado  ejecutoria)  ^has  been  rendered  against  him; 
(d)  the  plaintiff  may  acquire  by  prescription  the  thing 
which  was  given  to  him  by  virtue  of  the  declaration  of 
contumacy. 

Sixth  system.  In  Haiti  ^^  and  Santo  Domingo  '°  the 
default  is  declared  at  the  request  of  the  plaintiff,  when 
the  defendant  fails  to  appear  in  court  at  the  time  desig- 
nated. The  effect  of  default  is  that  the  redress  asked  by 
the  plaintiff  is  granted  at  once,  if  the  court  considers  it 
proper;  the  judges,  however,  may  delay  such  decision 
until  the  next  session  of  court  (audiencia). 

Seventh  system.  In  Honduras  '^^  a  party  is  in  default 
by  the  mere  expiration  of  the  period  designated  by  the 
law  or  by  the  court,  without  request  therefor  by  his 
opponent.  The  right  theretofore  available  becomes 
forfeited. 

Eighth  system.  In  Mexico  ''^  the  request  of  a  party  is 
necessary  to  declare  a  default  in  any  case,  and  the  loss  of 
the  right  available  within  the  period  fixed  is  a  necessary 
consequence. 

Ninth  system.  In  Peru  ^^  the  declaration  of  default 
must  be  asked  for  and  the  proceedings  follow  their 
course  without  hearing  the  person  in  default ;  the  latter 
may  appear  at  any  stage  of  the  case  to  continue  it  but 
he  must  pay  a  fine  of  two  soles  (about  80  cents  U.  S.), 
and  two  soles  in  addition  for  every  day  of  delay  in 
returning  copies  of  papers  which  require  return.  In  the 
meantime,  judicial  periods  run  and  he  can  advance  no 
claims  or  applications. 

Tenth  system.     In    San  Salvador  "^  a  default  is  de- 

89  Arts.  152,  153  c.  p.  '"  Arts.  149,  150  c.  p. 

'1  Art.  129  c.  p.  "  Art.  113  c.  p. 

"  Arts.  192  to  201  c.  p.  '*  Arts.  533  to  536  c.  p. 


RULES    OF    GENERAL   APPLICATION  751 

clared  when  a  party  to  the  suit  demands  it.  Its  effects 
are  as  follows :  The  complaint  is  considered  as  answered 
by  the  defendant,  denying  all  facts  and  conclusions;  the 
person  in  default  is  given  notice  of  such  declaration;  the 
proceedings  take  their  course  without  service  of  further 
notices  on  the  person  in  default;  and  he  may  appear  at 
any  stage  of  the  suit  to  continue  it. 

Eleventh  systtm.  In  Uruguay "'"  a  litigant  can  be 
declared  in  default  when  he  fails  to  appear  within  the 
period  fixed,  if  the  other  party  demands  it.  The  effects 
of  such  declaration  are :  (a)  that  subsequent  notices  are 
served  on  him  by  a  mere  entry  in  the  records  by  the 
recording  clerk;  (6)  that  the  plaintiff  cannot  change 
the  object  of  his  complaint,  if  the  defendant  is  in  de- 
fault, nor  the  defendant  his  counterclaim,  if  the  plaintiff 
is  in  default;  (c)  that  the  judge  in  proper  time  may 
render  his  decision  on  the  merits;  if  the  plaintiff  is  in 
default,  the  complaint  is  dismissed;  (d)  that  the  one  in 
default  is  personally  served  with  notice  of  the  judgment; 
(e)  that  property  of  the  defendant  sufficient  to  cover  the 
amount  claimed  is  attached;  (/)  that  the  one  in  default 
may  appear  at  any  time  during  the  proceedings  and 
continue  them,  from  the  stage  then  reached;  (g)  that 
against  a  judgment  rendered  against  a  person  twice 
declared  in  default  there  is  no  remedy. 

Twelfth  system.  In  Venezuela  ""^  the  mere  fact  that 
the  defendant  is  not  present  at  the  time  prescribed  for 
answering  a  complaint  deprives  him  of  the  privilege  of 
making  any  dilatory  plea  or  any  answer  to  the  merits, 
alleging  a  set-off,  demanding  that  the  guarantor  of  his 
title  be  cited  to  defend  the  case,  or  requesting  the  grant 
of  an  extraordinary  period  for  the  production  of  certain 
kinds  of  evidence. 

Legal  working  days  and  hours,    {dias  y  horas  hdbiles). 

All  judicial  proceedings  must  take  place  on  legal  working 
days  and  legal  working  hours,   under  penalty  of  nullity. 

"5  Arts.  844,  862  c.  p.  '«  Arts.  251,  252  c.  p. 


752  LATIN-AMERICAN  COMMERCIAL  LAW 

Legal  working  days  include  all  the  days  of  the  year  except- 
ing Sundays  and  legal  holidays;  and  legal  working  hours 
are  those  between  sunrise  and  sunset.  Courts  and  judges 
ma}''  authorize  the  performance  of  judicial  acts  on  non- 
working  days  or  at  non-working  hours  {habilitar  dias 
y  horas)  should  there  be  urgent  reason  therefor.  These 
provisions  constitute  practically  the  general  rule  in  all 
Spanish- America." 

Kinds  and  forms  of  judicial  decisions. 

The  most  general  classification  of  judicial  decisions  divides 
them  into  four  kinds,  as  follows: 

(a)  Providencias  or  decretos  (judicial  orders  or  rules) 
relate  to  matters  of  mere  practice. 

(6)  Autos  (rulings)  decide  incidental  issues  or  matters, 
such  as  the  disputed  personal  legal  capacity  or  disability 
of  any  of  the  persons  involved  in  the  suit,  or  the  com- 
petency of  the  court,  the  allowance  or  disallowance  of  a 
challenge,  the  striking  out  of  part  of  a  complaint,  the 
allowance  or  disallowance  of  any  plea  or  defense,  the 
refusal  to  admit  evidence,  or  any  ruling  of  that  sort 
which,  without  deciding  the  issues  in  the  case,  may  be  of 
substantial  effect  in  the  outcome  of  the  action. 

(c)  Sentencias  (judgments)  decide  questions  at  issue 
in  an  action,  or  incidental  issues  which  serve  to  put  an 
end  to  the  main  issue,  making  the  continuation  thereof 
impossible;  or  may  allow  or  refuse  a  litigant  to  be  heard 
after  he  was  declared  in  default. 

(d)  Sentencias  firmes  (final  judgments)  by  their  nature, 
or  because  the  parties  have  agreed  to  them,  are  not 
subject  to  any  ordinary  or  extraordinary  appeal. 

The  public  and  formal  instrument  in  which  a  final  judg- 
ment is  entered  is  called  ejecutoria. 

"  Spain,  256  to  259  c.  p.;  Argentina,  6  and  7  c.  p.;  Bolivia,  47  c.  p.;  Chile, 
62,  63  c.  p.;  Costa  Rica,  76  c.  p.;  Guatemala,  474  c.  p.;  Honduras,  91,  92  c.  p.; 
Mexico,  51  to  53  c.  p.,  and  1063  to  1065  cod.  of  com.;  Nicaragua,  171,  172  c.  p.; 
Peru,  165,  168  c.  p.;  San  Salvador,  1246  c.  p.;  Uruguay,  83  c.  p.;  Venezuela, 
160,  161  c.  p. 


RULES    OF    GENERAL   APPLICATION  753 

The  formula  for  a  providencia  or  decreto  consists  only  in  the 
order  of  the  judge  or  court,  the  date  thereof,  and  the  name 
of  the  judge  or  court,  no  statement  of  the  legal  grounds  on 
which  the  order  was  based  being  necessary. 

The  formula  for  autos  requires  the  statement  of  facts  from 
which  they  arose  (resultandos) ,  and  the  legal  basis  of  the  de- 
cision (considerandos)  ,''^  both  accurately  drawn  and  confined 
to  the  particular  question  decided,  and  the  name  of  the  judge 
or  court  and  the  place  and  date  of  the  decision. 

A  sentencia  must  be  carefully  drafted  in  accordance  with 
the  following  rules: 

(a)  judgments  must  be  clear,  precise,  and  follow  the 
pleadings  and  other  allegations  duly  advanced  in  the 
action  and  contain  the  declarations  required,  deciding 
for  or  against  the  defendant  all  questions  in  litigation. 
If  there  are  several  issues,  the  decisions  pertaining  to 
each  must  be  rendered  separately.  If  there  is  an  adju- 
dication of  profits,  interest,  losses  or  damages,  the  net 
amount  thereof  must  be  determined  or  the  bases  fixed 
according  to  which  they  may  be  assessed.  Only  in  case 
it  is  impossible  to  do  either  must  the  decision  reserve 
the  right  to  fix  the  amount  thereof  and  its  enforcement 
in  the  execution  of  judgment.  Judges  and  courts  can- 
not, under  any  pretext,  postpone,  delay,  or  refuse  to 
decide  questions  raised  in  the  action; 

(h)  the  judgment  must  state  the  place,  date,  and  name 
of  the  judge  or  court,  the  names,  residences,  professions 
and  status  of  the  litigants,  the  names  of  their  attorneys 
and  the  object  of  the  action; 

(c)  in  separate  and  numbered  paragraphs,  beginning 
with  the  word  resultando  there  must  be  clearly  and 
concisely  stated  the  contentions  of  the  parties  and  the 
facts,  properly  alleged,  on  which  the  contentious  are 
based  and  which  are  deemed  important  and  operative. 
The  last  resultando  must  state  whether  the  provisions  of 
law  have  been  observed  in  the  course  of  the  proceedings, 
or  the  defects  or  omissions  disclosed; 

^8  See  infra. 


754  LATIN-AMERICAN  COMMERCIAL  LAW 

(d)  in  separate  paragraphs,  also,  and  beginning  with 
the  word  considerando,  the  legal  arguments  advanced  by 
the  parties  must  be  stated,  with  the  reasons  and  legal 
principles  adduced  by  the  court  to  support  its  decision, 
with  citation  of  authority.  If,  during  the  course  of  the 
action,  any  defects  or  omissions  have  been  disclosed 
which  require  correction,  they  must  be  stated  in  the 
last  considerando,  mentioning,  in  proper  case,  the  correct 
doctrine  to  be  followed; 

(e)  finally,  judgment  must  be  pronounced  in  accord- 
ance with  the  general  rules  heretofore  stated,  deciding 
in  separate  paragraphs  the  various  issues  raised,  and 
correcting  any  errors  which  may  have  been  committed 
in  the  proceedings."^ 

Form  of  authenticating  a  judicial  decision. 

An  ancient  tradition  has  prevailed  up  to  the  present  time 
as  to  the  method  of  authenticating  judicial  decisions,  namely, 
with  respect  to  the  different  parts  of  the  signature.  Accord- 
ing to  a  general  and  ancient  usage,  the  signature  of  a  person 

"3  Spain,  358  to  360,  371  c.  p.;  Argentina,  63,  216,  217  c.  p.;  Bolivia,  366  to 
369,  377,  379,  385,  386  c.  p.;  Brazil,  232,  ib.;  Chile,  165,  167,  192,  193,  194, 
196,  197  c.  p.;  Colombia,  283  to  287,  834  to  843  c.  p.,  and  art.  28  of  law  No. 
169  of  1896;  Costa  Rica,  82  to  88,  93  c.  p.;  Ecuador,  311  to  314,  316  to  319, 
327  c.  p.;  Guatemala,  487  to  489,  872  to  875,  877  c.  p.;  Haiti,  148  c.  p.;  Hon- 
duras, 183  to  188,  190,  191,  193  c.  p.;  Mexico,  66,  599  to  608,  612  c.  p.  and 
1321  to  1329  of  the  code  of  com.;  Nicaragua,  371  to  375,  385,  386,  393  c.  p.; 
Panama,  546,  551,  552  c.  p.;  Peru,  1073  to  1076  c.  p.;  San  Salvador,  415  to  420, 
425,  433  c.  p.;  Santo  Domingo,  128,  129,  141,  142  c.  p.;  Uruguay,  459  to  462, 
466,  467,  478,  479  c.  p.;  Venezuela,  12,  28,  174,  177,  185  c.  p. 

A  judgment  which  releases  the  defendant  settles  by  that  mere  fact  all 
questions  pending  in  a  suit.  Spain,  Trib.  Sup.,  Jan.  19,  1912;  Gacetas  of  15  and 
16  of  April,  1913,  p.  60. 

A  judgment  which  releases  the  defendant  on  account  of  defenses  not  as- 
serted in  proper  time  infringes  the  fundamental  rules  of  the  necessary  connec- 
tion between  the  complaint  and  the  answer.  Spain,  Trib.  Sup.,  June  28,  1912; 
Gacetas  of  June  26  and  27,  1913,  p.  565. 

Only  allegations  set  forth  respectively  in  the  complaint  and  the  answer 
thereto,  can  be  the  subject  of  an  adjudication  in  a  final  decision.  Argentina, 
Camara  Fed.  de  Apel.,  Parana,  Jan.  12,  1914,  Jurisp.  de  los  Tribs.  Noes., 
June,  1914,  p.  86. 

A  judgment  cannot  be  typewritten;  it  must  be  handwritten.  Brazil, 
Accordao  de  Trib.  de  S.  Paulo,  Jnue  3,  1909,  Rev.  de  Direito,  vol.  14,  p.  346. 


RULES    OF   GENERAL   APPLICATION  755 

is  composed  of  three  parts,  namely,  the  first  or  Christian 
name  (nombre)  which,  as  a  rule,  is  given  to  a  person  when 
he  is  baptized,  the  family  name  or  surname  (apellido)  which 
may  consist  of  the  father's  family  name  alone,  or  of  the 
father's  family  name  followed  by  the  mother's  family  name; 
and  finally,  the  ruhrica  or  flourishing  line,  individual  to 
every  person  and  used  instead  of  a  seal  or  any  other  addi- 
tional sign.  Firma  entera  signifies  the  full  signature,  com- 
prising first  name,  family  name  and  ruhrica.  Media  firma 
consists  of  the  family  name  and  the  ruhrica. 

The  law  provides  that  all  judicial  proceedings  must  be 
authenticated  by  the  public  official  charged  with  the  duty 
of  certifying  the  act.  Judicial  decisions  must  be  rendered 
before  the  secretary  or  clerk  who  must  authenticate  them: 
the  judge  must  place  his  full  signature  {firma  entera)  on  the 
original  order  issued  in  each  case  or  matter,  as  well  as  upon 
rulings  and  judgments,  and  his  media  firma  on  other  orders 
relating  to  mere  practice  and  on  declarations  and  formal 
acts  in  which  they  may  take  part.  The  judgments  and 
decisions  of  an  audiencia  (superior  court)  must  be  signed 
with  the  firma  entera  of  the  justices,  and  the  presiding  judge 
of  the  chamber  must  affix  his  ruhrica  to  all  orders.  The 
justice  who  is  to  prepare  a  case  for  decision  and  write  the 
opinion  {magistrado  potente),  must  affix  his  media  firma  to 
all  proceedings  held  before  him. 

The  secretaries  and  recording  clerks  must  authenticate 
with  their  firma  entera  any  judicial  decision  and  other  act 
in  which  a  judicial  authority  takes  a  personal  part,  and  the 
certificates  or  copies  of  papers  which  they  may  issue.  No- 
tices and  similar  process  must  be  authenticated  with  their 
media  firma.^^ 

Such  are  the  provisions  of  the  code  of  Spain,^^  the  other 
codes,  accepting  the  distinction  between  firma  entera,  media 
firma  and  ruhrica  combining  differently  the  use  of  these 

^  A  judicial  decree  which  is  not  authorized  by  the  corresponding  secretary  is 
a  ruling  without  authenticity,  which  cannot  serve  as  a  basis  for  starting  "exec- 
utory, "  proceedings.  Colombia,  Corte  Suprema  de  Just.,  April  17,  1889; 
Gacela  Jud.,  vol.  16,  p.  135. 

81  Arts.  249,  251,  252  c.  p. 


756  LATIN-AMERICAN  COMMERCIAL  LA 

methods  of  authenticating  judicial  acts,  but  agreeing  sub- 
stantially with  the  code  of  Spain.^^ 

Recourse  against  judicial  decisions. 

The  following  forms  of  recourse  are  provided,  as  a  rule, 
against  judicial  decisions: 

(a)  against  order  of  mere  practice  (providencias)  or 
rulings  {autos)  which  are  not  appealable,  the  remedy 
given  is  that  of  reposicion  or  revocacion,  or  revocacion 
por  contrario  imperio,  according  to  the  different  names 
given  in  the  various  codes.  This  relief  consists  in  a 
rehearing  before  the  judge  who  issued  the  order  ob- 
jected to.  The  judge  himself  may  then  decide  and, 
as  a  rule,  there  is  no  recourse  against  his  decision; 

(6)  against  final  judgments  {sentencias)  which  are 
not  clear  enough  for  certainty  as  to  their  meaning  at 
the  time  of  execution  or  which  have  not  covered  all 
the  issues  in  litigation,  the  law  grants  the  parties  the 
right  to  apply  for  aclaracion  or  ampliacion,  i.  e.,  eluci- 
dation or  amplification  of  the  judgment.  In  this  case, 
as  in  the  previous  one,  the  judge  or  court  which  rendered 
the  decision  must  undertake  such  elucidation  or  ampli- 
fication of  the  judgment; 

(c)  against  judgments  in  all  matters  of  and  rulings 
on  dilatory  pleas  and  incidental  issues,  an  appeal  to  a 
superior  court  is  proper.  The  appeal  may  be  allowed 
for  review  only  (en  el  efecto  devolutivo)  or  for  review  and 
a  stay  of  proceedings  {en  ambos  efectos).  In  the  first 
case  the  execution  of  the  judgment  is  not  suspended, 
as  it  is  in  the  second,  pending  the  final  decision  of  the 
superior  court; 

(d)  against  rulings  or  interlocutory  decrees  of  a  court 
of  appeal,  there  is  the  remedy  of  suplica  or  review  of  the 
matter  by  the  same  court;  and 

(e)  lastly,  against  final  judgments  and  rulings  ren- 

*^  Bolivia,  378  c.  p.;  Ecuador,  1025  c.  p.;  Guatemala,  487  c.  p.;  Mexico, 
67  c.  p.;  Nicaragua,  387  c.  p.;  Panama,  172  c.  p.;  Peru,  1075  c.  p.;  San  Salva- 
dor, 427  c.  p. 


RULES    OF    GENERAL   APPLICATION  757 

dered  by  courts  of  appeal  there  is  no  remedy  but  an 
appeal  for  annulment  of  judgment  (casadon).  The 
remedy  of  casadon  must  be  based  upon  one  of  the 
following  causes: 

1st.  Violation  of  law  or  legal  doctrine  in  the  adjudg- 
ing part  of  the  decision; 

M.  Breach  of  some  of  the  essentials  in  matters 
of  form; 

Sd.  The  rendition  of  an  award  by  arbitrators  out- 
side the  scope  of  or  after  the  period  fixed  in  the 
compromisP 

83  Spain,  362,  375,  381,  382,  383,  401,  402,  1687,  1789  c.  p.;  Argentina,  47, 
48,  223  to  225  c.  p.;  Bolivia,  375  c.  p.;  art.  6  of  decree  of  Jan.  7,  1850,  1265, 
1268,  1410  c.  p.;  3  and  4  of  law  of  Dec.  24,  1851;  Brazil,  639,  641,  646,  652, 
665,  667,  668,  680,  682,  ih.;  Chile,  209,  937  c.  p.;  Colombia,  art.  4,  law  No.  4  of 
1907,  898  to  913  c.  p.;  Costa  Rica,  91,  92,  897,  898,  905,  911,  917,  959,  992, 
993,  1005  c.  p.;  Ecuador,  322,  323,  330,  331,  373,  380,  442  c.  p.;  Guatemala, 
880,  900,  1818,  1867  c.  p.;  Haiti,  160  to  163  c.  p.;  Honduras,  195,  197,  200,  217, 
900,  911  c.  p.;  Mexico,  629,  642,  648,  649,  689,  698,  699  c.  p.;  and  1331,  1334, 
1336,  1338,  1344,  1345  c.  com.;  Nicaragua,  380,  381,  494,  803,  806,  855  c.  p.; 
Panama,  1035  to  1086  c.  p.;  Peru,  1078,  1088,  1090  c.  p.;  San  Salvador,  423, 
424,  952,  955,  1000  c.  p.;  Santo  Domingo,  443  c.  p.;  Uruguay,  486,  651,  654, 
665  c.  p.;  Venezuela,  175,  186,  192,  198,  410,  411  c.  p. 

The  remedy  of  casadon  is  given  against  the  adjudging  part  of  a  judgment, 
not  against  or  on  account  of  the  legal  basis  (considerandos)  set  forth  in  it. 
Spain,  Trib.  Sup.,  June  11,  1912;  Gaceta  of  June  18,  1913,  p.  485. 

The  application  or  petition  by  means  of  which  a  remedy  of  casaddn  is  entered 
must  state  the  legal  provisions  on  which  the  remedy  is  founded  and  the  way 
{concepto)  in  which  those  legal  provisions  were  infringed  by  the  judgment 
objected  to.    Spain,  Trib.  Sup.,  Jan.  19,  1912;  Gaceta  of  April  15,  1913,  p.  59. 

An  appeal  is  proper  only  when  it  is  made  from  a  final  decision,  that  is,  a 
decision  which  adjudges  the  main  issue  in  the  case,  a  decision  which  has  the 
force  and  practical  effect  of  a  final  one,  when,  deciding  an  incidental  issue,  it 
decides  impliedly  the  principal  question.  Brazil,  Cam.  da  Corte  de  Apel., 
Nov.  16,  1906,  Revista  de  Direilo,  vol.  12,  p.  137. 

During  the  proceedings  in  casacion,  evidence  different  from  that  adduced 
below  cannot  be  taken  into  consideration.  Colombia,  Corte  Sup.  de  Just., 
Nov.  29,  1892;  Gaceta  Jud.,  vol.  8,  p.  99. 

The  remedy  of  denegada  apelacion  (appeal  insisted  upon  in  spite  of  the 
refusal  of  the  judge  to  enter  the  appeal)  is  not  proper  when  the  judge  of  first 
instance  declares  that  the  recourse  is  not  to  be  declared  entered;  it  is  only 
proper  when,  after  having  entered  it,  he  declares  that  it  is  not  proper.  Mexico, 
2a  Sala  Trib.  Sup.  del  Dist.  Fed.,  Jan.  18,  1913,  Diario  de  Jurisp.,  vol.  29, 
p.  260. 

The  remedy  of  casaddn  must  be  declared  illegal  when  entered  after  the 


758  LATIN-AMERICAN  COMMERCIAL  LAW 

In  Argentina,^^  Brazil,^^  Colombia, ^^  Nicaragua,^^  Peru  ^^ 
and  Uruguay, ^^  instead  of  the  remedy  of  casacion  there  is 
the  remedy  of  ''nullity,"  with  great  variety  of  detail  and 
comprehensiveness. 

In  Brazil  ^^  the  revista  or  revision  is  a  remedy  to  nullify 
proceedings  or  judgments;  it  is  less  comprehensive  than 
the  remedy  of  nullity,  which  covers  even  nullities  arising 
from  defects  in  contracts  and  obligations. 

In  Chile  a  remedy  of  revision  is  given  in  cases  where  some 
supervening  facts  show  that  a  judgment  was  groundless  or 
was  given  in  contradiction  to  another  judgment  which  had 
the  force  of  res  judicata. ^''^ 

In  Ecuador  ^~  there  is  a  third  instance  and  a  remedy  of 
complaint  (queja)  for  denial  or  delay  of  justice  somewhat 
similar  to  that  of  casacion. 

Guatemala  ^^  admits  a  third  instance,  to  come  before  the 
same  chamber  of  the  court  which  decided  in  second  instance. 

In  Haiti  ^^  and  Santo  Domingo  ^^  the  revision  civil  {re- 
quet  civil)  presents  a  certain  similarity  to  casacion.  In  Haiti  ^^ 
when  a  decree  in  a  matter  of  mere  practice  is  objected  to, 
the  objection  can  be  raised  by  way  of  appeal  at  the  same 
time  as  the  appeal  from  the  final  judgment. 

In  Venezuela  ^"^  there  can  be  a  third  instance  against  a 

expiration  of  eight  days  after  a  notice  of  the  decision  in  the  previous  instance 
was  served  upon  the  petitioning  party.  Mexico,  Trib.  Sup.  del  Dist.  Fed.  la. 
Sala,  Feb.  13,  1912,  Diar.  de  Jurisp.,  vol.  25,  p.  435. 

8*  Arts.  237,  281  to  284  c.  p. 

In  dealing  with  extraordinary  remedies  established  by  art.  14  of  law  48  of 
Aug.  25,  1863,  governing  the  jurisdiction  of  the  Corte  Suprema  de  la  Nacion 
the  court  cannot  take  into  consideration  other  provisions  of  the  Constitu- 
tion, international  treaties  or  federal  laws  than  those  invoked  below.  Bue- 
nos Aires,  Corte  Sup.  de  la  Nac,  June  4,  1914,  Jurisp.  de  los  Tribs.  Noes., 
June,  1914,  p.  9. 

85  Arts.  672,  680,  ib. 

86  Arts.  123  to  140,  law  No.  105  of  1890. 

87  Arts.  946  to  951  c.  p.  88  Art.  1085  c.  p. 

89  Arts.  670,  672,  679  c.  p.  ^  Arts.  665,  667,  *. 

91  Art.  980  c.  p.  92  Arts.  393,  430  c.  p. 

9'  Art.  1860  c.  p.  9^  Art.  416  c.  p. 

96  Art.  480  c.  p.  96  Art.  451  c.  p. 

97  Art.  406  c.  p. 


RULES   OF   GENERAL   APPLICATION  759 

decision  rendered  in  a  first  appeal,  but  only  in  so  far  as  the 
second  decision  may  differ  from  that  rendered  in  the  first 
instance. 

Taxation  of  costs. 

Judicial  costs,  as  a  rule,  are  divided  into  two  classes, 
namely:  procesales  and  personales.  In  Uruguay,  the  first 
are  called  castas,  and  the  second  ones  costos.  The  castas 
procesales  cover  judicial  fees  for  service  rendered  by  judges 
or  employees  of  the  court,  where  the  administration  of 
justice  is  not  free,  stamps  or  stamped  paper,  postage,  and 
compensation  to  witnesses;  castas  persanales  cover  compen- 
sation to  lawyers  and  experts  engaged  by  the  party. 

If  the  judgment  does  not  charge  costs  to  either  party  it 
is  understood  that  each  must  pay  his  own  expenses.  The 
cases  in  which  a  party  is  adjudged  to  pay  costs,  as  well  as 
the  extent  of  such  obligation,  vary  greatly  in  the  Latin- 
American  countries. 

The  most  general  rules  are  the  following: 

In  Argentina,^^  Chile,^^  Honduras  ^^^  and  Peru,^°^  the  los- 
ing party  must  be  adjudged  to  pay  all  costs  unless  the  court 
finds  some  reason  to  release  him  from  the  burden. 

In  Bolivia,  ^"^  Costa  Rica,^°^  Nicaragua  ^°^  and  San  Sal- 
vador, ^^^  a  plaintiff  who  does  not  show  good  cause  for  his 
complaint,  a  contumacious  litigant  or  one  who  shows  bad 
faith,  must  be  adjudged  to  pay  costs,  which  cover  the 
castas  pracesales  only,  unless  it  is  expressly  decided  that  he 
should  pay  damages.    In  that  case  all  costs  are  covered. 

88  Art.  221  c.  p. 

A  first  instance  decision  which  does  not  grant  all  that  the  plaintiff  demanded, 
must  be  confirmed  and  the  defendant  released  from  costs,  because  the  plaintiff 
did  not  obtain  his  whole  claim,  and  he  appealed  only  on  the  ground  that  no 
costs  were  adjudged  to  him  in  the  decision.  Buenos  Aires,  Cam.  2a  de  Apel. 
Civ.,  June  23,  1914,  Jurisp.  de  los  Tribs.  Nacs.,  June,  1914,  p.  301. 

»3  Art.  151  c.  p.  "»  Arts.  192  c.  p.,  242  to  244  c.  p. 

loi  Art.  1077  c.  p. 

^"^  Art.  392  c.  p.,  Corte  Suprema  decision  published  in  the  Gacela  J  ml.,  No. 
259,  p.  1558. 

"'  Art.  1072  c.  p.  i«^  Arts.  397,  1082  c.  p. 

106  Arts.  437,  1225  c.  p. 


760  LATIN-AMERICAN  COMMERCIAL  LAW 

In  Cuba/««  Colombia,  ^o^  Ecuador/^^  Guatemala/"^  Mex- 
ico ""  and  Venezuela, ^^^  a  litigant  who  displays  manifest 
bad  faith  in  the  proceedings  must  be  adjudged  to  pay  all 
costs.  In  Cuba  and  Colombia  the  party  who  in  such  case 
has  to  pay  costs  is  not  obliged  to  pay  any  compensation 
to  his  attorney  unless  it  is  proved  that  the  latter  did  not  help 
the  client  in  his  bad  faith  proceedings.  In  Mexico  the  party 
adjudged  to  pay  costs  need  not  pay  the  fees  of  his  opponent's 
attorney  if  such  attorney  is  not  a  lawyer. 

In  Venezuela  the  party  who  must  pay  the  fees  of  his 
opponent's  attorney  is  not  obliged  to  pay  more  than  half 
the  amount  in  litigation."^ 

In  Haiti  "^  and  Santo  Domingo  "^  the  party  who  loses 
must  always  pay  all  costs. 

Loss  of  rights  in  judicial    proceedings    (Caducidad  de  la 
instancia) . 
Proceedings  are  considered  abandoned  and  the  effects 

iw  Arts.  1,  2  of  order  No.  3  of  1900. 

As  the  assistance  of  lawyers  and  solicitors  is  not  necessary  in  proceedings 
of  non-contentious  jurisdiction,  no  computation  of  their  fees  is  proper  in  the 
judicial  decision  thereon.  Spain,  Trib.  Sup.,  May  3,  1912;  Gaceta  of  June  5, 
1913,  p.  379. 

10'  Art.  864  c.  p.  43,  law  No.  40, 1907,  and  103  to  105  of  law  No.  105  of  1890. 

If  the  decision  rendered  in  second  instance  adjudges  costs,  and  the  decision 
in  first  instance  did  not,  it  is  understood  that  the  costs  referred  to  by  the  de- 
cision in  second  instance  are  those  originating  in  the  second  instance  only. 
Colombia,  Corte  Sup.  de  Just.,  July  29,  1891;  Gaceta  Jud.,  vol.  6,  p.  245. 

The  remedy  of  casacion  is  not  proper  with  respect  to  judicial  costs,  because 
it  relates  only  to  the  subject-matter  of  the  contention,  and  not  to  matters  of 
an  accessory  character,  as  costs  are.  Colombia,  Corte  Sup.  de  Just.,  Casaci6n, 
March  27,  1897;  Gaceta  Jud.,  vol.  12,  p.  323. 

los  Art.  325  c.  p.  ^^^  Arts.  526,  534,  535,  536. 

"» Arts.  143  c.  p.  and  1081  to  1084. 

Costs  must  be  adjudged  against  the  party  who  htigated  with  an  evident 
want  of  justice,  in  the  opinion  of  the  judge.  Mexico,  Juzgado  4°.  de  lo  Civil 
del  Dist.  Fed.,  Nov.  13,  1908,  Diario  de  Junsp.,  vol.  18,  p.  123. 

Lawyer's  fees  for  voyages  cannot  be  taken  into  account  by  the  judge  in 
taxing  costs,  when  said  voyages  could  have  been  avoided  by  issuing  rogatory 
letters  to  the  judge  of  the  place  where  a  judicial  act  has  taken  place.  Mexico, 
Juzgado  lo.  de  1°  Civil  del  Dist.  Fed.,  Aug.  24,  1911,  Diar.  de  Jur.,  vol.  25, 
p.  597. 

Ill  Art.  183  c.  p.  112  Art.  184  c.  p.  "» Art.  137  c.  p. 

1"  Art.  130  c.  p. 


RULES    OF    GENERAL    APPLICATION  761 

thereof  extinguished,  even  in  the  case  of  minors  or  incom- 
petent persons  if,  after  having  been  instituted  they  are  not 
prosecuted. 

The  period  for  proceedings  thus  to  be  deemed  abandoned 
differs  widely.  In  Spain  ^^^  it  is  four  years  and  in  Hon- 
duras ^^^  three  years  if  the  proceedings  are  in  first  instance; 
two  years  in  second  instance,  and  one  year  if  in  casacion, 
in  both  countries. 

In  Bolivia,  ^^^  Nicaragua  ^^^  and  San  Salvador,  ^^^  when  the 
plaintiff  fails  to  prosecute  the  suit  after  answer  to  his  com- 
plaint, the  defendant  may  request  him  to  continue  the  pro- 
ceedings under  penalty  of  a  declaration  of  abandonment 
{desercion).  The  judge  must  acquiesce  in  such  request  and 
give  the  plaintiff  a  period  of  three  days  (four  days  in  Bolivia) 
after  the  expiration  of  which  without  any  petition  from  the 
plaintiff,  the  proceedings  are  declared  abandoned. 

In  Chile  ^-°  the  proceedings  (instancia)  are  considered 
abandoned  when  both  parties  have  ceased  to  prosecute  the 
same  for  three  years.  Only  the  defendant  can  plead  such 
abandonment,  but  he  can  waive  it  by  not  pleading  it  after 
the  plaintiff  makes  a  move  in  the  case.  Abandonment  can- 
not be  pleaded  in  proceedings  for  the  liquidation  of  the  estate 
of  an  insolvent,  in  bankruptcies,  partition  of  inheritances  or 
of  partnership  or  corporation  assets. 

In  Colombia  ^-^  an  action  is  deemed  abandoned  when  the 
plaintiff  ceases  to  prosecute  the  case  for  one  year.  This 
provision  does  not  apply  to  the  partition  of  property  between 
co-owners,  nor  to  acts  of  non-contentious  jurisdiction  or 
'' executive"   actions. 

In  Costa  Rica  ^"  the  instancia  can  be  declared  abandoned 
when  the  plaintiff  fails  to  prosecute  it  for  six  months. 

116  Art.  410  c.  p. 

To  make  a  declaration  that  proceedings  in  an  action  have  lapsed  and  been 
abandoned  is  not  a  power  of  the  courts  but  a  duty.  Spain,  Trib.  Sup.,  Dec.  14, 
1912;  Gacela  of  Oct.  20,  1913,  p.  299. 

"'Art.  147  c.  p.  »"Art.s.  502,  503  c.  p. 

"8  Arts.  510,  511  c.  p.  I'^Arts.  539,  510  c.  p. 

i*  Arts.  159  to  163  c.  p. 

1"  Art.  54  of  law  No.  105  of  1890,  29  of  law  No.  100  of  1892. 

i"Art.  417  c.  p. 


762  LATIN-AMERICAN  COMMERCIAL  LAW 

In  Ecuador  ^-^  the  first  instance  is  deemed  abandoned  by 
the  lapse  of  three  years  without  prosecution,  provided  the 
last  proceeding  required  that  a  move  should  be  made. 

In  Guatemala  ^'^  the  first  instance  is  abandoned  by  the 
lapse  of  six  months  without  prosecution;  the  second  and  third 
instance  by  the  lapse  of  two  months. 

In  Haiti  ^-^  and  Santo  Domingo  ^-^  a  proceeding  is  aban- 
doned by  the  lapse  of  two  years  in  Haiti  and  three  years  in 
Santo  Domingo;  this  period  is  extended  to  six  months  more, 
when  a  motion  is  made  to  resume  the  instance  or  to  appoint  a 
new  attorney. 

In  Mexico  ^^^  abandonment  of  the  proceedings  has  no 
legal  effect  so  long  as  the  action  itself  is  not  barred  by  limita- 
tion; only  when  a  party  has  appealed  from  a  judgment  or 
ruling,  or  has  entered  a  petition  of  casacion,  is  the  recourse 
declared  abandoned  when  he  fails  to  appear  before  the 
superior  court  to  continue  the  proceedings. 

In  Peru  ^^^  the  period  for  abandonment  of  proceedings  is 
two  years  for  the  first  instance,  one  year  for  the  second,  and 
five  months  for  the  recourse  of  nullity.  These  periods  do  not 
apply  to  minors  who  are  not  properly  represented  in  the  suit. 

The  period  is  three  years  in  Uruguay  ^^^  and  four  years  in 
Venezuela,  ^^°  but  in  the  latter  country  the  abandonment  of 
the  proceedings  in  the  first  instance  cannot  take  place  with- 
out the  defendant's  consent. 

The  legal  effect  of  the  abandonment  of  the  proceedings  is 
as  follows:  the  plaintiff  does  not  forfeit  his  action  if  the 
abandonment  took  place  in  the  first  instance,  and  he  can 
renew  it;  but  the  abandoned  proceedings  are  without  effect 
on  the  period  for  the  limitation  of  the  action,  which  was 
interrupted  by  them.  If  the  abandonment  occurs  during  the 
second  or  third  instance  the  effect  is  to  make  the  previous 
decision  enforceable. ^^^  Only  in  Guatemala  ^^^  can  the 
proceedings  not  be  renewed. 

123  Arts.  454,  455  c.  p.         i24  a^.  454  c.  p.  '^s  Art.  394  c.  p. 

i»  Art.  397  c.  p.  ^^  Arts.  686,  723  c.  p.     i^s  Arts.  269,  276  c.  p. 

"9  Art.  1316  c.  p.  130  Art.  214  c.  p. 

"1  Spain,  414,  418  c.  p.;  Bolivia,  504  c.  p.;  Chile,  163  c.  p.;  Colombia,  54  ib.; 
132  Art.  454  c.  p. 


RULES    OF    GENERAL    APPLICATION  763 

Legal  aid  to  the  poor. 

In  Spanish- American  countries  there  is  a  provision  of  the 
law  in  favor  of  persons  who,  lacking  the  pecuniary  resources 
to  prosecute  their  claims,  need  to  appear  in  court  whether 
as  plaintiffs  or  defendants.  In  order  to  enjoy  the  benefit  of 
such  provision  it  is  necessary  to  have  a  judicial  declaration 
that  the  applicant  is  poor,  by  proving,  in  some  countries, 
that  his  means  of  subsistence  are  not  greater  than  a  certain 
standard  (double  the  wages  of  a  worker),  in  others,  that  his 
income  does  not  exceed  a  certain  amount  per  year,  and  in 
still  others,  the  matter  is  left  to  the  discretion  of  the  judge 
who  must  take  all  the  circumstances  into  consideration. 

The  effects  of  such  declaration  are  also  more  or  less  liberal, 
for,  while  in  some  countries  a  poor  litigant  is  entitled  to  have 
a  lawyer  appointed  to  assist  him  and  is  relieved  from  paying 
fees  or  from  the  obligation  of  using  stamped  paper,  and  of 
making  judicial  deposits  when  the  law  so  requires,  in  other 
countries  the  benefit  is  reduced  to  the  use  of  a  less  expensive 
stamped  paper  for  petitions  and  proceedings  and  to  his 
release  from  any  obligation  of  making  deposits  as  security 
provided  by  law  or  of  paying  the  total  amount  of  costs. '^^ 

Costa  Rica,  419  c.  p.;  Ecuador,  455  c.  p.;  Haiti,  401  c.  p.;  Honduras,  153  c.  p.; 
Nicaragua,  427  c.  p.;  Peru,  277  c.  p.;  San  Salvador,  469  c.  p.;  Santo  Domingo, 
401  c.  p.;  Uruguay,  1330  c.  p.;  Venezuela,  214,  215  c.  p. 

'^^  Spain,  14,  15  c.  p.;  Argentina,  593,  601  c.  p.;  Bolivia,  664  to  674  c.  p.; 
ChUe,  142,  143  c.  p.;  Colombia,  297  of  law  No.  105  of  1890;  Costa  Rica,  162 
to  168  c.  p.;  Ecuador,  950  to  955  c.  p.;  Guatemala,  307  to  323  c.  p.;  Honduras, 
13  to  24  c.  p.;  Mexico,  290  to  302  c.  p.;  Nicaragua,  769  to  775  c.  p.;  Panama, 
1911  to  1919  c.  p.;  Peru,  282,  295  c.  p.;  San  Salvador,  896  to  902  c.  p.;  Uruguay, 
1283  to  1290  c.  p.;  Venezuela,  38  to  50  c.  p. 

Foreigners  who  appear  in  the  Spanish  courts  asking  to  be  helped  as  poor 
persons  in  order  to  carry  on  a  judicial  action,  are  entitled  to  the  benefits  of  the 
law  and  must  be  granted  such  relief.  Spain,  Trib.  Sup.,  Feb.  1,  1912;  Gaceta 
of  April  25,  1913,  p.  115. 

A  declaration  that  a  person  is  entitled  to  the  benefit  of  legal  aid  to  the  poor 
is  proper  when  he  has  applied  therefor  to  the  judge  of  projx-r  jurisdiction  in 
the  intended  litigation,  has  precisely  stated  the  object  of  said  litigation,  the 
attorney  general  ha.s  been  heard  in  the  application,  and  the  lack  of  resources 
of  the  petitioner  has  been  proved.  Mexico,  Juzgado  6°  de  lo  Civil  del  Dist. 
Fed.,  July  28,  1908,  Diario  de  Jurisp.,  vol.  18,  p.  606. 


CHAPTER  XLII 

Legal  Procedure 

contentious  and  non-contentious  jurisdiction 

As  the  nature  of  this  book  precludes  our  entering  into  the 
details  of  legal  procedure  in  the  different  countries  of  Latin- 
America,  as  has  been  done  with  respect  to  the  substantive 
law  of  commerce,  this  chapter  will  be  confined  to  the  presen- 
tation of  general  principles  and  rules,  as  estabUshed  in  the 
code  of  civil  procedure  of  Spain,  which  may  be  considered  as 
a  type,  with  occasional  remarks  or  citations  concerning 
variations  in  the  law  of  other  countries  which  may  warrant 
special  mention. 

Forms  of  actions. 

The  following  forms  of  actions  or  proceedings  may  be 
noted : 

(a)  the  ordinary  action  {juicio  ordinario  or  declar- 
ativo),^  which  is  classified  according  to  the  amount 
claimed;  into  ordinary  action  of  greater  amount  (juicio 
declarativo  de  mayor  cuantia)  -  exceeding  5,000  pesetas; 
and  the  ordinary  action  of  minor  importance  {juicio 
declarativo  de  menor  cuantia).  The  latter  is  subdivided 
in  turn,  into  written  proceedings  {juicio  escrito)  when 
the  amount  in  dispute  exceeds  1,000  pesetas,  and  oral 
proceedings  {juicio  verbal),  when  less  than  that  amount;  ^ 

(b)  the  summary  action  {juicio  sumario),"^  which  may 
be  subdivided  into  various  classes,  depending  on  the 
purpose  of  the  suit; 

^  Spain,  article  480  c.  p. 

^  Art.  482  c.  p.     Actions  for  more  than  500  pesetas  or  those  involving  the 
civil  status  of  a  person. 
'Art.  714. 

« Arts.  1559,  1607,  1616  and  1692  c.  p. 

764 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION    765 

(c)  the  ''executory"  or  "executive"  action  (juicio 
ejecutivo)  when  the  action  is  based  upon  documents 
constituting  full  evidence,  in  the  nature  of  a  confession 
of  judgment.^ 

(d)  intestacy  proceedings  {juicio  de  intestado) ;  ^ 

(e)  testamentary  proceedings  (juicio  de  testamentaria)  ;^ 
(J)  insolvency  proceedings  (concurso  de  acreedores) ;  ^ 
(g)  bankruptcy  proceedings  (juicio  de  quiehra).^ 

Proceedings  before  the  complaint. 

There  are  two  forms  of  legal  steps  preceding  the  complaint, 
namely,  (a)  those  which  the  law  requires,  and  (6)  those  which 
the  law  merely  authorizes  in  order  that  the  plaintiff  may 
safeguard  nis  interests  and  insure  the  practical  success  of 
the  litigation. 

Proceedings  to  avoid  litigation  (acto  de  conciliabion) . 

Among  the  first  group,  the  law  of  Spain  prescribes  the 
proceedings  to  avoid  litigation.  Judges,  in  every  written 
action,  are  forbidden  to  admit  any  complaint  not  accom- 
panied by  the  certificate  of  the  proceedings  designed  to 
effect  a  conciliation,  in  all  cases  not  expressly  exempt 
from  such  formality  by  law.  The  proceedings  must 
be  carried  out  before  the  municipal  judge.  On  the  day 
appointed  by  him  for  the  purpose  of  attempting  to  effect 
conciliation,  each  party  must  appear  accompanied  by  un 
hombre  hueno,  or  persons  who  assist  the  judge  in  bringing 
about  a  conciliation  between  the  parties.  If  no  settlement 
is  affected  the  proceedings  are  considered  closed,  a  record  of 
the  same  or  a  statement  that  the  defendant  did  not  appear, 
is  entered  in  a  special  book,  and  a  certificate  of  such  record 
is  given  to  the  person  or  persons  requesting  it,  in  order  that 
he  may  begin  suit,  or  use  it  as  he  sees  fit.  With  the  exception 
of  Uruguay  the  conciliation  procedure  appears  to  have  been 
abolished  or  fallen  into  disuse  in  Latin-America,  with  the 
possible  exception  of  divorce  cases. 

6  Art.  1427  c.  p.        « Art.  958  c.  p.        ">  Art.  1035  o.  p. 
8  Art.  1128  c.  p.        9  Arts.  1321  to  1426  c.  p. 


766  LATIN- AMERICAN  COMMERCIAL  LAW 

Preparatory  proceedings. 

Among  the  second  group  of  proceedings  there  are  several 
measures  called  preparatory  {diligencias  preliminares)  which 
serve  to  prepare  for  an  action,  as  follows: 

(a)  a  demand  by  the  prospective  plaintiff  upon  the 
party  whom  he  intends  to  sue,  for  a  sworn  declaration 
concerning  some  fact  relating  to  the  personal  qualifica- 
tions of  the  latter,  without  which  information  the  action 
cannot  be  brought; 

(h)  a  request  for  the  exhibition  of  a  certain  movable 
which  is  to  be  the  subject-matter  of  a  real  action  against 
the  person  having  the  thing  in  his  possession  {dctio  ad 
exhihendum) ; 

(c)  a  demand  by  the  person  who  believes  himself  to 
be  an  heir,  a  co-heir,  or  a  legatee  for  the  exhibition  of 
the  will,  codicil,  or  testamentary  memorandum  of  the 
testator; 

(d)  a  demand  by  the  buyer  on  the  seller,  or  by  the 
seller  on  the  buyer,  in  case  of  eviction,  for  the  exhibition 
of  the  title-deed  or  other  instruments  having  reference 
to  the  thing  sold; 

(e)  a  demand  by  a  partner  or  member  of  an  associa- 
tion that  the  documents  and  commercial  books  of  the 
partnership  or  association  be  presented  by  a  co-partner 
or  co-owner  who  may  have  the  same  in  his  possession,  in 
cases  where  this  is  legally  proper; 

(/)  a  demand  by  the  possessor  of  a  private  instrument 
requesting  the  acknowledgment  of  the  signature  of  the 
debtor,  in  order  to  lay  the  foundation  for  an  ''executive" 
action. 
With  the  exception  of  the  cases  above  mentioned,  the 
person  seeking  to  institute  an  action  cannot  request  a  dec- 
laration iuider  oath  from  the  opposing  party,  or  from  wit- 
nesses, or  any  other  means  of  evidence,  except  when,  by 
reason  of  the  advanced  age  of  a  witness,  imminent  danger 
to  his  life,  his  early  departure  for  a  place  to  which  communi- 
cation is  difficult  or  slow,  or  for  other  good  reason,  such 
plaintiff  is  in  danger  of  losing  his  claim  for  back  of  evidence. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     767 

In  that  event  he  may  request,  and  the  judge  may  order, 
that  the  witness  or  witnesses  in  the  exceptional  position 
above  mentioned,  be  examined  by  deposition  in  the  manner 
prescribed  by  law. 

In  case  personal  property  is  exhibited,  and  the  plaintiff 
states  that  it  is  the  subject-matter  of  his  action,  the  clerk 
must  enter  a  description  thereof  in  the  records,  the  property 
itself  being  left  in  the  possession  of  the  person  exhibiting 
the  same,  with  an  order  to  preserve  it  in  the  same  condition 
until  the  termination  of  the  suit.  The  deposit  of  the  thing 
may  also  be  demanded  by  the  plaintiff,  if  the  requisites  for 
an  attachment  by  way  of  security  are  present.  If  the  person 
requesting  the  deposit  does  not  institute  his  action  within 
thirty  days  after  these  proceedings,  the  attachment  is  dis- 
solved de  jure,  and  he  must  make  compensation  for  damages 
caused  thereby.  ^"^ 

Preventive  measures. 

Certain  measures  may  be  taken  before  beginning  an  action 
or  during  the  proceedings,  called  medidas  preventivas  or 
yrovidencias  precautorias,  the  purpose  of  which  is  to  secure 
the  results  of  an  action  brought  or  about  to  be  brought. 
They  are  of  different  kinds,  but  may  be  divided,  following 
the  code  of  Spain,  into  two  classes,  namely  (a),  preventive 
seizures  or  attachment,  and  (6)  the  security  of  property 
in  litigation. 

Preventive  attachment  (embargoes  preventives). 

Preventive  or  preliminary  attachment  may  be  ordered 
for  debts  in  money  as  well  as  in  kind.  In  the  second  case 
the  plaintiff  must,  under  his  responsibility,  fix,  for  the  pur- 
pose of  the  attachment,  the  cash  value  of  the  thing  claimed, 
calculated  according  to  the  average  market  price  in  town, 
without  prejudice  to  the  later  submission  of  evidence  as  to 
the  true  value. 

In  order  that  a  preventive  attachment  may  be  ordered 
it  is  necessary: 

10  Art.  131G  c.  p. 


768  LATIN-AMERICAN  COMMERCIAL  LAW 

(a)  that  documentary  evidence  of  the  existence  of 
the  debt  be  presented  with  the  petition; 

(&)  that  the  attached  debtor  be  either  a  foreigner 
not  naturahzed,  or,  even  though  a  citizen,  that  he  have 
no  known  residence,  or  own  no  real  property,  or  any 
agricultural,    industrial   or    commercial    establishment 
at  the  place  where  payment  of  the  debt  may  be  legally 
demanded,  or  that  he  have  disappeared  from  his  resi- 
dence or  establishment,   without  leaving  any  person 
in  charge  thereof,  and  if  he  left  some  one  in  charge,  that 
such  person  do  not  know  the  debtor's  actual  residence 
or  that  the  latter  conceal  himself,  or  that  there  be  rea- 
sonable ground  to  believe  that  he  will  conceal  or  under- 
sell his  property  to  the  prejudice  of  his  creditors. 
If  the  instrument  of  title  presented  should  be  one  by  \Trtue 
of  which  an  execution  can  be  ordered  without  further  pro- 
ceedings (''executive"  action),  the  provisional  seizure  thereof 
in  execution  may  be  at  once  ordered;  otherwise  it  may  be 
ordered  for  the  account  and  risk  of  the  person  requesting  it. 
Should  he  not  be  a  person  of  admitted  responsibility,  the 
judge  must  require  him  to  furnish  security  sufficient  to 
answer  for  damages  and  costs  which  the  defendant  may 
suffer  thereby. 

The  person  who  has  obtained  a  preventive  attachment 
must  request  ratification  thereof  by  filing  the  corresponding 
complaint  within  twenty  days  after  the  le\"ying  of  the  attach- 
ment; otherwise  the  seizure  becomes  de  jure  null  and  void 
and  the  plaintiff  must  be  ordered  to  indemnify  the  defend- 
ant for  any  damages  sustained. 

Security  of  property  in  litigation. 

A  person  who,  presenting  documentary  evidence  of  his 
rights,  institutes  an  action  claiming  the  o\\Tiership  of  mines, 
or  of  woodlands,  the  principal  wealth  of  which  consists  of 
timber,  or  of  plantations,  or  of  industrial  and  manufactur- 
ing estabUshments,  may  request  that  judicial  intervention 
be  ordered  in  the  management  of  the  property  in  litigation. 
The  parties  to  the  suit  are  cited  to  appear  with  the  sole 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     769 

purpose  of  coming  to  an  agreement  as  to  the  person  to  be 
appointed  as  interventor  (supervisor  or  administrator); 
should  they  be  unable  to  reach  an  agreement,  the  plaintiff 
must  designate  four  person  of  whom  the  defendant  must 
select  one;  if  he  should  not  do  so,  the  person  who  pays  the 
highest  territorial  tax  must  be  appointed. 

If  any  of  the  documents  which  may  lay  a  foundation  for 
an  ''executive"  action  is  presented  in  an  action,  and  an 
obligation  to  do  or  to  abstain  from  doing  something,  or  to 
deliver  specific  things  is  clearly  apparent  therein,  the  judge 
may,  at  the  instance  and  under  the  responsibility  of  the 
plaintiff,  adopt  any  measures  which,  in  the  circumstances, 
may  be  deemed  necessary  to  secure  the  enforcement  of 
any  judgment  that  may  be  rendered  in  the  action.  If  the 
person  requesting  the  measure  is  not  known  to  have  suffi- 
cient financial  responsibility,  the  judge  must  require  him 
to  furnish  security  sufficient  to  answer  for  any  resulting 
damages.  The  judges  can  also  secure  property  of  a  debtor 
in  order  to  pay  an  obligation  when  the  debtor  absconds 
himself,  or  leaves  his  domicil  without  leaving  any  person 
in  charge  of  his  affairs,  or  when  there  is  a  well-founded  fear 
that  he  may  dilapidate  or  secrete  his  property." 

Action  of  jactitation  {Accion  de  jactancia) . 

As  a  rule  no  person  can  be  compelled  to  bring  an  action 
against  another.  An  exception  to  such  rule  arises  when  a 
person  publicly  boasts  that  another  person  is  his  debtor,  or 
that  he  has  rights  with  respect  to  a  certain  thing  possessed 
by  another.  In  such  case  the  alleged  debtor  or  possessor 
of  the  thing  may  petition  the  court  to  fix  a  period  within 
which  the  boasting  person  must  bring  the  action  he  claims 
to  have,  or  else  be  enjoined  to  keep  silent,  his  claim  being 
deemed  waived.  A  person  who  in  a  legal  instrument  or 
transaction  reserves  any  rights  he  may  have  against  another, 
or  with  respect  to  a  certain  thing,  is  not  considered  a  boasting 
person  (jadancioso) .  ^  - 

"  Arts.  459  to  479  c.  p. 

»2  Spain,  496  to  501,  1395  to  1426  c.  p.;  Argentina,  67  to  70,  443  to  463  c.  p.; 


770  LATIN- AMERICAN  COMMERCIAL  LAW 

The  effects  of  an  action  of  jactancia  are  not  in  all  countries 
the  loss  of  the  right  which  the  jadancioso  assumed  to  have. 
In  Costa  Rica  he  must  pay  a  fine  of  from  one  hundred  to 
five  hundred  colones;  in  Nicaragua  he  is  not  allowed  during 
a  certain  period  to  bring  the  action  he  refused  to  begin  at 
the  injunction  of  the  court. 

The  codes  of  Spain  and  Peru  have  no  provision  in  regard 
to  jactancia,  but  the  Spanish  courts  have  held  that  law  46, 
tit.  2,  Part.  3  of  the  Siete  Pariidas  is  actually  in  force,  and 
that  the  person  who  boasts  of  a  right  and  refuses  to  vindi- 
cate it  judicially  when  enjoined  thereto  by  a  court,  must 
on  a  well-founded  petition  of  an  interested  party,  be  ad- 
judged to  maintain  perpetual  silence  on  the  matter. ^^ 

In  Venezuela,  articles  649  to  654  of  the  code  of  civil  pro- 
cedure have  substituted  the  action  of  injurious  delay  {retardo 
prejudicial)  for  the  jactancia,  and  it  applies  to  all  cases  in 
which  the  would-be  plaiatiff  delays  maliciously  in  beginning 
his  action,  whether  he  boasts  or  not  of  his  supposed  rights. 
If  he  does  not  start  his  action  within  the  period  provided 
by  the  court,  it  will  not  be  admitted  to  trial  until  the  defend- 
ant is  freed  from  any  damages  the  inaction  may  cause. 

Proceedings  in  an  action. 

The  essential  parts  of  an  action  are:  (a)  the  complaint; 
(6)  the  summons;  (c)  the  answer;  {d)  the  evidence;  and 
(e)  the  judgment. 

The  summons  and  the  judgment  have  already  been  dis- 

Bolivia,  178  to  188  c.  p.;  351  to  359  ib.;  Chile,  263  to  300  c.  p.;  Colombia,  386 
to  393  c.  p.,  arts.  8  to  31  of  the  law  40  of  1907  and  art.  41  of  law  No.  105  of 
1890;  Costa  Rica,  171  to  176,  178  to  191  c.  p.;  Ecuador,  96  and  97  c.  p.;  Guate- 
mala, 232,  233,  235  269,  306  c.  p.;  Honduras,  250  to  260  c.  p.;  Mexico,  1151 
to  1193  c.  com.;  Nicaragua,  142  to  150  c.  p.;  Panama,  375  to  407  and  729  c.  p.; 
Peru,  209  to  246  c.  p.;  San  Salvador,  122  to  154  c.  p.;  Uruguay,  228  to 
260  c.  p.;  Venezuela,  368  to  384  c.  p. 

"  Argentina,  Buenos  Aires,  425  to  432  c.  p.;  Bolivia,  189,  191,  722  and  723 
c.  p.;  Chile,  259  to  262,  278  c.  p.;  Colombia,  275  c.  p.;  Costa  Rica,  4  c.  p.; 
Ecuador,  901,  904  c.  p.;  Guatemala,  1024  c.  p.;  Mexico,  23  c.  p.;  Nicaragua, 
149  c.  p.;  Panama,  356  to  360  c.  p.;  San  Salvador,  152  c.  p.;  Uruguay,  259,  260, 
863,  872  c.  p.;  Spain,  Trib.  Sup.,  July  6,  1882;  Gaceta  of  July  19,  1882,  and 
September  27,  1912,  No.  163,  42  Jurisp.  Civil,  n.  8,  1089. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     771 

cussed  in  a  general  way,  so  that  we  shall  now  proceed  to 
summarize  the  rules  governing  the  other  parts  of  an  action. 

Requisites  of  a  complaint. 

The  complaint  which  commences  a  judicial  action  must  be 
in  writing  and  must  contain:  (a)  the  designation  of  the 
court  or  judge,  for  example,  "  Al  Juez  Primero  de  lo  CiidV' 
(To  the  first  Judge  of  Civil  Jurisdiction) ;  (6)  the  name  and 
residence  of  the  plaintiff,  as  well  as  the  capacitj'',  personal  or 
representative,  in  which  he  brings  the  action;  (c)  the  name 
and  residence  of  the  defendant;  (d)  the  facts  on  which  the 
claim  is  based,  in  numerical  order;  (e)  the  principles  or  rules 
of  law  governing  the  action,  in  like  order;  (/)  the  particular 
redress  to  which  the  plaintiff  considers  himself  entitled,  i,  e., 
the  request  for  judgment.^'* 

Documents  which  must  accompany  a  complaint. 

The  following  documents  must  accompany  every  com- 
plaint or  answer:  (a)  the  power  of  attorney  in  case  the 
action  is  brought  by  proxy;  (5)  the  instrument  showing  the 
capacity  of  the  party,  whenever  he  appears  as  the  legal 
representative  of  any  person  or  association,  or  if  the  right  he 
claims  was  transferred  to  him  by  inheritance  or  otherwise; 
(c)  the  certificate  of  the  preliminary  proceedings  to  avoid 
litigation  {acto  de  condliacidn) ,  when  an  indispensable 
requisite  for  beginning  an  action;  (d)  the  document  or 
documents  upon  which  the  party  interested  bases  his  right. 
If  not  at  his  disposal,  he  must  indicate  the  notarial  protocol 
or  archives  in  which  the  originals  are  filed.  It  is  understood 
that  the  plaintiff  has  the  documents  at  his  disposal,  whenever 
the  originals  are  filed  in  a  protocol  or  public  archive  from 
which  he  may  demand  and  obtain  an  authenticated  copy 
thereof.    When  the  documents  above  referred  to  are  of  the 

1*  An  alternative  complaint,  in  which  the  plaintiff  asks  the  payment  of  a 
certain  sum  in  damages,  or,  if  the  defendant  does  not  agree  to  that  sum,  to 
submit  to  arbitrators  the  amount  due,  in  accordance  with  stipulations  of  the 
parties  in  a  contract,  is  not  improper.  Spain,  Trib.  Sup.,  March  24,  1886; 
Gaceta  of  July  31,  1886. 


772  LATIN-AMERICAN  COMMERCIAL  LAW 

kind  called  public  instruments,  the  presentation  can  be 
made  by  means  of  a  simple  copy,  if  the  person  interested 
declares  that  he  has  no  other  authentic  one;  but  such  copy 
does  not  produce  any  effect  whatever  if,  during  the  period 
designated  for  taking  evidence,  he  does  not  obtain  and 
include  in  the  record  an  authentic  copy. 

After  the  fihng  of  the  complaint  and  answer,  neither  the 
plaintiff  nor  the  defendant  is  permitted  to  file  any  other 
document,  except  the  following: 

(a)  those  bearing  a  date  subsequent  to  the  complaint ; 

(b)  those  bearing  a  prior  date,  provided  the  party 
presenting  them  states  on  oath  that  he  had  no  previous 
knowledge  thereof; 

(c)  those  which  could  not  be  procured  before,  for 
reasons  for  which  the  party  interested  cannot  be 
blamed,  provided  that  the  designation  of  the  protocol 
or  archive  in  which  the  originals  are  filed  was  made  in 
proper    time.^^ 

Copies  which  must  accompany  a  complaint. 

Every  instrument  presented  with  a  complaint  in  an 
ordinary  action  must  be  accompanied  by  as  many  copies 
thereof  as  there  are  defendants  or  opponents,  unless  the 
document  or  instrument  is  composed  of  more  than  twenty- 
five  sheets,  in  which  event  the  presentation  of  copies  is  not 
obligatory. 

A  complaint  which  is  not  accompanied  by  the  above- 

^^  Article  503  of  the  code  of  civil  procedure  which  prescribes  that  the  com- 
plaint or  answer  must  be  accompanied  by  the  documents  upon  which  the  party 
interested  bases  his  rights  is  not  violated  by  a  judgment  in  favor  of  the  plain- 
tiff when,  in  his  complaint,  the  use  of  certain  easements  was  involved  and  the 
opposing  party  recognized  the  ownership  in  the  land  enjojang  such  easements 
and  the  existence  of  the  servitudes,  even  though  the  defendant  requested  the 
plaintiff  to  present  the  documents  upon  which  he  based  his  complaint.  Spain, 
Trib.  Sup.,  November  29,  1888;  Gaceta  of  March  8,  1889. 

After  the  complaint  and  the  answer  thereto  have  been  entered  the  parties 
cannot  present  new  issues  or  disavow  the  facts  they  have  admitted  in  their 
respective  pleas.  Spain,  Trib.  Sup.,  October  17,  1892;  Gaceta  of  December  19, 
1892. 

Spain,  502  to  513  c.  p. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JUBISDICTION     773 

mentioned  documents  and  copies  cannot  be  accepted  by  the 
court. 

These  provisions,  as  a  rule,  are  not  apphcable  to  oral 
proceedings.^^ 

Dilatory  pleas  or  grounds  of  demurrer. 

After  the  complaint,  with  the  necessary  copies,  has  been 
presented,  it  must  be  ordered  served  on  the  defendant  or 
defendants  together  with  the  copies,  who  must  be  sum- 
moned to  appear  or  answer  within  a  period  of  nine  days, 
which  cannot  be  extended.  The  period  for  answer  varies 
slightly  from  country  to  country. 

If  the  defendant  produces  any  dilatory  plea  or  demurs,  he 
is  not  obUged  to  answer  the  complaint  until  the  same  has 
been  disposed  of;  this  must  be  done  before  proceeding  further 
in  the  action. 

The  following  only  are  admissible  as  dilatory  pleas: 

(a)  lack  of  jurisdiction; 

(b)  incapacity  of  the  plaintiff,  or  of  the  defendant,  or 
of  the  plaintiff's  attorney  or  legal  representative; 

(c)  pendency  of  another  action  before  another  compe- 
tent court  {litispendencia) ; 

(d)  a  legal  defect  in  framing  the  complaint  or  in 
bringing  the  action; 

(e)  any  other  plea  to  which  the  law  expressly  gives 
that  character. 

Dilatory  pleas  can  only  be  entered  within  six  days,  count- 
ing from  the  day  following  the  notification  of  the  order 
requiring  an  answer  to  the  complaint.  After  the  expiration 
of  this  period,  such  pleas  must  be  included  in  the  answer, 
and  do  not  produce  the  effect  of  suspending  the  course  of  the 
action.    All  dilatory  pleas  must  be  entered  at  the  same  time 

's  Spain,  514  to  522  c.  p.;  Argentina,  71  to  75  c.  p.;  Bolivia,  115  to  125  c.  p.; 
Brazil,  65  to  69  *.;  Chile,  250  to  253  c.  p.;  Colombia,  265  to  267  c.  p.;  Costa 
Rica,  215  to  220  c.  p.;  Ecuador,  9S  to  102  c.  p.;  Guatemala,  542  to  550  c.  p.; 
Honduras,  261  and  262  c.  p.;  Mexico,  922  to  926  c.  p.;  Nicaragua,  159  to  161, 
230  and  467  c.  p.;  Panama,  299  to  322  c.  p.;  Peru,  124  to  135,  306  to  308  c.  p.; 
San  Salvador,  185  to  195  c.  p.;  Uruguay,  284  to  289  c.  p.;  Venezuela,  239  to 
243  c.  p. 


774  LATIN-AMERICAN  COMMERCIAL  LAW 

and  in  one  pleading;  those  not  pleaded  must  be  included  in 
the  answer. 

All  dilatory  pleas  must  be  referred  to  the  plaintiff  for 
answer  within  three  days,  after  which  the  judge  passes 
upon  the  exceptions  in  the  form  of  an  incidental  issue;  but 
if  the  exception  is  to  the  jurisdiction  of  the  court,  or  the 
pendency  of  another  action,  such  pleas  must  first  be  passed 
upon. 

After  the  decision  overruling  the  dilatory  plea  has  been 
accepted  without  appeal,  or  after  it  has  become  final,  notice 
must  be  served  upon  the  defendant  at  the  petition  of  the 
plaintiff,  requiring  him  to  answer  the  complaint  within  ten 
days  following  service  of  the  order.  ^^ 

Security  for  costs. 

Among  the  dilatory  pleas  provided  by  the  law  may  be 
included  the  petition  of  the  defendant  that  the  plaintiff 
guarantee  the  payment  of  the  costs  arising  out  of  the  action. 
This  request  is  subject  to  different  conditions  in  the  various 
countries,   as  follows: 

System  of  Spain.  Such  security  can  only  be  demanded 
from  the  plaintiff  when  he  is  a  foreigner,  and  in  the  cases 
and  conditions  in  which  such  security  is  demanded  from 
citizens  of  countries  which  adopt  this  system,  in  the 
plaintiff's  country. ^^ 

System  of  Argentina.    The  security  can  be  demanded 

"  Spain,  522  to  588  c.  p.;  Argentina,  83,  84  c.  p.;  Bolivia,  167  to  176  c.  p., 
and  art.  7  of  the  law  of  February  5,  1858;  Brazil,  74  to  80  ib.;  Chile,  293  to 
298  c.  p.;  Colombia,  463  to  468  c.  p.  and  art.  87  of  law  100  of  1892,  art.  164  of 
law  40  of  1907,  and  arts.  50  and  52  of  law  105  of  1890;  Costa  Rica,  228  to 
235  c.  p.;  Ecuador,  121  to  124  c.  p.;  Guatemala,  569  to  584  c.  p.;  Haiti,  169, 
175  to  188  c.  p.;  Honduras,  286  to  288  c.  p.;  Mexico,  28  to  34,  935  to  940  c.  p.; 
Nicaragua,  128  to  132  c.  p.;  Panama,  963  to  976,  1094  and  1095  c.  p.;  Peru, 
312  to  319  c.  p.;  San  Salvador,  120  to  121  c.  p.;  Santo  Domingo,  168  to  187 
c.  p.;  Uruguay,  246  to  270  c.  p.;  Venezuela,  253  to  270  c.  p. 

The  dilatory  plea  based  on  the  pendency  of  another  similar  action  between 
the  same  parties  in  another  jurisdiction  is  proper  only  when  the  defendant 
in  the  first  of  the  actions  instituted  has  been  alreafly  summoned  to  appear 
in  the  court  and  answered  the  complaint.  Spain,  Trib.  Sup.,  Jul}'  11,  1890; 
Gaceta  of  October  28,  1890. 

18  Spain  533  c.  p.;  Mexico  28,  938  c.  p. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     775 

from  any  plaintiff  not  a  resident  of  the  place  in  which 
the  action  is  brought  whether  he  is  a  citizen  or  not.^^ 

System  of  Bolivia.  All  foreign  plaintiffs  are  obliged  to 
give  security  for  costs. -° 

System  of  Colombia.  The  obhgation  of  giving  security 
for  costs  is  mutual,  whether  the  parties  are  resident  or 
not,  or  citizens  or  foreigners.-^ 

System  of  Nicaragua.  A  plaintiff  must  always  give 
security  for  costs. ^- 

Answer  and  counterclaim  {contestacion  and  reconvencion) . 

The  answer  to  the  complaint  must  comply  with  all  re- 
quirements prescribed  for  the  complaint  itself.  If  it  is  not 
filed  within  the  period  allowed,  the  complaint  is  considered 
as  if  answered  and  the  proceedings  continue  as  may  be 
proper. 

The  answer  may  be  made :  (a)  by  admitting  the  facts  and 
the  conclusions  set  forth  in  the  complaint  as  correct;  (6)  by 
a  categorical  and  full  denial  thereof;  (c)  by  advancing  per- 
emptory pleas. 

The  answer  may  also  contain  a  counterclaim,  if  the  judge 
has  jurisdiction  thereof.  After  the  answer  to  the  complaint 
has  been  filed  a  counterclaim  cannot  be  admitted;  the 
defendant  can  then  bring  a  separate  action  only. 

The  answer  to  the  complaint  must  be  referred  to  the 
plaintiff  for  ten  days  in  order  that  he  may  reply  thereto 
(replica) ;  and  the  replication  for  a  like  period  to  the  defend- 

'^  Argentina,  85  c.  p.;  Uruguay,  120,  246  c.  p.;  Brazil,  decree  564  of  July  10, 
1850,  extended  to  commercial  cases  by  art.  736  of  Regulation  737  of  1850,  in- 
cluded also  in  art.  12  of  Part  III  of  decree  3084  of  1898,  consolidating  the  laws 
of  federal  justice.  In  Brazil,  the  defendant  estimates  the  amoimt  of  security 
desired  and  plaintiff  may  request  a  reduction.  If  the  judge  docs  not  wish  to 
reduce  it,  but  plaintiff  insists,  the  judge  appoints  two  lawyers  at  a  small  fee 
to  fix  it  by  arbitration.    See  Rodrigo  Octavio  in  40  Clunet  (1913),  p.  783. 

^  Bolivia,  art.  10  c.  p.;  Guatemala,  577  c.  p.;  Haiti,  167  and  168  c.  p.;  Santo 
Domingo,  167  c.  p. 

21  Colombia,  arts.  103  to  106  of  law  105  of  1890,  and  arts.  19  and  20  of  law 
169  of  1891.  See  arts.  11-12  c.  p.  Panama,  arts.  668  and  669  c.  p.;  Costa  Rica, 
art.   198  c.  p. 

22  Nicaragua,  18  and  19  c.  p. 


776  LATIN-AMERICAN  COMMERCIAL  LAW 

ant,  in  order  that  he  may  rejoin  {duplica).  In  the  replication 
and  rejoinder  the  parties  must  concisely  and  in  numbered 
paragraphs  state  the  facts  and  rules  of  law  which  support 
their  respective  contentions,  adding  to  or  amending  those 
contained  in  the  complaint  and  answer.  ^^ 

Periods  for  admission  of  evidence. 

The  judge  must  order  that  the  evidence  in  the  action  be 
taken,  whenever  the  parties  request  it,  or  when  he  deems  it 
proper,  unless  the  litigants  agree  to  submit  the  case  to 
judgment  without  the  taking  of  evidence.  The  judge  in 
that  event  orders  the  record  to  be  brought  before  him  by  the 
clerk,  and  the  parties  cited  to  hear  judgment. 

There  are  two  periods  for  the  taking  of  evidence:  (a)  the 
ordinary  and,  (h)  the  extraordinary  period.  The  former  is 
divided  into  two  parts:  the  first  part,  which  cannot  be  ex- 
tended, is  twenty  days  and  during  this  period  the  parties  must 
state  all  the  matters  upon  which  they  desire  evidence  to  be 
taken.  The  second  part,  which  is  of  thirty  days  and  can  be 
extended  in  case /orce  majeure  prevents  the  taking  of  evidence 
within  that  time,  serves  for  the  taking  of  evidence  on  matters 
proposed  by  the  parties  during  the  first  part  of  the  period. 

There  are  countries  in  which  the  ordinary  period  has  only 
one  parte  which  serves  to  state  the  matters  upon  which  the 
parties  want  to  submit  evidence  and  at  the  same  time  taking 
the  evidence.  Such  period  may  vary  from  country  to  coun- 
try, but  as  a  rule  is  forty  days. 

The  extraordinary  period  is  onl}'-  granted  when  the  evi- 
dence must  be  taken  outside  of  the  country,  and  it  varies 
according  to  the  distance  to  the  place  where  the  evidence  is 
to  be  taken.-'* 

23  Spain,  539  to  548  c.  p.;  Argentina,  98  to  103  c.  p.;  Bolivia,  247  to  256  c.  p.; 
Brazil,  96  to  110,  ib.;  Chile,  299  to  307  c.  p.;  Colombia,  937  to  955  c.  p.  and  143 
of  law  105  of  1890;  Costa  Rica,  236  to  242  c.  p.;  Ecuador,  125  to  129  c.  p.; 
Guatemala,  587  to  602  c.  p.;  Honduras,  289  to  299  c.  p.;  Mexico,  943  to  946 
c.  p.;  Nicaragua,  184,  195  c.  p.;  Panama,  1099  to  1104,  1108  c.  p.;  Peru,  320,  334 
c.  p.;  San  Salvador,  216  to  226  c.  p.;  Uruguay,  313  to  326  c.  p.;  Venezuela, 
215,  252,  271  to  280  c.  p. 

2«  Spain,  549  to  561  c.  p.;  Argentina,  104  to  124  c.  p.;  Bolivia,  262  to  269  c.  p.; 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     777 

General  rules  for  the  taking  of  evidence. 

If  after  the  replication  and  rejoinder  some  important  fact, 
material  to  the  case,  has  occurred,  or  if  any  like  fact  of  prior 
date  comes  to  the  knowledge  of  any  of  the  parties,  of  which 
they  swear  that  they  had  no  previous  knowledge,  they  may 
allege  such  facts  in  a  supplementary  pleading  during  the  first 
period  designated  for  the  admission  of  evidence.  A  copy  of 
the  supplementary  pleadings  must  be  given  to  the  opposing 
party,  who,  within  three  days,  must  admit  or  deny  the  new 
facts,  allege  other  facts,  or  controvert  those  set  forth. 

The  evidence  must  be  confined  to  the  allegations  con- 
tained in  the  complaint,  the  answer,  replication  and  re- 
joinder, and  to  those  of  the  supplementary  pleadings  which 
have  not  been  fully  admitted  by  the  party  prejudiced 
thereby. 

All  proceedings  for  the  taking  of  evidence  are  public, 
except  when  dangerous  to  good  order,  and  must  take  place 
after  at  least  twenty-four  hours'  notice  to  the  parties.  The 
parties  and  their  attorneys  merely  attend  at  the  taking  of 
evidence,  and  cannot  intervene  therein  in  any  other  manner 
than  that  prescribed  for  each  class  of  evidence.  All  proceed- 
ings for  the  taking  of  evidence  after  the  expiration  of  the 
corresponding  period  are  void.^^ 

Means  of  evidence. 

The  means  of  evidence  which  can  be  employed  in  an  action 
are: 

(a)  admission  to  the  parties  during  the  action  {con- 

Brazil,  127  to  137,  ib.;  Chile,  316  to  329  c.  p.;  Colombia,  546  to  550  c.  p.;  Costa 
Rica,  243  to  251  c.  p.;  Guatemala,  621  to  632  c.  p.;  Haiti,  189  to  193,  253  to  255 
c.  p.;  Honduras,  308  to  309  c.  p.;  Mexico,  377  to  400  c.  p.;  Nicaragua,  205  to 
208  c.  p.;  Panama,  700  to  710  c.  p.;  Peru,  348  to  362;  San  Salvador,  237  to  244 
c.  p.;  Santo  Domingo,  188  to  192  c.  p.;  Uruguay,  334  to  344  c.  p.;  Venezuela, 
284,  288,  289  c.  p. 

"  Spain,  563  to  577  c.  p.;  Argentina,  104  to  124  c.  p.;  Bolivia,  257  to  202 
c.  p.;  Chile,  308  to  314  c.  p.;  Colombia,  536  to  545  c.  p.;  Costa  Rica,  255  to  260 
c.  p.;  Ecuador,  137  to  245  c.  p.;  Guatemala,  603  to  620  c.  p.;  Honduras,  300  to 
307  c.  p.;  Mexico,  354  to  376,  546  to  568  c.  p.;  Panama,  687  to  698  c.  p.;  Peru, 
335  to  346  c.  p.;  San  Salvador,  227  to  236  c.  p.;  Uruguay,  327  to  332,  346  to 
349  c.  p.;  Venezuela,  289  to  306  c.  p. 


778  LATIN-AMERICAN  COMMERCIAL  LAW 

fesion  en  juicio).  In  Argentina  the  extrajudicial  con- 
fession is  also  a  means  of  evidence,  provided  it  is  proved 
according  to  law  and  provided  also  that  there  is  a 
foundation  of  evidence  in  writing  to  support  the 
same. 

(6)  pubUc  documents; 

(c)  private  documents; 

{d)  commercial  books; 

(e)  opinion  of  experts; 

(/)  judicial  inspection; 

{g)  testimony  of  witnesses.  ^^ 

Admission  of  the  parties  during  the  action. 

From  the  time  the  case  is  opened  to  the  submission  of 
evidence  until  the  notice  to  appear  to  hear  judgment  in 
first  instance,  each  party  may  request  that  the  other  party 
give  evidence  under  oath  concerning  a  particular  question. 
It  must  be  noted  that  a  party  to  a  civil  or  commercial  suit 
cannot  be  questioned  on  facts  in  general,  but  only  on  facts 
or  acts  done  or  known  by  himself.  The  hst  of  those  facts  as 
presented  by  the  opposing  party  is  not  called  an  interroga- 
tory or  list  of  questions,  but  posiciones  (statements)  because 
they  are  assertions  which  the  answering  party  must  simply 
affirm  or  deny.  The  posiciones  must  be  in  wTiting,  enclosed, 
as  a  rule,  in  a  sealed  envelope  which  the  judge  keeps  un- 
opened until  the  party  cited  appears  to  answer.    The  person 

26  Spain,  578  to  595  c.  p.;  Argentina,  1224  to  1228  c.  c.  and  138  c.  p.;  Bolivia, 
270  c.  p.;  Brazil,  138,  ib.;  Chile,  33  c.  p.;  Colombia,  541  c.  p.;  Ecuador,  146  c.  p.; 
Honduras,  320  c.  p.;  Mexico,  375  c.  p.;  and  1205  com.  c;  Panama,  686  c.  p.; 
Peru,  347  c.  p.;  and  San  Salvador,  245  c.  p.;  Uruguay,  349. 

Evidence  is  considered  irrelevant  and  must  not  be  admitted  when  for  any 
reason  whatever  such  evidence  cannot  be  taken,  as,  for  instance,  the  taking 
of  excerpts  from  the  memoranda  of  preliminary  proceedings,  because  this 
would  be  equivalent  to  violating  the  secrecy  of  such  proceedings.  Spain, 
Trib.  Sup.,  May  6,  1888;  Gaceta  of  August  11,  1888. 

Evidence  can  only  be  taken  before  the  courts  and  with  the  formalities 
prescribed  by  the  law.  Spain,  Trib.  Sup.,  April  2,  1887;  Gaceta  of  August  18, 
1887. 

The  burden  of  proof  of  the  existence,  object,  period  and  condition  of  a 
contract,  the  existence  of  which  is  denied  by  the  defendant,  lies  upon  the 
plaintiff.    Spain,  Trib.  Sup.,  March  24,  1891;  Gaceta  of  May  26,  1891. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     779 

to  be  examined  must  appear  without  his  attorney.  If  he 
fails  to  appear  or  to  show  good  cause  for  non-appearance,  he 
must  be  again  cited  for  another  stated  day  and  hour,  with 
the  admonition  that  if  he  does  not  then  appear,  his  absence 
will  be  taken  as  an  admission  of  the  facts.  At  the  time  of 
appearance  the  judge  must  determine  whether  the  posiciones 
are  acceptable  or  not,  rejecting  those  which  are  irrelevant 
or  conflict  with  the  provisions  of  the  law.  He  then  proceeds 
to  the  examination  of  the  party.  Although  the  answer 
must  be  affirmative  or  negative,  the  party  answering  is 
permitted  to  add  such  explanation  as  he  may  deem  proper, 
or  as  the  judge  may  request.  If  the  answer  is  evasive  the 
judge  must  admonish  the  party  that  the  facts  concerning 
which  he  refuses  a  categorical  answer  will  be  accepted  as 
admitted.  The  answering  party  may  refuse  to  affirm  or 
deny  a  fact  when  it  was  not  committed  by  him.  If  on  ac- 
count of  illness  or  other  special  circumstance  the  party 
cannot  appear  to  answer  the  posiciones,  the  judge  may  go 
to  his  house,  together  with  the  clerk,  in  order  to  take  the 
testimony.-^ 

Public  documents. 

The  following  are  included  within  the  category  of  public 
documents  and  constitute  proof,  the  right  of  the  opposing 
party  to  demand  a  comparison  with  the  original  being  re- 
served: 

(a)  those  issued  by  public  officials  in  the  proper 
exercise  of  their  functions,  according  to  law,  among 
which  the  documents  drafted  by  notaries  are  the  most 
frequent ; 

(6)  certificates  issued  by  exchange  and  commercial 

"  Spain,  578  to  594  c.  p.;  Argentina,  125  to  138  c.  p.;  Bolivia,  352  to  359 
c.  p.;  Brazil,  155  to  174,  *.;  Chile,  375  to  392  c.  p.;  Colombia,  555  to  577  c.  p.; 
and  72,  73  of  law  105  of  1890;  Costa  Rica,  261  to  278  c.  p.;  Ecuador,  256  to 
293  c.  p.;  Guatemala,  633  to  667  c.  p.;  Haiti,  323,  335  c.  p.;  Hondunus,  338  to 
351  c.  p.;  Mexico,  401  to  438  c.  p.  and  1211  to  1236  com.  c;  Nicaragua,  334  to 
361  c.  p.;  Panama,  711  t/i  762  c.  p.;  Peru,  363  to  393  c.  p.;  San  Salvador,  369 
to  405  c.  p.;. Santo  Domingo,  324  to  336  c.  p.;  Uruguay,  434  to  447  c.  p.;  A'^en- 
ezuela,  307  to  324  c.  p. 


780  LATIN-AMERICAN  COMMERCIAL  LAW 

brokers  of  entries  contained  in  the  record  of  their  re- 
spective transactions  in  the  manner  and  with  the  for- 
mahties  prescribed  by  the  code  of  commerce; 

(c)  record  books,  by-laws,  ordinances,  registers,  prop- 
erty statistics,  and  other  documents  in  public  archives 
of  state,  province,  or  town,  and  copies  made  and  au- 
thenticated by  secretaries  and  archivists  when  directed 
to  do  so  by  proper  authority; 

(d)  resolutions,  by-laws  and  regulations  of  partner- 
ships or  associations,  provided  they  have  been  approved 
by  public  authority,  and  the  copies  have  been  certified 
according  to  law; 

(e)  records  or  certificates  of  births,  marriages  and 
deaths  taken  from  the  registers  by  the  parish  priests, 
or  by  the  person  in  charge  of  the  ci\'il  registry; 

(/)  writs  of  attachment  in  execution  and  all  kinds 
of  judicial  proceedings. 
Documents  executed  in  other  countries  have  the  same 
validity  in  an  action  as  those  executed  in  the  country  of  the 
forum,  provided  they  possess  the  following  requisites: 

(a)  that  the  purpose  of  the  contract  be  lawful  in  the 
latter  country; 

(h)  that  the  contracting  parties  have  legal  capacity 
and  power  to  contract  according  to  the  laws  of  their 
own  country; 

(c)  that  in  the  execution  of  the  contract  all  formaU- 
ties  and  requirements  of  the  law  of  the  country  where 
the  contract  or  act  is  executed  or  performed  have  been 
observed ; 

(d)  that  the  document  be  legalized  and  duly  authen- 
ticated.-^ 

^  Spain,  596  to  600  c.  p.;  Argentina,  139  c.  p.;  1031  to  1045  c.  c;  Bolivia,  177 
to  179  c.  p.;  Brazil,  140  to  154  c.  p.;  Chile,  331,  334  c.  p.;  Colombia,  677  to  690 
and  36  law  40  of  1907;  Costa  Rica,  279  to  284,  c.  p.;  Ecuador,  147  to  192  c.  p.; 
Guatemala,  668  to  685,  709  to  722  c.  p.;  Haiti,  194  to  252  c.  p.;  Honduras,  321 
to  334  c.  p.;  Mexico,  439  to  444  c.  p.  and  1237  to  1251  com.  c;  Panama,  857  to 
879  c.  p.;  Peru,  400  to  409  c.  p.;  San  Salvador,  246  to  255,  260  to  275  c.  p.; 
Santo  Domingo,  214  to  251  c.  p.;  Uruguay,  350  to  359  c.  p.;  Venezuela,  325  to 
335  c.  p. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION    781 

Notaries  and  their  functions. 

As  the  notarial  instruments  are  the  most  important  among 
those  which  may  be  introduced  in  evidence  in  an  action,  it 
may  not  be  without  interest  to  give  a  summary  description 
of  the  character  and  functions  of  a  notary  public  in  Latin- 
America,  taking  as  a  guide  the  provisions  of  the  Spanish 
law. 

A  notary  is  a  public  official  authorized  to  certify  con- 
tracts and  other  extrajudicial  instruments  according  to 
law.  He  is  bound  to  certify  any  public  or  private  instru- 
ment or  legal  act  or  transaction,  when  requested,  and  incurs 
liability  for  failure  to  render  such  services  within  the  judicial 
district  in  which  his  office  is  located. 

In  order  to  be  a  notary  it  is  necessary: 
(a)  to  be  a  citizen  of  legal  age; 
(6)  to  have  good  habits; 

(c)  to  have  pursued  the  studies  and  to  have  complied 
with  the  other  requisites  prescribed  by  law  and  regu- 
lations, or  to  be  a  la\\yer; 

(d)  to  give  security  for  the  faithful  discharge  of  his 
duties.  Such  security  may  consist  of  a  deposit  in 
money,  bonds  of  the  public  debt,  or  a  mortgage  on 
realty. 

The  functions  of  a  notary  may  be  divided  into  three  acts, 
namely : 

(a)  to  prepare  original  instruments; 

(6)  to  issue  certified  copies; 

(c)  to  make  "protocols." 
An  original  instrument  is  one  which  a  notary  must  draft 
from  a  contract  or  document  submitted  for  his  authenti- 
cation. It  must  be  signed  by  the  interested  parties,  by  the 
attending  witnesses,  by  the  witnesses  who  identify  the  par- 
ties thereto,  when  proper,  and  by  the  notary,  who  also  sets 
his  seal  thereon.  All  instruments  must  be  drafted  by  the 
notary  in  the  language  of  his  country  and  must  be  clearly 
written,  without  abbreviations  or  blank  spaces.  In  the 
statements  of  dates  and  amounts,  figues  cannot  be  used. 
The  notary  must  certify  to  having  read  the  instrument  in 


782  LATIN-AMERICAN  COMMERCIAL  LAW 

full  to  the  parties  concerned  and  to  the  attesting  witnesses, 
or  to  have  permitted  them  to  read  it,  as  they  choose,  before 
they  sign  it,  and  to  the  identifying  witnesses  the  part  that 
refers  to  them.  He  must,  furthermore,  inform  all  these  per- 
sons of  the  privilege  they  have  of  reading  the  instrument 
themselves. 

Additions,  marginal  notes,  interlineations,  erasures,  or 
blots  in  the  original  instrument  are  of  no  effect,  unless  they 
are  mentioned  (salvados)  at  the  end  of  the  instrument,  and 
expressly  approved  by  the  interested  persons  before  they 
affix  their  signatures. 

Notaries  must  authenticate  all  public  instruments  with 
their  signature,  their  flourish  {rubrica)  and  the  mark  they 
may  select  for  the  purpose;  the  latter  cannot  be  subsequently 
changed  without  authority  of  the  government. 

In  all  public  instruments  the  notary  must  state  his  name 
and  residence,  the  names  and  residences  of  the  witnesses,  and 
the  place  and  date  of  the  execution  of  the  instrument.  He 
must  certify  that  he  is  acquainted  with  the  parties  thereto, 
or  that  he  has  assured  himself  of  their  identity  by  the 
declaration  of  the  attesting  witnesses,  or  of  two  other  persons 
acquainted  with  them,  who  are,  therefore,  called  witnesses  of 
identification. 

Public  instruments  are  void: 

(a)  whe  nthey  contain  any  provision  in  favor  of  the 
notary  who  authenticates  them; 

(6)  when  the  witnesses  are  relatives  of  the  parties  or 
the  notary  within  the  fourth  civil  degree  of  consanguin- 
ity, or  second  of  affinity,  or  when  they  are  employees  or 
servants  of  the  notary; 

(c)  when  the  notary  does  not  certify  in  legal  form 
that  he  is  acquainted  with  the  persons  interested,  or 
when  the  signatures  of  such  persons  and  witnesses,  when 
required  to  sign,  do  not  appear,  or  when  the  notary 
himself  has  failed  to  affix  his  signature,  flourish  {rubrica) 
or  mark. 
Instruments  authenticated  by  a  notary  are  admitted  as 
evidence  within  the  district  in  which  he  resides.    In  order  to 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     783 

have  them  admitted  outside  such  district,  the  signature  of 
the  notary  must  be  authenticated  by  two  other  notaries  of 
the  same  judicial  district,  and  countersigned  by  the  judge 
of  first  instance,  who  must  fix  thereto  the  seal  of  the  court. 

Protocol. 

By  protocolo  is  meant  the  file  or  collection  in  proper 
order  of  the  official  instruments  authenticated  during  one 
year,  from  January  1st  to  December  31st,  inclusive.  It  must 
be  included  in  one  or  more  volumes,  folioed  by  number,  and 
with  the  other  requisites  prescribed  by  law. 

The  protocolos  belong  to  the  state.  The  notaries  must 
preserve  them  in  accordance  with  the  law,  as  archivists 
thereof,  under  their  responsibility. 

All  original  instruments  must  bear  a  serial  number  written 
in  full  by  order  of  dates.  All  the  sheets  (pliegos)  of  original 
instruments  must  be  composed  of  full  or  double  sheets 
{dos  hojas)  of  stamped  paper.  On  the  side  on  which  they  are 
to  be  bound  they  must  have  a  blank  margin  of  20  milli- 
meters, besides  one  of  60  millimeters  on  each  page  at  the  left 
of  the  text  to  which  the  notary  must  affix  his  flourish. 

Notaries  must  keep  the  protocols  under  lock  and  key  in 
the  building  in  which  they  reside.  Protocols,  as  a  rule,  are 
secret.  Neither  the  original  instrument  nor  the  protocol 
may  be  removed  from  the  building  in  which  it  is  kept, 
not  even  by  virtue  of  a  judicial  administrative  order, 
except  to  transfer  it  to  the  proper  archives,  or  in  case  oi  force 
majeure. 

Testimonies. 

A  testimonio  is  the  first  copy  of  an  original  instrument 
which  each  of  the  parties  interested  has  a  right  to  receive. 
Second  or  subsequent  copies  can  not  be  issued,  except  by 
virtue  of  a  judicial  order,  and  after  citation  of  the  persons 
interested,  or  of  the  representative  of  the  department  of 
justice  {ministerio  publico)  when  the  persons  interested  are 
unknown  or  absent  from  the  town  where  the  notarial  office 
is  situated.    No  previous  citation  is  necessary,  however,  in 


784  LATIN- AMERICAN  COMMERCIAL  LAW 

the  case  of  instruments  stating  unilateral  obligations,  or 
when  all  the  interested  parties  request  the  copy. 

A  testimonio  must  contain  a  precise  citation  of  the  protocol 
and  of  the  serial  number  of  the  original  instrument  from 
which  the  copy  was  made,  and  it  must  be  signed,  ruhricado 
and  marked  by  the  notary  on  stamped  paper,  must  state 
that  it  is  the  first  copy,  and  comply  with  all  other  legal 
requisites.  In  issuing  a  first  copy  the  notary  must  make  a 
memorandum  on  the  margin  of  the  original  instrument  and 
above  his  signature,  stating  the  person  for  whom  such  copy 
is  issued,  the  date  of  issue,  and  the  class  of  paper  on  which  it 
is  written.  He  must,  moreover,  state  all  these  details  in  the 
subscribing  clause  with  which  the  testimonio  is  closed. ^^ 

Private  documents,    correspondence    and  books  of  mer- 
chants. 

Original  private  documents  can  be  introduced  in  evidence 
by  the  litigants  and  must  be  attached  to  the  record,  unless 
they  form  part  of  a  book,  proceedings,  or  package,  or  belong 
to  a  third  person  who  does  not  wish  to  part  with  them,  in 
which  event  the  papers  are  exhibited  in  order  that  a  certified 
copy  of  the  part  designated  by  the  interested  party  may  be 
made.  The  authenticity  of  private  documents  must  be 
acknowledged  or  denied  under  oath  before  the  judge  by  the 
party  to  be  charged,  unless  he  has  acknowledged  their 
authenticity  in  his  answer,  replication  or  rejoiner.^° 

Whenever  the  authenticity  of  a  signature  is  denied,  a 
comparison  of  handwritings  may  be  made;  and  whenever  a 
doubt  is  raised  as  to  the  authenticity  of  any  private  instru- 
ment which  cannot  be  verified  by  the  person  or  official  who 
issued  it,  such  comparison  must  be  made  by  experts.  The 
person  demanding  the  comparison  designates  the  document 
or  documents  with  which  such  comparison  is  to  be  made,  and 
as  to  the  authenticity  of  which  there  is  no  doubt.  Should  no 
such  documents  exist,  a  pubhc  document  is  considered 
authentic;  and  with  regard  to  a  private  document  the  judge 

23  Law  of  April  9,  1862,  in  force  in  Cuba  and  Porto  Rico. 

3"  In  regard  to  commercial  books  see  chapter  on  Commercial  Bookkeeping. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JUEISDICTION     785 

must  take  its  evidential  value  into  consideration  in  combina- 
tion with  other  evidence." 

Opinion  of  experts  {Juicio  pericial). 

Whenever  the  contested  issues  of  fact  require  special 
knowledge  in  a  certain  science,  art,  or  industry,  experts 
may  be  named  to  give  their  opinions.  The  party  who 
desires  such  opinion  must  state  clearly  the  matter  with 
regard  to  which  he  wishes  such  testimony.  The  judge 
decides  upon  the  matter  on  which  expert  evidence  is  to  be 
taken,  and  whether  one  or  three  experts  shall  serve  by 
agreement  of  the  parties,  or  designated  by  lot  from  among 
those  who  have  diplomas  as  such  experts  in  the  science  or 
industry  in  question.  If  there  is  not  a  sufficient  number  of 
experts  to  proceed  to  choose  by  lot,  the  judge  must  appoint 
them.  The  experts  must  assume  their  duties  under  oath, 
and  can  be  challenged  for  the  same  reasons  that  a  judge  may 
be,  namely,  personal  interest,  relationship  with  the  parties, 
etc. 

The  parties  and  their  counsel  may  attend  the  expert 
examination  and  make  such  suggestions  to  the  experts  as 
they  may  deem  proper.  The  experts  may  make  their  reports 
in  writing  or  orally,  according  to  the  importance  of  the  sub- 
ject, stating  their  reasons.  The  parties  may  through  the 
judge  request  further  explanations.  When  the  experts 
disagree  they  make  as  many  reports  as  there  are  opinions. 
The  judge  or  court  must  consider  the  expert  testimony 
according  to  the  rules  of  sound  judgment.  They  are  not 
obliged  to  accept  such  opinion  as  conclusive.  ^^ 

"  Spain,  602  to  609  c.  p.;  Argentina,  139  to  160  c.  p.;  1046  to  1070  c.  c; 
Bolivia,  278  to  282  c.  p.;  Chile,  335  to  344  c.  p.;  Colombia,  691  to  705  and  art. 
7,  decree  909  of  1906;  Costa  Rica,  287  to  296  c.  p.;  Ecuador,  193  to  208  c.  p.; 
Guatemala,  686  to  708,  723  to  935  c.  p.;  Haiti,  194  to  252  c.  p.;  Honduras,  335 
to  337  c.  p.;  Mexico,  445  to  467  c.  p.,  and  1241  to  1245  com.  c;  Panama,  880 
to  915,  956  to  962  c.  p.;  Peru,  410  to  440  c.  p.;  San  Salvador,  254  to  259,  273  to 
279  c.  p.;  Santo  Domingo,  193  to  213  c.  p.;  Uruguay,  360  to  374  c.  p.,  and  659 
of  the  Rural  Code;  Venezuela,  325  to  335  c.  p. 

32  Spain,  610  to  632  c.  p.;  Argentina,  161  to  178  c.  p.;  Bolivia,  335  to  351  c.  p.; 
Chile,  411  to  427  c.  p.;  Colombia,  651  to  676  c.  p.,  and  77  to  80  of  law  105  of 
1890,  31  law  100,  1892;  Costa  Rica,  297  to  314  c.  p.;  Guatemala,  736,  769  c.  p.; 


786  LATIN- AMERICAN  COMMERCIAL  LAW 

Judicial  inspection. 

If  for  the  purpose  of  elucidating  and  weighing  the  facts,  it 
seems  necessary  for  the  judge  personally  to  examine  some 
place,  scene  or  thing  involved  in  the  litigation,  a  judicial 
inspection  thereof  must  be  made  at  the  instance  of  any  of  the 
parties,  who,  together  with  their  attorneys,  may  attend  the 
examination  and  make  such  verbal  suggestions  to  the  judge 
as  they  may  deem  proper.  When  it  is  decided  to  make  a 
judicial  as  well  as  an  expert  examination  of  a  thing  both 
proceedings  must  be  held  simultaneously.  Witnesses  also 
may  be  examined  at  the  place  of,  and  immediately  after,  the 
judicial  inspection,  when  it  serves  to  elucidate  their  testi- 
mony. The  clerk  makes  a  record  of  these  proceedings, 
including  all  pertinent  suggestions  made  by  the  parties,  the 
statements  of  the  other  persons  who  were  present,  and  the 
signatures  of  all.^^ 

Evidence  of  witnesses. 

None  of  the  parties  to  an  action  is  permitted  to  submit 
the  evidence  of  witnesses  for  the  purpose  of  contradicting 
facts  proved  by  judicial  admission  of  the  parties. 

To  the  instrument  requesting  the  admission  of  the 
testimony  of  witnesses  there  must  be  attached  the  interrog- 
atory or  list  of  questions  upon  which  the  witnesses  are  to  be 
examined,  with  a  copy  of  the  petition  and  of  the  interroga- 

Haiti,  302  to  322  c.  p.;  Honduras,  356  to  370  c.  p.;  Mexico,  468  to  497  c.  p.; 
Panama,  845  to  856  c.  p.;  Peru,  491  to  504  c.  p.;  San  Salvador,  336  to  363  c.  p.; 
Santo  Domingo,  302  to  323;  Uruguay,  412  to  430  c.  p.;  Venezuela,  336  to  342 

c-  P- 

There  is  no  breach  of  law  when  a  petition  that  handwriting  experts  give 
their  testimony  with  regard  to  the  sense,  expression,  and  intention  of  a  docu- 
ment is  denied,  as  those  are  facts  which  can  and  must  be  considered  only  by 
the  court.    Spain,  Trib.  Sup.,  March  22,  1888;  Gaceta  of  ]\Iay  2,  1888. 

33  Spain,  633  to  636  c.  p.;  Argentina,  210  to  211  c.  p.;  Chile,  405  to  410  c.  p.; 
Colombia,  727  to  734  c.  p.,  and  art.  81,  law  105  of  1890;  Costa  Rica,  315  to  318 
c.  p.;  Ecuador,  294  to  305  c.  p.;  Guatemala,  770  to  774  c.  p.;  Haiti,  296  to  310 
c.  p.;  Honduras,  352  to  355  c.  p.;  Mexico,  498  to  502  c.  p.  1259,  1260  com.  c; 
Panama,  916  to  931  c.  p.;  Peru,  394  to  399  c.  p.;  San  Salvador,  364  to  368  c.  p.; 
Santo  Domingo,  295  to  301  c.  p.;  Uruguay,  431  to  433  c.  p.;  Venezuela,  343 
to  347  0.  p. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION    787 

tory.    The  questions  must  be  numbered,  stated  with  clear- 
ness and  precision,  and  confined  to  points  at  issue. 

The  judge  must  examine  the  questions,  approving  those 
which  may  be  pertinent  and  rejecting  those  deemed  irrele- 
vant. 

Within  ten  days  following  the  notification  of  the  order 
admitting  such  evidence,  the  person  interested  must  present 
a  list  of  his  witnesses,  giving  the  name  and  surname  of  each, 
his  trade  or  profession,  his  residence  and  address,  if  known. 
This  list  may  be  enlarged  within  said  period. 

A  copy  of  this  list  is  given  to  the  opposing  parties,  and  no 
witnesses  other  than  those  mentioned  therein  can  be  ex- 
amined. 

The  litigants  may  present  cross  interrogatories  {repre- 
guntas)  before  the  examination  of  the  witnesses.  The  judge 
approves  those  which  are  pertinent,  and  rejects  all  others. 
These  interrogatories  must  be  opened  at  the  beginning  of 
the  proceedings  for  the  examination  of  the  witnesses;  if 
presented  unsealed,  they  must  be  kept  in  the  custody  of  the 
judge,  under  his  personal  responsibility. 

The  witnesses  must  be  examined  separately  and  succes- 
sively; those  who  have  testified  must  not  communicate  with 
the  others,  nor  may  the  latter  be  present  when  the  former 
are  testifying.  To  this  end,  the  judge  must  adopt  such 
measures  as  he  may  consider  proper. 

A  witness  above  fourteen  years  of  age  must  take  an  oath, 
and  each  witness  must  be  asked: 

(a)  his  name,  age,  status,  occupation  and  place  of 
residence; 

(6)  whether  he  is  a  relative  of  any  of  the  litigants  by 
consanguinity  or  affinity,  and  in  what  degree; 

(c)  whether  he  is  an  employee  or  servant  of  the  person 
for  whom  he  appears,  or  whether  he  is  a  partner  or  has 
any  other  interest  or  connection  with  said  party; 

{d)  whether  he  has  any  direct  or  indirect  interest  in 
the  action  or  in  another  similar  action; 

(e)  whether  he  is  an  intimate  friend  of  any  of  the 
litigants. 


788  LATIN-AMERICAN  COMMERCIAL  LAW 

As  these  questions  are  always  asked  of  all  witnesses,  they 
are  called  generales  (general)  questions. 

The  witnesses  are  then  examined  upon  each  of  the  ques- 
tions contained  in  the  interrogatory  presented  by  the  party 
for  whom  they  appear,  and  then  upon  those  contained  in  the 
cross  interrogatory. 

The  witness  must  answer  orally  without  the  aid  of  any 
memorandum,  unless  the  question  refers  to  accounts,  books 
or  papers,  in  which  case  he  is  permitted  to  consult  them.  He 
must  give  the  reason  upon  which  his  answer  is  founded  {la 
razon  de  su  dicho). 

The  parties  and  their  counsel  cannot  interrupt  the  wit- 
ness, nor  ask  him  other  questions  than  those  set  forth  in 
their  respective  interrogatories.  Only  in  the  event  that  the 
witness  fails  to  answer  fully  any  question  or  cross-question, 
or  contradicts  himseK,  or  expresses  himself  ambiguously, 
may  the  parties  or  their  counsel  call  the  attention  of  the 
judge  to  the  fact  in  order  that  he  may  require  the  witness  to 
make  the  proper  explanation.  The  judge  can  also,  ex  officio, 
request  from  the  witness  any  explanations  he  may  deem 
proper  for  the  elucidation  of  the  facts  upon  which  he  may 
have  testified. 

In  weighing  the  probative  force  of  the  testimony  of  w^it- 
nesses,  the  judge  or  court  must  apply  the  rules  of  sound 
judgment,  taking  into  consideration  the  reasons  upon  which 
the  testimony  is  based  and  the  circumstances  connected 
therewith.  Nevertheless,  when  the  law  determines  the 
number  or  the  qualifications  of  the  witnesses,  as  a  condition 
precedent  to  the  admission  of  their  testimony  on  a  particular 
matter,  the  provisions  of  said  law  must  be  observed. ^^ 

Within  four  days  after  the  testimony  of  the  witnesses  of 

'*  Spain,  637  to  659  c.  p.;  Argentina,  179  to  209  c.  p.;  Bolivia,  283  to  334 
c.  p.;  Brazil,  175  to  203,  ih.;  Chile,  345  to  374  c.  p.;  Colombia,  595  to  650  c.  p., 
74  to  76,  law  105  of  1890  and  law  53  of  1882;  Costa  Rica,  319  to  344  c.  p.; 
Ecuador,  209  to  255  c.  p.;  Guatemala,  775  to  835,  854  to  867  c.  p.;  Haiti,  256  to 
295  c.  p.;  Honduras,  371  to  407  c.  p.;  Mexico,  503  to  532,  574  to  594  c.  p.,  1261 
to  1273  com.  c;  Nicaragua,  254  to  309  c.  p.;  Panama,  784  to  844  c.  p.;  Peru, 
449  to  490  c.  p.;  San  Salvador,  285  to  335;  Santo  Domingo,  252  to  294;  Uru- 
guay, 375  to  411  c.  p.;  Venezuela,  348  to  367  c.  p. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     789 

one  party  has  been  taken,  the  opposing  party  may  challenge 
any  witness  by  reason  of  his  kinship  with  the  person  for 
whom  he  appeared,  or  for  any  other  reason  calculated  to 
impair  the  impartiality  and  fairness  of  his  testimony.  The 
evidence  relating  to  the  cause  of  challenge  must  be  attached 
to  the  record. 

Final  pleadings. 

After  the  period  for  the  taking  of  evidence  has  expired, 
the  records  of  the  evidence  are  attached  to  the  main  record  of 
the  proceedings.  Either  of  the  parties  may  ask  for  a  public 
oral  hearing;  if  they  do  not,  the  judge  orders  the  original 
record  to  be  delivered  to  each  of  the  parties  successively,  for 
the  preparation  of  a  wTitten  argument  {alegato  de  Men 
prohado)  within  ten  days  (the  period  varies  from  country  to 
country).  The  judge  may  extend  this  period,  at  the  instance 
of  a  party,  to  thirty  days,  when  the  volume  or  the  compli- 
cated character  of  the  evidence  so  requires.  The  pleadings 
must  concisely  summarize  and  discuss  in  numbered  para- 
graphs the  evidence  adduced  and  the  principles  of  law 
applicable  to  the  case.^^ 

Citation  for  judgment. 

After  the  record  has  been  returned  to  the  court  the  judge 
orders  a  citation  of  the  parties  for  judgment,  assigning,  on 
eight  days'  notice,  the  day  and  hour  for  a  hearing,  if  de- 
manded. After  the  hearing  or  the  citation  for  judgment, 
the  judge  must  render  his  decision  and  announce  it  within 
twelve  days.  This  period  may  be  extended  to  fifteen  days 
if  the  length  of  the  record  exceeds  one  thousand  folios.  •''''  The 
period  is  usually  further  extended  if  the  pressure  of  cases 
requires  it. 

Other  forms  of  action. 

The  proceedings  that  have  been  summarized  are  substan- 
tially observed  in  every  action,  but  there  are  cases  which 
require  a  simpler  and  speedier  course  in  the  administration 

"  Spain,  667  to  670  c.  p.  '«  Spain,  677,  678  c.  p. 


790  LATIN- AMERICAN  COMMERCIAL  LAW 

of  justice  either  on  account  of  the  lesser  importance  of  the 
case,  or  because  of  the  necessity  for  a  more  rapid  redress  in 
the  pubhc  as  well  as  in  the  private  interest,  or  because  a 
right  manifestly  proved  at  the  beginning  of  the  action  would 
be  hampered  in  its  vindication  by  unnecessary  delay  in  the 
proceedings. 

By  reason  of  the  amount  involved,  actions,  as  has  already 
been  observed,  are  di\dded  into  actions  of  greater  impor- 
tance {juicios  de  mayor  cuantia),  and  actions  of  lesser  im- 
portance (juidos  de  menor  cuantia).  The  only  substantial 
difference  between  the  two  proceedings  consists  in  the  periods 
granted  to  the  parties  for  putting  in  the  answer  or  counter- 
claim, and  for  presenting  their  evidence  and  final  pleadings, 
and  for  the  judge  to  render  his  decision. 

On  account  of  the  quick  redress  which  certain  cases 
require,  actions  are  divided  into  ordinary  actions  (juicios 
ordinarios),  with  all  foregoing  formalities  and  lengthy 
pleadings,  and  summary  actions  (juicios  sumarios).  They 
differ  from  one  another  in  the  kind  of  redress  to  which  they 
are  directed,  for  instance,  the  action  for  ejectment  of  a 
tenant  (juicio  de  desahucio),  the  summary  proceedings  to 
acquire  possession  (interdicto  de  adquirir  la  posesion),  to 
retain  possession  (interdicto  de  retener  la  posesion),  or  to 
recover  possession  (interdicto  de  recobrar  la  posesion), 
siunmary  proceedings  to  pre^^'ent  a  new  injurious  construc- 
tion {interdicto  de  obra  nueva),  or  against  ruinous  construc- 
tion (interdicto  de  obra  peligrosa),  etc.  The  judgment  in  these 
cases  passes  not  upon  the  ultimate  rights  of  the  parties, 
which  may  require  the  full  period  for  the  taking  of  evidence 
and  for  the  arguments  of  the  parties,  but  upon  certain  facts 
which  of  themselves  and  for  reasons  of  a  general  character 
call  for  immediate  redress.  The  decision,  as  a  rule,  reserves, 
consequently,  the  privilege  of  the  parties  to  argue  the  basic 
issues  in  an  ordinary  action. 

EXECUTORY    OR    EXECUTIVE    ACTIONS 

Sometimes  the  plaintiff  possesses  a  document  which, 
provided  with  conclusive  probative  force  by  the  law,  creates 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     791 

in  his  favor  a  presumption  that  he  is  entitled  to  the  redress  he 
demands,  and  makes  unnecessary  the  various  formahties  of 
an  ordinary  action.  An  executory  action  must,  therefore,  be 
based  upon  an  act  or  document  importing  a  confession  of 
judgment  {titulo  ejecutivo).  The  following  documents  are 
the  only  ones  having  such  self -executing  effect: 

(a)  a  pubhc  instrument,  provided  that  it  is  a  first 
copy,  or,  if  a  second  copy,  that  it  has  been  issued  by 
virtue  of  a  judicial  order  and  with  a  citation  of  the 
person  to  be  charged,  or  his  predecessor  in  interest; 
(6)  any  private  document  which  has  been  acknowl- 
edged as  geniune  under  oath  before  a  judge  competent 
to  issue  the  writ  of  execution; 

(c)  an  admission  made  before  a  competent  judge; 

(d)  bills  of  exchange,  without  the  necessity  of  a 
judicial  acknowledgment  thereof,  against  the  acceptor 
who  did  not  qualify  his  acceptance  as  spurious  at  the 
time  of  the  protest  of  the  bill  of  exchange  for  non-pay- 
ment; 

(c)  any  commercial  paper  payable  to  order  or  to  bearer, 
when  legally  issued,  representing  obligations  past  due, 
and  any  matured  coupons  provided  they  correspond  to 
the  bonds,  and  the  latter  to  the  stub-book  from  which 
they  were  detached; 

(f)  the  original  memoranda  or  policies  of  contracts 
made  through  exchange  agents  or  pubUc  brokers,  signed 
by  the  contracting  parties  and  by  the  agent  or  broker 
participating   therein,   provided   they   are   verified   by 
virtue  of  a  judicial  order  and  a  citation  of  the  opposing 
parties,  with  the  register  of  such  agent  or  broker,  and 
that  such  register  is  kept  in  accordance  with  the  law. 
When  an  executory  action  is  based  upon  a  private  docu- 
ment, request  must  be  made  that  the  debtor  acknowledge  his 
signature,  whereupon  the  judge  must  fix  a  day  for  that 
purpose. 

If  the  debtor  fails  to  appear,  he  must  be  cited  a  second 
time,  with  a  warning  that  his  non-appearance  will  be  con- 
sidered as  an  admission  of  the  authenticity  of  the  signature 


792  LATIN-AMERICAN    COMMERCIAL  LAW 

for  the  purpose  of  execution.  In  case  of  such  non-appearance 
the  execution  issues,  provided  that  a  protest  or  demand  for 
payment  by  notarial  instrument  or  in  proceedings  to  avoid 
litigation  {ado  de  conciliacion)  has  previously  been  made, 
and  the  falsity  of  the  signature  has  not  been  alleged.  Except 
for  these  cases,  the  creditor  must  request  and  the  judge  must 
order  that  the  debtor  be  cited  for  a  third  and  last  time,  with 
a  warning  that  if  he  should  not  appear,  he  will  be  considered 
to  have  acknowledged  the  document;  and  if  he  does  not 
appear  or  advance  good  reasons  for  his  non-appearance,  he  is 
considered  to  have  confessed  judgment  for  the  purpose  of 
the  issue  of  execution. 

When  the  debt  is  payable  in  kind,  with  merchandise  or 
property  which  can  be  measured  or  weighed,  the  computa- 
tion in  cash  is  made  at  the  price  agreed  upon  in  the  contract ; 
and  otherwise  according  to  the  market  price  of  such  property 
or  merchandise,  certified  by  the  directors  of  the  college  or 
chamber  of  brokers,  should  there  be  any  in  the  town,  or 
otherwise,  by  a  certificate  of  two  brokers  or  merchants,  or 
the  municipal  authority,  in  certain  cases;  the  right  of  the 
debtor  being  reserved  to  demand  a  reduction  of  said  price  at 
the  time  of  his  opposition  to  the  execution. 

Procedure  in  executive  actions. 

When  a  complaint  in  an  executive  action  is  presented,  the 
judge  must  examine  the  accompanying  documents;  if  he 
finds  that  they  consist  of  those  which  warrant  an  execution, 
he  must  issue  an  order  or  writ  of  attachment,  which  must  be 
delivered  to  the  bailiff  of  the  court,  who  in  the  presence  of  the 
court  clerk  demands  payment  from  the  debtor.  If  the 
debtor  does  not  pay  at  once,  sufficient  property  is  attached 
to  cover  the  amount  claimed  and  the  costs.  Even  though 
the  debtor  pays  upon  demand,  all  the  costs  incurred  are 
taxed  against  him.  If  there  is  property  specially  mortgaged 
or  pledged  to  the  debt  the  attachment  must  first  be  levied 
thereon;  otherwise,  as  well  as  when  said  property  is  not 
enough,  sufficient  property  of  any  kind  must  be  attached  in 
the  following  order: 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     793 

(a)    money,   if   any    should    be    found;    (6)    public 

securities;    (c)  jewelry;  (d)  credits  (choses  in   action), 

which  can  be  realized  at  once;  (e)  fruits  or  rents  of  any 

kind;  (/)  live-stock;    (g)    personal   property;  (/?)  real 

property;  (i)  salaries  or  pensions;  (j)  credits  and  rights 

which  cannot  be  realized  at  once. 

No  attachments  can  be  levied  upon  the  bed,  in  daily  use, 

of  the  debtor,  his  wife  and  children,  nor  upon  their  necessary 

clothing,  nor  upon  the  tools  of  trade  of  the  debtor. 

In  the  case  of  salaries  or  pensions,  one-fourth  thereof  only 
can  be  attached,  if  they  amount  to  less  than  5,000  pesetas 
a  year,  and  one-third  thereof  if  in  excess  of  that  amount. 

After  the  attachment  has  been  levied  the  debtor  is  noti- 
fied that  the  sale  of  the  property  attached  has  been  ordered, 
and  he  must  be  served  at  the  same  time  with  copies  of  the 
complaint  and  documents  which  the  execution  creditor  ma}'' 
have  presented.  Within  three  days  following  the  service 
of  complaint,  the  debtor  may  object  to  the  execution;  other- 
wise he  must  be  declared  in  default  at  the  instance  of  the 
plaintiff,  and  the  proceedings  follow  their  course  without 
the  defendant  being  again  cited,  except  when  the  law  so 
requires.  The  judge  then  orders  the  record  to  be  brought 
before  him  for  judgment  with  a  citation  of  the  plaintiff  only. 
If  the  debtor  objects  in  proper  time  and  manner  he  must  be 
given  a  period  of  four  days  to  plead  any  of  the  following 
defenses  he  may  deem  proper.  They  are  the  only  defenses 
admissible  in  executive  actions: 

(a)  falsity  of  the  document  importing  a  confession 
of  judgment;  (6)  payment;  (c)  set-off  of  a  net  claim 
appearing  in  a  document  importing  a  confession 
of  judgment;  {d)  the  statute  of  limitations;  (e)  release 
or  respite;  (/)  waiver  of  the  right  to  demand  payment; 
(g)  lack  of  personal  capacity  on  the  part  of  the  exe- 
cution creditor  or  his  solicitor;  (h)  novation;  (i)  com- 
promise; (j)  agreement  to  submit  the  matter  for  de- 
cision to  arbitrators,  or  to  amicable  adjusters,  executed 
with  legal  formalities;  (k)  lack  of  competent  jurisdic- 
tion. 


794  LATIN-AMERICAN  COMMERCIAL  LAW 

Any  other  defense  which  the  debtor  may  plead  is  reserved 
for  an  ordinary  action,  but  this  does  not  prevent  the  rendi- 
tion of  a  judgment  ordering  the  sale  of  the  attached  prop- 
erty {sentencia  de  remate).  In  executive  actions  based  on 
bills  of  exchange,  the  only  defenses  admissible  are  those 
mentioned  in  the  first  five  subdivisions  of  the  foregoing 
enumeration,  and  the  impairment  of  the  bill  of  exchange 
for  lack  of  presentation  or  protest  or  notification  to  the  par- 
ties concerned  in  proper  form  and  time. 

The  defendant  may  demand  that  the  action  be  stayed 
and  declared  void  on  the  following  grounds: 

(a)  that  the  obligation  or  the  instrument  by  virtue 
of  which  the  execution  was  issued  is  void; 

(6)  that  the  instrument  does  not  import  a  confession 
of  judgment  (no  tiene  fuerza  ejecutiva)  either  because 
of  external  defects  or  because  it  is  not  yet  due,  or  be- 
cause the  amount  is  not  demandable  or  is  not  certain; 

(c)  that  the  debtor  has  not  been  served  with  notice 
of  sale  with  legal  formalities; 

(d)  that  the  execution  debtor  lacks  the  personal  or 
representative  capacity  in  which  he  is  sued. 

The  plaintiff  is  given  four  days  to  answer  these  objections. 
A  period  of  ten  days  for  the  taking  of  evidence,  if  necessary, 
is  established;  the  parties  are  then  given  a  common  period 
of  four  days  to  examine  the  proceedings;  a  date  is  fixed,  if 
any  of  the  parties  so  request,  for  a  hearing,  and  within  three 
days  thereafter,  or  within  five  days  if  there  has  been  no 
hearing,  the  judge  must  render  judgment  in  one  of  the  three 
senses  following: 

(a)  that  the  execution  be  confirmed,  stating  the 
amount  to  be  paid  to  the  creditor; 

(b)  that  the  order  for  the  sale  is  denied; 

(c)  that  the  entire  proceedings  or  a  part  thereof,  are 
void,  in  which  case  they  must  be  brought  back  to  their 
status  at  the  time  the  error  was  committed. 

In  the  first  case  the  costs  are  taxed  against  the  debtor; 
in  the  second,  against  the  plaintiff,  and  in  the  third,  each 
party  must  pay  his  own  expenses,  unless  there  is  reason  to 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     795 

tax  them  against  one  of  the  parties;  or,  by  way  of  correction, 
against  the  official  responsible  for  the  nullity  of  the  pro- 
ceedings.^^ 

In  Argentina,  ^^  Bolivia,  ^^  Chile,  ^"^  Colombia, ''^  Honduras, ^^ 
Panama  ^^  and  Venezuela  "  the  executive  action  can  be 
based  upon  a  private  instrument  when,  after  the  first  cita- 
tion for  acknowledgment  thereof,  the  debtor  fails  to  appear, 
because  by  that  failure  the  document  is  deemed  acknowl- 
edged, without  any  other  citation  or  formality. 

In  Panama,  ^^  furthermore,  the   executive  proceeding  is 

"  Spain,  1429  to  1480  c.  p.;  Argentina,  464  to  528  c.  p.;  Bolivia,  515  to  620 
c.  p.;  Brazil,  308  to  319,  ih.;  Chile,  455  to  538  c.  p.;  Colombia,  1008  to  1094 
c.  p.,  arts.  46  to  50,  53,  54,  173,  178  of  law  40  of  1907,  arts.  180  to  183,  189,  190, 
197,  199,  200,  205,  207  to  209,  211  of  law  105  of  1890;  arts.  39  of  law  57  of 
1887;  22  and  26  of  law  100  of  1892  and  law  46  of  1876,  amendments  30th  and 
35th;  Costa  Rica,  453  to  493  c.  p.;  Ecuador,  499  to  552  c.  p.;  Guatemala,  909 
to  1016  c.  p.;  Haiti,  469  to  679  c.  p.;  Mexico,  1015  to  1070  c.  c,  and  1391  to 
1414  com.  c;  Panama,  1166  to  1337  c.  p.;  Peru,  590  to  741  c.  p.;  San  Salva- 
dor, 587  to  659  c.  p.;  Santo  Domingo,  806  to  811  c.  p.;  Uruguay,  873  to  941 
c.  p.;  Venezuela,  508  to  516  c.  p. 

A  request  that  the  "executory  "  proceedings  be  declared  void  is  not  admis- 
sible, whatever  the  reasons  alleged  therefor,  if  the  defendant  did  not  object  to 
the  "executory  "  action  in  proper  time.  Spain,  Trib.  Sup.,  January  13,  1912; 
Gaceta  of  April  10,  1913. 

When  the  defendant  did  not  know  that  an  "executory"  action  had  been 
begun,  but  learned  of  it  later,  and  might  have  raised  in  the  proceeding  the 
question  of  the  nulHty  of  the  same,  without  doing  so,  he  cannot  claim  such 
nullity  in  an  ordinary  action  after  the  "executory"  one  is  closed.  Spain, 
Trib.  Sup.,  January  15,  1912;  Gaceta  of  April  11,  1913. 

The  citation  for  judicial  sale  of  the  attached  property  in  an  "executory  " 
action  is  equivalent  to  the  summons  in  an  ordinary  action.  Spain,  Trib.  Sup., 
December  31,  1912;  Gaceta  of  October  26,  1913. 

The  defects  of  the  instrument  upon  which  the  plaintiff  based  an  "executory" 
action,  and  the  faults  committed  in  the  "executory"  proceedings  cannot  be 
the  subject  of  a  complaint  in  an  ordinary  action  begun  afterwards  by  the 
defendant  on  the  ground  of  presumptive  errors  in  the  former  action.  Spain, 
Trib.  Sup.,  November  24,  1915;  Gacetas  of  March  19,  20,  and  22,  1916. 

The  object  of  the  ordinary  action  reserved  to  the  defendant  in  an  "execu- 
tory "  action  is  only  to  try  at  length  the  issue  whether  or  not  tlu;  obligation 
which  was  demanded  really  existed;  not  to  present  pleas  and  dcfcniscis  which 
should  have  b(!cn  raised  in  the  "executory"  proceedings.  Spain,  Trib.  Sup.; 
Gaceta  of  December  2,  1914. 

3»  Art.  468  c.  p.  ^9  Art.  897  c.  p.  *°  Art.  45()  c  p. 

"  Art.  700  c.  p.  «  Art.  448  c.  p.  "  Art.  892  c.  p. 

"  Art.  509  c.  p.  «  Art.  881  c.  p. 


796  LATIN-AMERICAN  COMMERCIAL  LAW 

proper  when   the  subscriber  of  a  private  document  has 
acknowledged  his  signature  before  a  notary  public. 

In  Argentina/^  Bolivia/^  Chile,  ^^  Colombia/'^  Costa 
Rica,^°  Honduras/^  Mexico,^^  Nicaragua/^  Panama  "  and 
Peru,^^  the  confession  or  admission  of  a  debt  of  definite 
amount  is  also  a  foundation  for  executive  proceedings. 

.\rticles  246  to  267  of  decree  No.  737  of  Nov.  25,  1850, 
in  Brazil  provide  for  an  action  in  commercial  matters  which 
is  called  assigna  qao  de  des  dias  (designation  of  ten  days)  by 
which  the  judge  gives  the  defendant  a  period  of  ten  days 
to  pay  or  show  legal  cause  for  not  paying.  This  action  is 
proper  when  it  is  based  upon: 

(a)  a  public  instrument; 

(6)  a  bill  of  exchange  or  any  other  document  possess- 
ing the  same  force,  according  to  law; 

(c)  a  promissory  note  or  any  other  document  relating 
to  commercial  transactions; 

(d)  a  bill  of  lading; 

(e)  insurance   policies; 

(/)  invoices  or  accounts  of  merchandise  sold  at  whole- 
sale, when  not  objected  to  within  a  legal  period  fixed 
by  the  party. 
This  action  does  not  lie  for  obligations  which  are  not  of 
liquid  amount,  or  which  depend  upon  a  term  or  condition. 
The  defendant,  within  the  ten  days  fixed  by  the  judge, 
may  present  his  objections,  which  may  differ  for  each  docu- 
ment; but,  as  a  rule,  the  falsity  or  nullity  of  the  instrument, 
payment,  or  novation  of  the  debt  can  be  pleaded. 

If  the  defendant  does  not  make  any  legal  objection  or  the 
objections  are  irrevelant  or  not  proved  during  the  ten  days, 
he  is  adjudged  to  pay  and  the  judgment  is  executed. 

This  action  can  also  be  founded  upon  other  private  docu- 
ments besides  those  heretofore  mentioned,  if  such  documents 

■>«  Art.  465  c.  p.  *^  Art.  518  c.  p,  «  Arts.  455,  456  c.  p. 

«  46  law  40  of  1907.  ^^  Art.  453  c.  p.  "  Art.  473  c.  p. 

"  Art.  1288  com.  c. 

"  Art.  61,  law  of  March  20,  1875.  "  Art.  1166  c.  p. 

"  Art.  591  c.  p. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION     797 

are  acknowledged  before  a  judge,  or  are  considered  as  ac- 
knowledged after  citation  of  the  debtor  and  default  in  ap- 
pearance. 

Execution  of  judgment. 

As  soon  as  judgment  has  become  final,  the  execution 
thereof  must  be  proceeded  with  at  the  instance  of  the  party, 
by  the  judge  or  court  which  took  cognizance  of  the  action 
in  first  instance.  If  the  judgment  orders  the  payment  of  a 
definite  and  net  sum,  an  attachment  against  the  property 
of  the  judgment  debtor  is  issued,  the  property  attached  is 
appraised  and  sold,  and  payment  is  made  to  the  plaintiff. 
If  the  judgment  orders  something  to  be  done  and  the  party 
adjudged  to  do  it  fails  to  perform  within  the  period  fixed, 
it  must  be  done  at  his  expense,  and,  if  it  be  an  act  which  can- 
not be  performed  by  another,  it  is  understood  that  he  prefers 
to  pay  damages.  WTien  real  estate  is  to  be  delivered  to  the 
successful  litigant  he  must  be  put  in  immediate  possession 
thereof.  The  same  is  true  of  personal  property,  if  it  can  be 
found;  otherwise  the  judgment  debtor  must  pay  damages. 

When  the  judgment  orders  the  payment  of  damages  with- 
out specifying  the  amount  thereof,  whether  the  basis  there- 
for be  established  in  the  judgment  or  not,  the  judgment 
creditor  must  present  a  statement  of  the  amount  calculated 
according  to  the  basis  established,  and  a  decision  is  made 
thereon  after  a  brief  hearing  of  the  parties;  the  creditor's 
calculation  is  approved,  if  according  to  the  judgment  and 
in  so  far  as  the  debtor  may  not  have  shown  it  to  be  incorrect. 
When  the  property  is  sold  and  an  appeal  as  to  the  amount 
fixed  by  the  judge  has  been  taken  by  the  judgment  debtor, 
the  creditor  is  given  the  amount  agreed  upon  by  the  debtor, 
together  with  the  costs,  and  the  difference  between  said 
amount  and  that  fixed  by  the  judge  is  deposited  in  court 
until  the  appeal  is  decided,  unless  the  creditor  furnishes 
proper,  security,  in  which  case  the  difference  is  also  given 
to  the  creditor.  ^^ 

"  For  judgments  rendered  by  foreign  courts,  see  chapter  on  Conflict  of 

Laws. 


798  LATIN-AMERICAN  COMMERCIAL  LAW 

Settlement    by    arbitrators    and    amicable    compoimders 

{amigables  componedores) 

Sometimes  the  parties  agree  to  have  their  differences 
composed  by  private  persons  in  whose  good  judgment  and 
fairness  they  trust;  and  the  law  seeks  to  encourage  this 
method  of  settling  controversies  which  may  better  satisfy 
the  parties  than  the  decision  of  a  judge.  The  law  recognizes 
two  kinds  of  arbitrators:  those  properly  so  called  and  ami- 
cable compounders.  The  first  give  their  decisions  strictly 
according  to  law,  whereas  the  amicable  compounders  are 
bound  by  no  principle  of  law  in  reaching  their  conclusions 
and  render  their  decisions  according  to  equity  (a  verdad 
sabida  y  buena  fe  guardada) . 

There  must  always  be  an  odd  number  of  arbitrators. 

The  compromis  or  submission  must  necessarily  be  con- 
tained in  a  public  instrmnent,  and  is  void  if  prepared  in  any 
other  manner.  The  agreement  of  compromis  must  contain, 
under  penalty  of  nullity:  (a)  the  names,  occupation  and 
domicil  of  the  litigating  parties;  (6)  the  names,  occupation 
and  domicil  of  the  arbitrators;  (c)  the  question  which  must 
be  submitted  to  them,  with  its  attendant  circumstances; 

(d)  the  period  during  which  they  must  render  a  decision; 

(e)  the  stipulation  that  a  fine  shall  be  paid  by  the  party  who 
fails  to  comply  with  such  parts  of  the  agreement  as  are 
indispensable  to  the  execution  of  the  compromis;  (/)  the 
stipulation  that  another  fine  shall  be  paid  by  any  party  who 
may  appeal  from  the  decision,  to  the  party  who  accepts  it, 

Spain,  919  to  350  c.  p.;  Argentina,  535  to  557  c.  p.;  Bolivia,  395  to  404,  407 
c.  p.;  and  decree  of  December  19,  1863,  arts.  16  to  18;  Brazil,  476  to  604,  ib.; 
Chile,  236  to  238  c.  p.;  Colombia,  868  to  875  c.  p.  and  arts.  113,  114,  231,  law 
No.  105  of  1890;  Costa  Rica,  1023  to  1063  c.  p.;  Ecuador  499  to  552  c.  p.; 
Guatemala,  1523  to  1563  c.  p.;  Honduras,  233  to  234  c.  p.;  Mexico,  736  to 
768  c.  p.;  Nicaragua,  400  to  412  c.  p.;  Panama,  568  to  580  c.  p.;  Peru,  1145 
to  1154  c.  p.;  San  Salvador,  433  to  453  c.  p.;  Santo  Domingo,  517  to  805  c.  p.; 
Uruguay,  489  to  510  c.  p.;  Venezuela,  435  to  446  c.  p. 

A  judgment  determining  issues  not  raised  by  the  parties  is  incongruous. 
Spain,  Trib.  Sup.,  October  28,  1889;  Gaceta  of  January  8,  1890. 

When  a  question  is  raised  with  regard  to  the  interpretation  of  a  judgment 
at  the  time  of  its  execution,  the  decision  rendered,  when  it  becomes  final,  is  an 
integral  part  thereof.  Spain,  Trib.  Sup.,  February  5,  1887;  Gaceta  of  April  24, 
1887. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION      799 

before  such  appeal  can  be  heard;  {g)  the  designation  of  the 
place  where  the  proceedings  for  arbitration  must  be  held; 
{h)  the  date  on  which  the  compromis  was  entered  into. 

The  acceptance  by  the  arbitrator  or  arbitrators  of  his  or 
their  appointment  gives  the  right  to  each  of  the  parties  to 
compel  them  to  comply  with  their  duties,  under  penalty  of 
damages. 

Arbitrators  may  be  challenged  for  the  same  causes  as 
judges  provided  the  causes  arise  after  the  compromis,  or  were 
unknown  to  the  parties  at  the  time  they  entered  into  it. 

The  compromis  becomes  void:  (a)  by  unanimous  consent 
of  those  who  entered  into  it;  (b)  by  the  expiration  of  the 
period  fixed  in  the  compromis  and  of  any  extension  thereof, 
without  a  decision  having  been  rendered.  The  extension  of 
the  period  for  rendering  a  decision  must  be  affected  by 
unanimous  consent  and  in  a  public  instrument. 

The  arbitration  proceedings  must  be  held  before  a  clerk  of 
a  court  of  first  instance  selected  by  the  arbitrators,  unless 
the  interested  parties  designate  a  special  clerk  by  common 
consent. 

The  respective  contentions  and  documents  in  support 
must  be  presented  to  the  arbitrators  with  legal  formalities, 
and  the  proceeding  must  be  carried  on  in  accordance  with 
the  provisions  of  the  law  unless  otherwise  provided  by  the 
compromis. 

The  judgment  of  the  arbitrators  must  also  be  in  accord- 
ance with  the  law,  the  contentions  and  the  evidence;  points 
on  which  they  disagree  must  be  submitted  to  the  judge  of 
first  instance  of  the  judicial  district,  and  his  decision  thereon 
shall  be  deemed  the  judgment,  whether  or  not  it  agrees  with 
the  vote  of  any  of  the  arbitrators.  The  judgment  may  be 
appealed  from  for  review  and  stay  of  proceedings  to  the 
court  of  second  instance;  and  appeals  are  prosecuted  in 
conformity  with  the  rules  established  for  appeals  from  final 
judgments  in  actions  of  greater  importance  {mayor  cuanlia) . 

If  the  arbitrators  have  the  character  of  amicable  com- 
pounders the  provisions  of  the  law  are  substantially  the  same 
except  that  the  duties  of  the  compounders  are  less  subject 


800  LATIN-AMERICAN  COMMERCIAL  LAW 

to  formalities;  they  must,  however,  receive  the  documents 
presented  by  the  parties,  hear  them  and  render  judgment 
according  to  their  opinion  of  the  merits.  The  judgment 
must  be  rendered  before  a  notary  who  must  give  notice 
thereof  to  the  parties.  From  the  judgment  rendered  by  the 
compounder  there  is  no  other  recourse  than  an  appeal  for 
annulment  of  judgment  {casacion)  in  the  cases  and  within 
the  period  established  by  the  law  for  regular  actions.  If  the 
appeal  for  annulment  of  judgment  is  not  allowed,  or  is  not 
interposed  in  time,  the  judgment  whether  rendered  by 
arbitrators  or  amiable  compounders,  becomes  final,  and  must 
be  executed  by  the  judge  of  first  instance  of  the  place  in 
which  the  judgment  was  rendered. ^^ 

NON-CONTENTIOUS   JURISDICTION 

General  rules. 

All  proceedings  in  which  the  intervention  of  a  court  or 
judge  is  requested  or  is  necessary,  without  any  actual  litiga- 
tion, or  in  which  no  issue  is  raised  between  known  and  de- 
termined parties,  are  considered  acts  of  voluntary  jurisdic- 
tion. 

If  the  person  instituting  the  proceedings,  or  any  person 
having  a  legitimate  interest  therein,  should  request  that 
some  other  person  be  heard,  or  if  the  judge  should  consider  it 
proper,  a  hearing  is  granted,  and  for  that  purpose  the  record 
is  left  for  examination  in  the  clerk's  office  for  a  short  period, 
according  to  the  circumstances.  All  documents  which  may 
be  presented  and  evidence  offered  are  admitted  without 
request  or  any  other  formality. 

The  moment  any  person  raises  an  issue  of  fact  or  law  the 
proceedings  in  the  form  of  voluntary  jurisdiction  are  closed 
and  become  subject  to  the  formalities  of  contentious  jurisdic- 
tion. 

The  judge  in  acts  of  non-contentious  jurisdiction  may 
modify  his  decrees  or  decisions  without  the  formalities 
required  for  contentious  jurisdiction.     Rulings  which  have 

"  Spain,  789  to  838  c.  p. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION      801 

the  force  of  final  judgments  and  against  which  no  remedy- 
was  interposed,  are  not  included  in  this  rule. 

The  party  who  instituted  the  proceedings  may  appeal  both 
for  a  review  and  a  stay  of  proceedings;  the  other  parties  are 
admitted  to  appeal  for  review  only.  An  appeal  for  annul- 
ment of  judgment  is  also  proper  against  the  decisions  of 
courts  of  second  instance. 

Acts  of  non-contentious  jurisdiction  in  commercial  mat- 
ters. 

Many  acts  of  a  merely  civil  character  are  subject  to  judicial 
intervention,  either  because  the  law  so  requires,  or  because 
the  interested  person  demands  it.  The  adoption  of  a  person 
as  a  child,  the  appointment  of  guardians  (tutores)  and  cura- 
tors {cur adores)  for  minors  or  incapacitated  persons;  substi- 
tution for  the  consent  of  parents,  grandparents  or  guardians 
for  minors  to  contract  marriage;  the  recording  in  a  public 
instrument  of  a  verbal  will  or  codicil ;  the  opening  of  a  sealed 
will  and  the  filing  in  protocols  of  a  testamentary  memoran- 
dum; the  investiture  of  power  in  minors  or  married  women 
to  appear  in  court;  the  proceedings  to  perpetuate  testimony, 
when  no  determined  person  can  be  prejudiced;  the  alienation 
of  property  of  minors  and  incapacitated  persons  and  the 
settlement  of  their  rights  out  of  court ;  the  administration  of 
the  property  of  absent  persons  whose  whereabouts  are 
unknown;  voluntary  judicial  public  sales;  the  judicial  deliv- 
ery of  possession  of  real  estate  in  which  summary  proceedings 
to  acquire  possession  do  not  he,  and  the  survey  and  demar- 
cation of  lands  are  some  of  the  cases  which  pertain  to  non- 
contentious  jurisdiction  in  civil  matters. 

There  are  also  acts  in  commercial  matters  in  which  a  judge 
is  requested  to  intervene.  In  reference  to  these  acts  not  only 
the  judges  of  first  instance,  and  where  there  is  none,  the 
municipal  judges  of  the  locality,  but  even  the  consuls  of  the 
country  where  certain  rights  are  to  be  enforced,  are  compe- 
tent. 

The  necessity  of  making  a  deposit  of  commercial  securities 
or  goods  is  a  case  of  frequent  occurrence.    The  contract  of 


802  LATIN-AMERICAN  COMMERCIAL  LAW 

purchase  and  sale  and  the  contract  of  transportation  often 
require  such  deposit;  in  such  cases  the  object  of  the  proceed- 
ings, on  the  part  of  the  judge,  is  to  have  a  complete  and 
faithful  description  of  the  things  deposited,  and  to  be  sure 
of  the  reliabiUty  of  the  bailee.  Should  it  become  necessary 
for  the  judge  to  order  the  sale  of  some  of  the  deposited 
merchandise,  in  order  to  meet  the  expenses  of  the  deposit, 
the  sale  must  be  made  at  pubHc  auction,  after  an  appraisal 
by  an  expert  appointed  by  the  owner  of  the  merchandise,  if 
present,  or  otherwise  by  the  representative  of  the  Depart- 
ment of  Justice,  complying  with  the  other  legal  requisites 
prescribed  for  sales  of  this  kind. 

With  regard  to  bills  of  exchange  it  has  been  observed  that 
when  a  bill  is  lost,  or  is  in  possession  of  a  person  not  a  holder 
in  due  course,  the  interested  party  can  apply  to  the  judge  of 
proper  jurisdiction  for  an  order  to  deposit  the  amount 
thereof.  The  functions  of  the  judge  are  confined  to  insuring 
the  appointment  of  a  proper  depositary  and  giving  the 
petitioner  a  period,  according  to  the  circumstances,  within 
which  he  shall  present  a  duplicate  of  the  bill  of  exchange,  or 
request  in  a  proper  action  the  definite  attachment  of  the  value 
thereof,  with  the  warning  that  if  the  action  is  not  instituted 
within  that  period  the  temporary  deposit  will  be  vacated. 

Judicial  intervention  in  commercial  matters  is  also  re- 
quested and  granted  in  connection  with  the  right  of  co- 
partners to  appoint  a  co-manager  in  case  the  person  in 
charge  of  the  management  is  making  an  improper  use  of  his 
powers;  or  when  the  co-partners  are  refused  the  right  to 
inspect  the  books  of  the  partnership;  or  when,  according  to 
the  provisions  of  law  or  the  stipulations  of  the  contract  of 
partnership  or  articles  of  organization  of  a  stock  corporation 
{sociedad  anonima),  it  is  necessary  to  appoint  an  arbitrator; 
or  when,  in  connection  with  a  contract  of  insurance,  the 
appointment  of  an  arbitrator  or  expert  is  required;  and 
finally  when,  in  overland  or  maritime  transportation,  mer- 
chandise is  to  be  disposed  of,  or  it  becomes  necessary  to  state 
the  condition  thereof,  or  the  damage  suffered  by  it  or  the 
cause  thereof. 


CONTENTIOUS  AND  NON-CONTENTIOUS  JURISDICTION      803 

In  all  these  and  similar  cases,  the  proceedings  are  carried 
on  in  a  way  designed  to  meet  the  necessities  and  in  accord- 
ance with  general  rules,  leaving  at  the  discretion  of  the 
judge  the  use  of  his  powers  in  order  to  safeguard  the  interests 
of  all  persons  concerned. 

The  judge,  in  cases  of  non-contentious  jurisdiction,  ex- 
ercises a  function  differing  from  the  usual  functions  of  a 
court,  because,  instead  of  providing  for  redress,  he  aims  to 
prevent  a  wrong  or  judicially  authenticate  a  legal  fact  or 
transaction. 


CHAPTER  XLIII 

CONFLICT  OF  LAWS  IN  LATEST-AMERICAN  COUNTRIES* 

General. — Clunet:  Tables  gen6rales,  1904,  4  v.  and  bibliographies  in  the 
subsequent  volumes  of  Clunet's  Journal  du  droit  international  prive. 

Ramirez,  Gonzalo:  EI  derecho  procesal  internacional  en  el  congreso  jurldico 
de  Montevideo.    Montevideo,  1892. 

Execution  des  sentences  rendues  par  es  tribuneauxe  etrangers  d'apres  la 
legislation  et  la  jurisprudence  espagnole  et  hispano-americaine  by  V.  Cobian. 
39  Clunet,  1912,  1059-71;  40  Clunet,  1913,  89-101. 

Spain. — Castro  y  Casaleiz,  Antonio  de:  El  derecho  de  expulsi6n  ante  el 
derecho  internacional  y  la  legislaci6n  espanola.    Madrid,  1896. 

Same:  Estudios  de  derecho  internacional  privado.  Conflictos  de  nacio- 
nalidad.    Condici6n  de  extratjero.    Madrid,  1900. 

Coode  y  Luque,  Rafael:  Derecho  internacional  privado.  Madrid,  1910. 
2  V. 

Same:  Oficios  de  derecho  internacional  privado.  Nacionalidad.  Situaci6n 
del  extranjero.    Madrid,  1901. 

Ferndndez  Prida,  Joaquin:  Derecho  internacional  privado.  Valladolid, 
1896. 

Gestoso  y  Acosta,  Luis:  Nuevo  tratado  de  derecho  internacional  privado. 
Valencia,  1913. 

Rubira  Abarca,  Alfredo:  El  derecho  internacional  privado  y  la  jurispruden- 
cia  espanola  en  materia  de  familia  y  sucesiones.     Madrid,  1908.     Pamphlet. 

Torres  Campos,  Manuel:  Elementos  de  derecho  internacional  privado,  4th 
ed.    Madrid,  1913. 

Torres  Campos,  Manuel:  Principios  de  derecho  internacional  privado. 
Madrid,  1883. 

Argentina. — Actos  de  las  sesiones  del  Congreso  sud-americano  de  derecho 
internacional  privado,  instalado  en  Montevideo  el  25  de  agosto  de  1888  y 
clausurado  el  18  de  febrero  de  1889.  Publicaci6n  ordenada  por  el  gobierno  de 
la  Republica  Argentina.    Buenos  Aires,  1889. 

Tratados  sancionados  por  el  Congreso  sud-americano  de  derecho  interna- 
cional privado,  instalado  en  Montevideo  el  25  de  agosto  de  1888,  y  clausurado, 
el  18  de  febrero  de  1889.  Publicacion  ordenada  por  el  gobierno  de  la  Repub- 
lica Argentina.    Buenos  Aires,  1889. 

Bulletin  argentin  de  droit  international  prive  v.  I  (July,  1903-Oct.,  1905), 
v.  2,  Nos.  1-5  (1906-1909) ;  Nos.  6-7,  Index.    Buenos  Aires  (1903-1909). 

Alcorta,  Amancio:  Curso  de  derecho  internacional  privado.  Buenos  Aires, 
1887-1892.  3  v. 

1  Spain,  11  c.  c;  Argentina,  14  c.  c;  Brazil,  17  c.  c;  Honduras,  2372  c.  c; 
and  Mexico,  15  c.  c. 

804 


CONFLICT   OF    LAWS  805 

Calandrelli,  Alcides:  Cuestiones  de  derecho  internacional  privado,  v.  I. 
Buenos  Aires,  1911;  v.  II.    Madrid,  1913;  v.  III.    Buenos  Aires,  1915. 

Same:  La  codificaci6n  del  derecho  internacional  privado.    Buenos  Aires,  1898. 

Calvo,  Carlos:  Derecho  internacional  te6rico  y  prdctico  de  Europa  y  Amer- 
ica. .  .  .  Paris,  1st  ed.,  2  v.  (1868),  5th  ed.,  6  v.  (1896). 

Same:  Dictionnaire  de  droit  international  public  et  prive.    Berlin,  1885.    2  v. 

Same:  Recueil  complet  des  traites,  conventions,  capitulations,  armistices 
et  autres  actes  diplomatiques  de  tous  les  etats  de  I'Amerique  latine  corapris 
entre  le  golfe  du  Mexique  et  le  cap  de  Horn,  depuis  I'annee  1493,  jusqu'd  nos 
jours  precede  d'un  memoire  sur  I'etat  actuel  de  I'Amerique,  de  tableaux  statis- 
tiques,  d'un  dictionnaire  diplomatique  avec  une  notice  historique  sur  chaque 
traite  important.    Paris,  1862-1867.    12  v. 

Cane,  Miguel:  Expulsion  de  extranjeros.    Buenos  Aires,  1899. 

Coleccion  de  tratados  celebrados  por  la  Republica  Argentina  con  las  naciones 
extranjeras.    Publicacion  oficial.    Buenos  Aires,  1884.    3  v. 

Coussac,  Carlos:  Expulsion  de  extranjeros.    Buenos  Aires,  1903. 

Doraenech,  Roberto:  Las  guerras  civiles  americanas  ante  el  derecho  inter- 
nacional, prologo  del  Dr.  Jose  Le6n  Suarez.    Buenos  Aires,  1915. 

Durd,  Francisco:  Naturalizacion  de  los  extranjeros.  Actos  e  intentos  legis- 
latives sobre  esta  materia  en  la  Republica  Argentina.     Buenos  Aires,  1911. 

Ferreira,  Ram6n:  Lecciones  de  derecho  internacional.    Parand,  1861. 

Same:  Cobro  coercitivo  de  deudas  piiblicas.    Buenos  Aires,  1906. 

Moniegue  Silla,  J. :  El  derecho  internacional  privado  en  la  Repiiblica  Argen- 
tina.   Apuntaciones  bibliograficas.    Buenos  Aires,  1896. 

Molina,  Victor  M.:  El  derecho  internacional  privado  y  el  c6digo  civil  argen- 
tine.   Buenos  Aires,  1905. 

Morelli,  Ciriaco:  Elcmentos  de  derecho  natural  y  de  gentes,  traducci6n  del 
Dr.  Luciano  Abeille.    Buenos  Aires,  1911. 

Orgaz,  Raul  A. :  Condicidn  jurldica  internacional  de  las  sociedades  an6nimas. 
C6rdoba,  1913. 

Pillado,  Ricardo:  Comentario  sobre  los  tratados  de  comei-cio  argentinos  .  .  . 
con  una  carta-pr61ogo  del  doctor  Eleodoro  Lobos.  .  .  .  Buenos  Aires,  1915. 

Podestd  Costa,  Luis:  El  extranjero  en  la  guerra  civil.  Buenos  Aires, 
1913. 

Restelli,  Ernesto:  Adquisici6n  de  la  nacionalidad  en  el  derecho  argcntino. 
Buenos  Aires,  1911. 

Saldias,  Adolphe:  La  politique  italicnne  au  Rio  de  la  Plata.  Les  etrangers 
residents  devant  le  droit  international.    Paris,  1889. 

Segovia,  Lisandro:  El  derecho  internacional  privado  y  el  Congrcso  sud- 
americano  de  Montevideo.    Buenos  Aires,  1SS9. 

Weiss,  A.:  Compendio  de  derecho  internacional  privado.  Traducido  y 
anotado  por  el  doctor  E.  >S.  Zeballos.    Paris  (1902).    2  v. 

Zeballos,  Estanislao  S.:  Justicia  internacional  positiva.  Conferencias 
dadas  en  la  Facultad  de  derecho  y  ciencias  sociales  de  la  Universidad  de 
Buenos  Aires,  en  el  curso  intensive  de  Derecho  internacional  privado.  (Der- 
echo privado  humano).    Valencia,  1911. 

Same:  Conferencias  internacionales  americanas.    Valencia,  1914. 

Same:  El  derecho  internacional  privado  en  la  Am6rica  colonial.  Rev.  de 
Leg.  y  Jur.    Santiago  de  Chile,  1904,  p.  247. 


806  LATIN-AMERICAN  COMMERCIAL  LAW 

Same:  La  nationalite  au  point  de  vue  de  la  legislation  compart  et  du  droit 
prive  humain.    Paris,  1914.    2  v. 

Same:  Codification  of  private  international  law.    Buenos  Aires,  1907. 

Daireaux  E.:  La  vie  et  les  moeurs  a  la  Plata.    Paris,  1888.    2  v. 

De  la  condition  legal  des  etrangers  dans  la  Republique  Argentine,  par  E. 
Daireaux  (13  Clunet,  1886,  286-298,  414^24). 

Lehmann,  B.:  Die  Rechtsverhaltnisse  der  Fremden  in  Argentinien.  Buenos 
Aires,  1889. 

De  Valicourt,  Comte  A.:  L'emigrant  fran^ais  et  sa  condition  en  Argentine. 
Paris,  1898. 

Decree  of  President  in  re  estates  of  intestate  foreigners.  Buenos  Aires, 
Nov.  19,  1862  (53  St.  Pap.,  1862-1863,  762-766). 

Law  respecting  the  testamentary  and  intestate  property  of  foreigners. 
Buenos  Aires,  Sept.  29,  1865  (58  St.  Pap.,  1867-1868,  455^56). 

L'intervention  des  consuls  dans  les  successions,  por  Alcides  Calandrelli 
(1  Bui.  Arg.  de  dr.  Int.,  1903-1905,  182-194). 

Jurisdiction  over  estates  of  American  citizens  dying  in  the  Argentine  Repub- 
lic (For.  Rel.,  1908,  6-10). 

Bolivia. — Diaz  de  Medina,  Federico:  Nociones  de  derecho  intemacional 
moderno.    Paris,  1899. 

Brazil. — Argresti  L.:  La  condizione  dello  straniero  nel  Brasile.  Memoria 
letta  all  Academia.    Pontaniana,  3  Nov.,  1912,  16  p. 

Bevilaqua,  Clovis:  Principios  elementaes  de  direito  intemacional  privado. 
Bahia,  1906. 

Briggs,  Arthur:  Cartas  rogatorias  internacionaes.     Rio  de  Janeiro,  1913. 

Carvalho,  Carlos  de:  A  questao  do  divorcio  no  Brazil;  solugao  pelo  direito 
intemacional.    Rio  de  Janeiro,  1844. 

Joppert  da  Silva,  O.,  e  Teixeira  de  Freitas,  M.  A.:  Direito  intemacional 
privado.    Parte  generae.    Nicteroy,  1908. 

Lacerda  de  Almeida,  Francisco  de  Paula:  O  decreto  No.  1641,  de  7  de  Janeiro 
de  1907  sobre  expulsao  de  estrangeiros  do  territorio  nacional,  legeramente  com- 
mentado  e  precedido  de  alguns  capitulos  doutrinarios  sobre  o  undamento 
jurldico  e  applicagao  pratica  do  direito  de  expulsao  e  com  referencias  aos  au- 
tores  nacionaes  e  d,  jurisprudencia  patria.    Rio  de  Janeiro,  1907. 

Martins,  Samuel:  Execugao  das  senten^as  extrangeiras  no  Brazil.  Recife, 
1906. 

Octavio  de  Langgaard  de  Menezes,  Rodrigo:  Direito  do  estrangeiro  no 
Brazil.    Rio  de  Janeiro,  1909. 

Same:  Le  mariage  au  Brasil,  celebration,  annulation  et  divorce  au  point  de 
vue  du  droit  international  prive.  Revue  de  VlnstUut  de  Droit  Compare,  v. 
Ill,  1910,  p.  412. 

Same:  A  codificagao  do  direito  intemacional  privado.    Rio  de  Janeiro,  1910. 

Same:  L'union  juridique  des  nations  au  point  de  vue  du  droit  prive.  Bru- 
xelles,  1910. 

Same:  Le  droit  international  prive  dans  la  legislation  bresilienne;  cours 
professe  a  la  Faculte  de  droit  de  I'Universite  de  Paris.    Paris,  1915. 

Pessoa,  Epitacio:  Projecto  do  codigo  de  direito  intemacional  privado.  Rio 
de  Janeiro,  1911. 

Pimenta  Bueno,  Jose  Antonio:  Direito  intemacional  privado,  e  aplica^ao 


CONFLICT    OF    LAWS  807 

de  sus  principios  com  referencia  ds  leis  particulares  do  Brazil.  Rio  de  Janeiro, 
1863. 

Sobreira  de  Mello,  Eduardo  Xavier:  Commentario  a  legislagao  brazileira 
sobre  bens  de  defuntos,  vagos  e  do  evento,  2d  ed.    Rio  de  Janeiro,  1878.    3  v. 

Viega,  Didimo  da:  Constituinado  o  direito  international  privado  em  sua 
essenia  o  conjunto  das  reglas  juridicas  que  dominan  as  relagoes  individuaes  da 
sociedade  intemacional;  alcanga  na  area  de  sua  acgao  a  parte  processal.  O 
Direito.    Vol.  107,  p.  427. 

Vianna,  Sa:  De  la  nonexustence  d'un  droit  international  americain.  Rio 
de  Janeiro,  1912. 

Chile. — Bello,  Andres:  Principios  de  derecho  de  gentes.  Santiago,  1832  and 
V.  X  of  his  Obras  completas.    Santiago,  1886. 

Bill  regulating  foreign  insurance  companies  in  Chile.  (For  Rel.,  1896,  43- 
45). 

Correa  y  Bravo,  Agustin:  Los  extranjeros  ante  la  ley  Chilena.  Santiago  de 
Chile,  1894. 

Cfuchaga  Tocornal,  Miguel:  Nociones  de  derecho  intemacional,  2d  ed. 
Santiago,  1902. 

Fabres,  Jose  Clemente:  La  leg:islaci6n  de  Chile  con  relaci6n  al  derecho  inter- 
nacional  privado.    Santiago,  1892. 

Philippi,  Julio:  La  clausula  de  "la  naci6n  mds  favorecida"  en  los  tratados 
de  Chile,  in  Revisla  de  derecho,  jurisprudenda  y  dencias  sociales,  1912,  p.  53. 

Caldes  Mendeville,  Jorge:  Los  extranjeros  ante  el  derecho.  Santiago, 
1913. 

Vera,  Robustiano:  Principios  elementales  de  derecho  intemacional  privado. 
Santiago,  1902. 

Colombia. — Caicedo  Arroyo,  M.:  Condici6n  de  los  extranjeros  en  Colombia. 
Bogota,  1896. 

Champeau  E.:  De  la  condition  des  etrangers  en  Colombia.  21  Clunet,  1894, 
pp.  292-340. 

Claims  by  foreigners.  Decree  of  Oct.  11,  1886  (77  St.  Pap.,  1885-1886,  810, 
813). 

Decree  in  re  Right  of  foreigners  to  hold  real  property.  Bogotd,  June  10, 
1862,  52  St.  Papers,  1861-1862,  pp.  1224-1225. 

Law,  Status,  rights  and  duties  of  foreigners.  Bogotd,  June  21,  1866, 
58  St.  Papers,  1867-1868,  pp.  603-604. 

Law  of  August  31,  1886,  concerning  claims  of  foreigners  in  rebellion.  77 
St.  Papers,  1885-1886,  pp.  807-809. 

Olarte  Camacho,  Vicente:  Condici6n  legal  de  los  extranjeros  en  Colombia, 
2d  ed.    Bogotd,  1913. 

Porras,  Demetrio:  Etude  su  la  condition  des  Strangers  en  Colombia.  15 
Bull,  de  Leg.  comparee,  1885-1886,  pp.  407-415. 

Restrepo  Herndndez,  Julidn:  Derecho  intcrnnoional  privado.    Bogotd  (?). 

Rights  and  privileges  of  foreigners  and  others  within  the  Union.  Bogotd, 
Sept.  26,  1861,  58  St.  Papers,  1807-1868,  p.  417. 

Rights  of  United  States  citizens  in  Colombia  as  to  expropriation  of  property. 
For.  Rel.,  1902,  pp.  301-313. 

Uribe,  Antonio  Jos6:  Lo  droit  internatinniil  prive  dans  la  legislation  Coloin- 
bien,  7  Revue  de  droit  intrrnalional  privc,  1911,  pp.  316-326. 


808  LATIN-AMERICAN  COMMERCIAL  LAW 

Costa  Rica. — Loi  de  20  Juillet  1896  interdisant  rimmigration  des  Chinois 
(en  Costa  Rica),  25  Clunet,  1892,  p.  972. 

Police  des  etrangers  (Costa  Rica),  4  Revue  general  de  droit  international 
public,  1897,  p.  972. 

Cuba. — Bustamante  y  Sirven,  Antonio'  S  de:  Tratado  de  derecho  inter- 
nacional  privado.    Habana,  1896,  v.  I. 

Same:  Programa  de  las  asignaturas  de  derecho  intemacional  publico  y  de 
derecho  intemacional  privado.    Madrid,  1891. 

Carrera  y  Justiz,  Francisco:  El  municipio  y  los  extranjeros.  Habana, 
1904. 

Heydrich,  R.  y  Gonzd,lez,  Bernard,  A.:  Lecciones  de  derecho  intemacional 
privado  desenvueltas  con  arreglo  al  programa  de  ei  senanza  del  Dr.  D.  Antonio 
S.  de  Bustamante.    Habana,  1893. 

Rights  of  British  subjects  are  not  governed  by  treaties  either  of  the  United 
States  or  Spain,  but  by  aliens'  law  of  1870  (Cuba).  For.  Rel.,  1901,  pp. 
225-231. 

Ecuador. — Law  of  August  28,  1886,  in  re  rights  of  foreigners  (77  St.  Pap., 
1885-1886,  728-732).  Law  of  August  25,  1892  (84  St.  Pap.,  1891-1892,  644r- 
647). 

Guatemala. — Ley  de  extranjeria.    Guatemala,  1895. 

Haiti. — Foreigners  required  to  procure  a  license  to  do  business  (in 
Haiti);    For.  Rel,  1899,  403-404. 

Devot,  Justin:  La  nationalite  et  son  influence  quant  a  la  jourissance  et  d 
I'exercice  des  droits.    Paris,  1893. 

Justin,  Joseph:  De  la  nationalite  en  Haiti,  suivid'un  apergu  historique  sur  le 
droit  haitien.    Port  au  Prince,  1905. 

Terres,  J.  B.:  Alien  law  of  Haiti  (Cons.  Rep.),  1894^6,  p.  279,  53  cong. 

Honduras. — Translation  of  the  alien's  law  of  the  Republic  of  Honduras. 
Feb.  8,  1906.  London,  1907.  Great  Britain.  Foreign  Office  Miscellaneous. 
N.  1,  1907. 

Mexico. — Algara,  Jose:  Lecciones  de  derecho  intemacional  privado. 
Mexico,  1899. 

Same:  iQu6  ley  debe  regir  la  sucesi6n  de  los  bienes  raices  ubicados  en  dis- 
tintos  Estados  de  la  Republica?    El  Derecho,  1894,  p.  329. 

Arroyo  de  Anda,  Agustin:  El  principio  de  la  nacionalidad  en  el  derecho 
intemacional  privado.  Mexico.  Rcvista  de  Leg.  y  Jurisp.,  1895,  1st  sem., 
p.  275. 

Avalos,  Miguel  V.:  Progreso  realizado  en  el  derecho  intemacional  privado 
desde  la  proclamaci6n  de  la  independencia  hasta  nuestros  dlas.  Mexico. 
Diar.  de  Jririsp.,  v,  23,  p.  287. 

Azpiroz  Manuel:  La  libertad  civil  es  el  verdadero  principio  del  derecho 
intemacional  privado.     Mexico,  1896. 

Same:  C6digo  de  extranjeria  de  los  Estados  Unidos  Mexicanos.  Ensayo 
de  codificaci6n.     Mexico,  1876. 

Bravo  Betancourt,  Ignacio:  Efectos  juridicos  en  Mexico  del  matriraonio 
celebrado  en  el  extranjero  entre  extranjeros,  o  entre  mexicanos,  o  entre  mex- 
icanos y  extranjeros.     Rev.  de  Leg.  y  Jurisp.  1901,  1st  sems.,  p.  360. 

C6rdoba  y  Morales,  Gonzalo  F.  de:  La  solucion  juridica  de  los  conflictos 
intemacionales.    76.,  1902,  2d  semst.,  p.  166. 


CONFLICT   OF    LAWS  809 

Diaz  Covarnibias,  Jose:  El  derecho  internacional  codificado  por  Blunt- 
schli,  adicionado  y  anotado  por  el  autor.    Mexico,  1871. 

Esteva  Ruiz,  Roberto  A.:  El  derecho  publico  internacional  en  Mexico. 
Su  evoluci6n  desde  la  epoca  virreinal  hasta  nuestros  dias.  Diar.  de  Jurisp., 
V.  24,  p.  64. 

Flores,  Rafael:  Sucesi6n  de  extranjeros  en  cuanto  a  bienes  inmuebles  que 
posean  en  la  repiiblica.  Rev.  de  Leg.  y  Jur.  Mexico,  1897,  1st  sems.,  p. 
413. 

Garcia  Gar6falo,  Ricardo:  iLa  ejecuci6n  de  las  sentencias  extranjeras  es 
materia  federal  o  de  legislacion  de  los  Estados?    Mexico,  1895. 

G6mez  de  la  Cortina,  Jose:  Prontuario  diplomiitico  y  consular.  Mexico, 
1856. 

Matrimonios  de  mexicanos  en  el  extranjero.  Studies  on  this  theme  by 
Mateos  Alarc6n,  Manuel;  Verdugo,  Agustin;  Portillo,  Jose,  and  Mendez  Luis. 
El  Derecho,  1894,  pp.  529,  545,  563  and  611. 

Mendez,  Luis:  Capacidad  juridica  de  los  extranjeros  para  adquirir  y  poseer 
bienes  raices  en  la  republica  y  para  disponer  de  ellos  por  contrato  o  por  testa- 
mento.    Mexico,  1884  (?). 

Morineau,  Julidn:  Efectos  juridicos  en  Mexico  del  matriraonio  celebrado  en 
el  extranjero  entre  extranjeros,  o  entre  mexicanos,  o  entre  mexicanos  y  ex- 
tranjeros.   Rev.  de  Leg.  y  Jurisp.,  1901,  1st  sem. 

Paniagua,  Levi:  La  ejecuci6n  de  las  sentencias  extranjeras  en  Mexico. 
Mexico.    Diario  de  Jurispriidencia,  v.  12,  p.  152. 

Perez  Verdia,  Luis:  El  principio  de  la  nacionalidad  en  derecho  internacional 
privado.    Rev.  de  Leg.  y  Jurisp.,  1895,  1st  sem. 

Same:  Tratado  elemental  de  derecho  internacional  privado.  Guadalajara, 
1908. 

Ramirez,  Jose  H. :  C6digo  de  los  extranjeros.  Diccionario  de  derecho  inter- 
nacional publico  y  privado  de  la  Repiiblica  Mexicana.    Mexico,  1870. 

Rodriguez,  Ricardo:  C6digo  de  extranjeria,  contiene  la  historia  legislativa  de 
Mexico  sobre  la  condici6n  juridica  de  los  extranjeros  preceptos  constitu- 
cionales,  ley  actual  de  extranjeria  de  28  de  mayo  de  1886,  su  comentario  en 
presencia  de  las  legislaciones  extranjeras  en  la  epoca  actual.  Legislaci6n 
comparada.    Mexico,  1903. 

Same:  La  condici6n  juridica  de  los  extranjeros  en  Mexico  en  la  administra- 
ci6n  del  senor  General  Porfirio  Diaz.    M6xico,  1903. 

Rojas,  Isidro:  El  embargo  de  los  valores  mexicanos  en  Nueva  York  desde  el 
punto  de  vista  juridico.    Rev.  de  Leg.  y  Jurisp.,  1899,  2d  sems.,  p.  414. 

Secretaria  de  Relaciones  Exteriores.  Gula  diplomdtica  y  consular.  Mexico, 
1902. 

Sierra,  Justo:  Lecciones  de  derecho  maritime  internacional.    Mexico,  1854. 

Soto,  Salvador:  Libertad  de  los  extranjeros  para  testar.  Rev.  de  Leg.  y 
Jurisp.,  1901,  2nd  semes.,  p.  7. 

Vallarta,  Ignacio  L. :  iQu6  ley  rige  el  testamento  en  que  sc  dispone  de  bienes 
raices  situados  en  diversos  estados  de  la  Republica?    M<5xico,  1893. 

Velasco,  Emilio:  Facultades  legislativas  federales  en  materia  de  ejecuci6n  de 
sentencias  extranjeras.    El  Derecho,  1895,  p.  501. 

Vera  Estafiol,  Jorge:  Los  conflintos  de  leyes  entre  entidades  de  la  Rf'pi'il)Ii(^:i 
Mexicana.    Rev.  de  Leg.  y  Jur.  M6xico,  1896,  2d  sems.,  p.  306. 


810  LATIN- AM  ERIC  AN  COMMERCIAL  LAW 

Verdugo,  Agustin:  iCudl  es  la  ley  que  debe  regir  las  testamentarias  y  ab 
intestados  sobre  inmuebles  desde  el  punto  de  vista  del  derecho  internacional 
privado.    El  Derecho,  1894,  p.  65. 

Verdugo,  Agustin:  Ejecuci6n  de  sentencias  extranjeras.  Dictamen  aca- 
demico  acerca  pe  si  esta  materia  es  de  legislaci6n  federal  o  local  de  los  Estados, 
o  de  ambos,  sobre  la  doctrina  que  prevalece  en  el  derecho  internacional  y 
sobre  cudl  sea  la  mds  sana.    lb.,  1895,  p.  438. 

Zavala,  Francisco  J.:  Examen  y  exposicion  de  la  ley  de  extranjeria  de  28  de 
mayo  de  1888.    El  Faro  numbers  76  to  85,  v.  XX. 

Same:  Compendio  de  derecho  internacional  privado,  3d  ed.      Mexico,  1903. 

Paraguay. — Decree  of  the  supreme  government  of  Paraguay,  regulating  the 
treatment  of  foreigners  within  the  Republic.  Asuncion,  May  20,  1845  (52  St. 
Pap.,  1861-1862,  1025-1027). 

Peru. — -Aranda,  Ricardo:  Congresos  y  Conferencias  internacionales  en  que 
ha  tomado  parte  el  Peru.    Lima,  1910.    2  v. 

Morote:  Derecho  internacional  privado.    Lima,  1896. 

Pradier-Fodere,  F. :  De  la  situation  legal  des  etrangers  au  Perou.  5  Clunet, 
1878,  pp.  345,  368,  577,  595  and  1879,  pp.  41,  53,  250,  270. 

Fuentes,  M.  A.:  Derecho  internacional  privado.    Lima,  1879. 

Zegarra,  Felix  C. :  La  condicidn  jurldica  de  los  extranjeros  en  el  Peni.  Lima, 
1872. 

Uruguay. — Ramirez,  Gonzalo:  El  derecho  procesal  internacional.  Monte- 
video, 1892. 

Same:  Derecho  comercial  internacional.    Montevideo,  1889. 

Same:  El  derecho  civil  internacional  privado.    Montevideo,  1888. 

Carrio,  N.  M.:  Apuntes  de  derecho  internacional  privado.  Montevideo, 
1911. 

Venezuela. — Cesar  Rivas,  Angel:  Condici6n  legal  de  los  extranjeros  en 
Venezuela.    3  Anales  de  la  Universidad  Central  de  Venezuela,  1902,  p.  131. 

Venezuelan  law  regulating  the  status  and  position  of  foreigners.  Caracas, 
April  16,  1903,  96  St.  papers,  1902-1903,  p.  647. 

Daguin,  Femand:  Les  etrangers  au  Venezuela.    Paris,  1905. 

Planas  Suarez,  S. :  Las  extranjeros  en  Venezuela,  su  condici6n  ante  el  derecho 
publico  y  privado  de  la  repiiblica.    2d  ed.    Madrid,  1917. 

Pappafava,  V.:  Situation  juridique  des  Strangers  au  Venezuela.  Bayone, 
1914. 


The  sources  of  private  international  law  are:  the  treaties 
between  nations  which  create  a  positive  rule  binding  the 
nations  parties  thereto;  the  rules  established  in  the  statutes 
of  every  country,  which  present  the  local  law  for  the  solution 
of  such  international  conflicts;  finally,  science,  which  studies 
the  general  principles  of  law  and  seeks  to  create  a  common 
ideal  for  the  solution  of  those  conflicts. 

I  shall  confine  myself  to  the  rules  established  in  the  stat- 
utes of  the  Latin-American  countries,  and  to  present  the 


CONFLICT    OF    LAWS  811 

conclusions  arrived  at  by  the  South  American  Congress  held 
in  Montevideo  in  1888-1889. 

The  reader  must  not  expect  that  all  the  points  that  may 
give  rise  to  international  conflicts  are  covered  in  this  study. 
Perhaps  his  impression  will  be  that  the  article  is  fragment- 
ary, but  this  deficiency  is  due  to  the  fact  that  the  statutes 
do  not  always  cover  all  the  points.  In  some  countries  there 
are  rules  which  are  not  found  in  others,  and  vice  versa.  He 
must  not  be  disappointed,  therefore,  in  finding  that  after 
the  statement  of  certain  rules,  we  mention  only  some  of  the 
codes  of  the  Latin-American  countries,  omitting  others 
which  do  not  refer,  so  far  as  we  have  been  able  to  find,  to 
that  particular  matter.  On  the  other  hand,  some  rules  refer- 
ring to  particular  contracts  or  acts  are  not  discussed  here 
because  they  find  their  place  in  the  corresponding  chapter 
of  this  book,  whereas  in  the  present  article  I  usually  refer 
to  the  general  principles. 

General  remarks. 

All  the  rules  which  are  herein  set  forth  are  subject  to  a 
superior  principle,  namely,  that  prohibitory  laws  concerning 
persons,  their  acts  or  property,  and  those  which  relate  to 
public  order  or  good  morals,  are  not  overruled  by  virtue 
of  laws  enacted  or  judgments  rendered,  or  by  regulations 
or  agreements  made  in  a  foreign  country. 

The  party  who  invokes  rights  created  by  a  foreign  law 
has  to  prove  the  existence  and  the  applicability  of  said  law 
to  the  case,- 

As  a  consequence  of  the  principle  that  contracts  and  acts 
are  subject  to  the  forms  established  by  the  law  of  the  place 
where  they  are  executed  the  means  of  evidence  are  also 
governed  by  that  law.  Article  12  of  the  civil  code  of  Brazil 
expressly  so  provides. 

*  Argentina,  13  c.  c;  Mexico,  19  c.  c. — A  decision  rendered  in  this  respect  by 
the  court  of  Medcllin,  in  C()loinl)ia,  on  Sept.  5,  1006,  is  very  important,  as  it 
establishes  that  when  the  national  law  j)rovi(l(!s  for  the  apf)lication  of  foreign 
laws,  the  judge  must  ex  ofjiciu  inquire  into  the  provisions  of  said  laws,  if  the 
parties  have  not  done  so.  2  Garavito  A.  Fernando,  Jurisp.  de  los  Trihunales  de 
Colombia,  725. 


812  LATIN-AMERICAN  COMMERCIAL  LAW 

I.    STATUS  AND  CAPACITY  OF  PERSONS 

A.  In  General 

System  of  Spain.  Laws  relating  to  family  rights  and 
obligations,  or  to  the  status,  condition  and  legal  capac- 
ity of  persons,  obligate  citizens  even  though  they  reside 
in  a  foreign  country.^ 

System  of  Brazil.  The  same  rule  is  estabhshed  by 
article  8  of  the  civil  code  of  Brazil;  but  article  9 
providesth  at  the  law  of  the  domicil  is  subsidiarily 
applied — 

1.  When  a  person  has  no  nationality. 

2.  When  dual  citizenship  is  attributed  to  a  person, 
namely,  that  of  his  birth,  and  that  of  his  parents,  the 
Brazilian  law  governs,  provided  Brazilian  citizen- 
ship be  one  of  the  two  ascribed  to  the  person.^  Decree 
No.  737  of  Nov.  25,  1850,  provides  that  laws  and 
usages  of  foreign  countries  are  applicable  to  questions 
relating  to  civil  status  and  capacity  of  foreigners  to 
contract  obhgations  when  such  foreigner  is  not  ma- 
triculated according  to  the  commercial  code.  Con- 
tracts, however,  are  not  void  for  lack  of  capacity 
in  a  foreigner  when  it  is  proved  that  they  are  advan- 
tageous to  him. 

System  of  Chile.  The  national  law  governs  the  status 
or  legal  capacity  of  a  native,  with  respect  to  acts  which 
must  produce  their  effect  in  the  country,  and  to  the 
rights  and  obligations  created  through  family  relations 

'  Spain,  9  c.  c.  See  In  re  Butler  y  Harrap  Decision  (Dec.  14,  1901,  No.  65, 
Tribunal  Supremo,  Cuba).  Notwithstanding  the  fact  that  art.  10  of  the 
civil  code  declares  the  rights  of  foreigners  in  Cuba,  neither  that  provision  nor 
any  other  gives  jurisdiction  to  the  Cuban  Tribunals  to  pass  upon  them.  9 
Jurisprndencia  del  Tribunal  Superior  en  materia  civil  (Havana,  1908)  1019, 
See  also  decisions  of  the  Tribunal  Superior,  Spain,  Dec.  11,  1893,  and  Dec.  18. 
1894. 

See  Haiti,  7  c.  c;  Honduras,  13  c.  c;  Santo  Domingo,  See;  and  Venezuela, 
7  c.  c. 

*  Pascuali  v.  Bicudo  (Sept.  25,  1914,  Court  of  Appeals  of  S.  Paulo,  Brazil)  8 
Rev.  del  Sup.  Trib.  Rio  de  Janeiro  (1915)  pt.  2,  p.  40. 


CONFLICT   OF    LAWS  813 

only  in  matters  referring  to  a  native  wife  and  children 
or  relative.'^ 

System  of  Mexico.  According  to  article  12  of  the 
civil  code  of  the  Federal  District  concerning  the  status 
and  capacity  of  persons,  the  Mexican  law  obligates 
Mexicans  with  respect  to  legal  acts  or  contracts  which 
must  be  performed  in  Mexico,  whatever  the  law  of  the 
country  where  the  act  or  contract  is  executed.^ 

System  of  Costa  Rica.    The  civil  code  of  Costa  Rica 

embodies  the  same  provisions  as  article  12  of  Mexico, 

but  adds  that  the  Costa  Rican  law  also  binds  aliens 

respecting  acts  which  take  place  or  contracts  which 

are  executed  and  must  be  performed  in  Costa  Rica.^ 

The  codes  of  the  above-mentioned  countries  do  not  all 

provide  for  acts  done  by  their  citizens  abroad,  which  must 

produce  effect  without  their  territory;  this  is  a  matter  which 

has  been  left  for  the  law  of  the  country  in  which  the  act 

must  take  place,  or  to  the  agreement  of  the  parties,  or  to  the 

rules  of  international  law,  in  default  of  both. 

System  of  Argentina.  The  civil  code  of  Argentina 
adopts  an  entirely  different  principle;  instead  of  con- 
sidering the  law  of  the  nationality  of  a  person,  in  order 
to  establish  his  status  and  legal  capacity,  it  considers 
the  law  of  the  country  in  which  a  person  is  domiciled, 
independently  of  his  nationality.  This  system  is  con- 
tained in  the  following  articles: 

Art.  6:  ''The  capacity  or  incapacity  of  persons, 
domiciled  in  the  territory  of  the  republic,  whether 
nationals  or  foreigners,  is  governed  by  the  laws  of 
this  code,  even  though  acts  performed  or  property 
situated  in  a  foreign  country  are  involved." 

Art.  7:  ''The  capacity  or  incapacity  of  persons 
domiciled  outside  the  territory  of  the  republic   is 

^  Chile,  15  c.  c;  Colombia,  19  c.  c;  Ecuador,  14  c.  c;  Nicaragua,  15  c.  c; 
San  Salvador,  15  c.  c;  and  Uruguay,  4  c.  c. 

'  Dorsay  v.  Diaz  Barriga  (Apr.  12,  1911,  Segunda  Sala  del  Supremo  Tribunal 
del  Dist.  Fed.),  23  Diario  de  Juruj/rudencia  (Mexico,  1911). 

''40  c.  c. 


814  LATIN-AMEKICAN  COMMERCIAL  LAW 

governed  by  the  laws  of  their  respective  domicils, 
even  though  acts  performed  or  property  situated  in 
the  repubhc  are  involved." 

Art.  138:  ''Whoever  moves  his  domicil  from  a 
foreign  country  to  the  territory  of  the  republic,  and 
is  of  legal  age  or  has  been  emancipated  according  to 
the  rules  established  in  this  code,  shall  be  so  consid- 
ered even  though  he  is  a  minor  or  not  emancipated  ac- 
cording to  the  laws  of  his  former  domicil." 

B.  Citizenship  and  Domicil  of  Married  Women 

With  respect  to  the  citizenship  of  a  married  woman,  or 
her  domicil,  as  the  case  may  be,  the  Latin-American  law 
is  as  divergent  as  it  is  in  the  matter  of  general  status  of 
persons.  Therefore,  we  have  to  subdivide  this  point,  in 
accordance  with  the  different  systems  which  prevail. 

System  of  Spain.  A  married  woman  follows  the 
status  and  citizenship  of  her  husband  in  Spain  and 
certain  other  comitries.^ 

System  of  Mexico.  The  principle  that  a  married 
woman  follows  the  status  and  citizenship  of  her  husband 
is  true  also  of  Mexico,^  Costa  Rica  ^°  and  Venezuela;  ^^-^- 
but  matrimony  does  not  denationalize  a  native  woman 
when  the  law  of  the  husband's  home  does  not  admit 
her  to  his  citizenship.  In  the  United  States,  under  the 
act  of  March  2,  1907,  an  American  woman  marrying 
a  foreigner  is  denationalized  whether  or  not  by  the  law 
of  her  husband's  country  she  acquires  his  nationality. 
System  of  Ecuador.  In  Ecuador,  a  foreign  woman 
married  to  an  Ecuadorian  acquires  the  citizenship 
of  her  husband,  if  she  establishes  a  domicil  in  his  coun- 
try; and  an  Ecuadorian  woman  married  in  Ecuador 

*  Spain,  22  c.  c;  Bolivia,  8  c.  c;  Colombia,  art.  3,  law  of  July  4,  1823;  Guate- 
mala, 56  c.  c;  Haiti,  5  pol.  c.  (pol.  c.  is  the  abbreviation  for  political  constitu- 
tion); Honduras,  48  c.  c;  Peru,  41  c.  c;  and  Santo  Domingo,  12  and  19  c.  c. 

9  Art.  2,  par.  IV,  law  of  May  28,  1886. 

1"  Arts.  3  and  4,  law  of  Dec.  21,  1886. 

"-12  18  c.  c. 


CONFLICT    OF    LAWS  815 

to  a  foreigner  does  not  lose  her  nationality  as  long  as 
she  remains  domiciled  in  Ecuador.  ^^ 
The  laws  of  other  Latin-American  countries  are  silent 
upon  this  point,  and  since  in  principle  it  is  necessary  to  have 
the  consent  of  a  person  for  acquiring,  as  well  as  for  losing, 
his  nationality,  if  the  law  does  not  provide  otherwise,  it 
seems  to  follow  that  in  these  countries  marriage  does  not 
denationalize  a  native  woman. ^^ 

System  of  Argentina.  It  has  been  noted  that  in 
Argentina  the  principle  of  domicil  has  replaced  that  of 
nationality,  and  the  law  establishes  in  regard  to  the 
domicil  the  same  rule  that  Spain  has  established  in 
regard  to  the  citizenship  of  married  women.  The 
Argentine  civil  code  ^^  provides  accordingly  that  a  mar- 
ried woman  who  is  separated  by  competent  authority 
from  her  husband  preserves  the  domicil  of  the  latter 
imless  she  has  created  another  for  herself.  The  widow 
retains  the  domicil  which  her  husband  had  as  long  as 
she  does  not  establish  herself  elsewhere.^® 

II.  REAL    ESTATE — GENERAL  PRINCIPLE 

Real  property  is  always  governed  by  the  law  of  the  country 
in  which  it  is  situated.  ^^ 

Spain,  however,  makes  an  exception  to  this  rule  in  favor 
of  legal  and  testamentary  successions,  as  well  as  in  regard 
to  the  order  of  succession,  as  to  the  amount  of  the  inherited 
rights  and  to  the  intrinsic  validity  of  the  testamentary  pro- 
visions, which  are  governed  by  the  nationality  of  the  dece- 
it Arts.  13  and  14,  law  of  Aug.  28,  1886. 

^*  1  F.  Laurent,  Prindpes  de  Droit  Civil  Frangais,  No.  349. 

«  Art.  90,  sec.  IX. 

"  A  married  woman  during  the  existence  of  marriage  takes  the  domicil  and 
law  of  her  husband:  Luzato  v.  Arquato  (Nov.  14,  1912,  Camara  Federal  de 
Apelaci6n)  Jurisjrrudencui  de  los  Tribunales  Nacionales  (Nov.,  1912),  93. 

"  Spain,  10  c.  c;  Argentina,  10  c.  c;  Bolivia,  3  c.  c;  Brazil,  10  c.  c;  Chile, 
16  c.  c;  Colombia,  20  c.  c;  Costa  Rica,  4  c.  c;  Ecuador,  15  c.  c;  Guatemala, 
5c  .  c;  Haiti,  6  c.  c;  Honduras,  14c.  c;  Mexico,  13  c.  c;  Nicaragua,  16  c.  c; 
Peru,  5  c.  c;  San  Salvador,  16  c.  c;  Santo  Domingo,  3  c.  c;  Uruguay,  5  c.  c; 
and  Venezuela,  8  c.  c. 


816  LATIN-AMERICAN  COMMERCIAL  LAW 

dent,  whatever  the  nature  of  the  property  and  the  country 
m  which  it  is  located, ^^ 

The  same  exception  is  found  in  the  civil  code  of  Brazil/^ 
but  it  is  limited  to  cases  in  which  the  decedent  was  not 
married  to  a  Brazilian  woman,  or  has  not  Brazilian  children, 
because  in  these  cases  the  succession  is  subject  to  the  laws 
of  Brazil. 

On  the  other  hand,  in  Haiti  the  law  is  so  strict  that  not 
only  does  it  provide  that  real  property  is  governed  by  the 
lex  rei  sitce,  but  also  that  foreigners  cannot  acquire  or  pos- 
sess it ;  thus  when  a  Haitian  gives  up  his  citizenship  he  must 
part  with  any  real  property  he  may  have  in  Haiti.  2° 

III.    PERSONAL  PROPERTY 

Traditional  system.  The  tradition  in  the  matter  of  per- 
sonal property  is  that  it  is  governed  by  the  law  of  its  owner. 
An  ancient  legal  proverb  states  that  movables  adhere  to  the 
hones — meaning  that  movables  are  considered  a  part  of  the 
person  himself. 

Movables  were  formerly  considered  of  no  importance; 
only  real  property  conveyed  honor  and  consideration  to  its 
possessor.  The  law  of  each  country,  therefore,  showed  little 
interest  in  chattels,  leaving  them  to  be  governed  by  the  law 
of  the  person  whether  citizen  or  foreigner.  An  economic 
revolution  later  took  place,  and  personal  property  is  now 
as  valuable  as  real  estate;  but  the  law  reflects  the  tradition 
in  Spain,  where  the  civil  code  ^^  provides  that  personal 
property  is  subject  to  the  law  of  the  owner. 

In  countries  such  as  France,  where  no  provision  is  found, 
a  doubt  may  arise  and  opinion  may  be  divided,  but  the 
weight  of  authority  is  for  the  application  of  the  traditional 
principle.  22 

18 10  c.  c.  13  Art.  14. 

2°  6  pol.  c.  For  further  treatment  of  the  capacity  of  foreigners  to  acquire 
real  estate,  see  my  treatise  on  Latin-American  Commercial  Law,  ch.  3. 

"  Art.  10. 

22  Merlin,  Ripertoire,  word  "Loi,"  pr.  6,  No.  3;  F.  Laurent,  he  cU.,  vol.  1, 
no.  120. 


CONFLICT   OF    LAWS  817 

Argentine  system.  In  reference  to  personal  property, 
a  distinction  is  made  in  Argentina,  ^^  Brazil  ^^  and  Uru- 
guay; ^^  when  it  has  a  permanent  situs,  it  is  governed 
by  the  law  of  the  place  where  it  is  located;  but  personal 
property  carried  by  its  owner,  or  intended  for  his  per- 
sonal use,  whether  at  his  domicil  or  abroad,  as  well  as 
personal  property  to  be  transported  and  sold,  is  gov- 
erned by  the  law  of  the  domicil  of  its  owner. 

System  of  Chile.  In  Chile, -^  Colombia,-^  Costa  Rica,-^ 
Ecuador,-^  Honduras, ^°  Nicaragua  ^^  and  Venezuela, ^^ 
personal  property  as  well  as  real  property  is  governed 
by  the  law  of  the  place  where  it  is  located. 

IV.    FORMS  OF  CONTRACTS  AND  LEGAL  ACTS 

The  legal  formal  requisites  of  contracts,  wills  and  other 
instruments  are  governed  by  the  law  of  the  country  in  which 
they  are  executed. ^^ 

In  Costa  Rica,^*  Guatemala,  ^^  Mexico,  ^^  Panama, ^^  and 

23  11  C.  C.  24  10  c.  C.  25  5  g     g 

2«  16  C.   C.  27  20  C.  C.  28  4  c    c 

29  15  C.  C.  30  14  c,  c,  31  16  c.  C. 

'2  8  c.  c. 

3'  Spain,  11  c.  c;  Anglada  de  Serres  v.  Giro  y  Manzano  (Dec.  8,  1902,  no.  54, 
Tribunal  Supremo,  Cuba).  A  last  will  made  by  a  foreigner  in  Cuba  must  ful- 
fill all  the  formalities  of  the  Cuban  laws,  no  matter  what  the  provisions  of  the 
law  of  the  foreigner's  country.     14  Jurisp.  del  Trib.  Sup.  en  mat.  civil,  664. 

Argentina,  12  c.  c;  Bolivia,  36  c.  c;  Brazil,  11  c.  c;  Chile,  17  c.  c;  Colombia, 
21  c.  c;  Ecuador,  16  c.  c;  Haiti  (Mar.  23,  1829,  court  of  cassation);  Honduras, 
15  c.  c;  Nicaragua,  17  c.  c;  and  San  Salvador,  17  c.  c. 

3*  8  c.  c. 

36 13  c.  c. 

3'  14  c.  c.  Dorsay  v.  Diaz  Barriga  (Apr.  12,  1911,  Segunda  Sala  del  Trib. 
Sup.  del  Dist.  Fed.,  Mexico).  A  foreign  document  written  in  a  foreign  lan- 
guage and  presented  without  translation  cannot  be  accepted.  Diario  de  Jurisp. 
(1911). 

Vega  Perez  v.  Agente  del  Ministerio  Ptiblico  and  Juez  del  Ilcgistro  civil 
(June  26,  1911,  Segunda  Sala  del  Trib.  Sup.  del  Dist.  Fed.,  Mexico).  A  re- 
ligious marriage  entered  into  in  a  foreign  country  in  which  the  same  is  valid, 
produces  all  its  effects  in  Mexico.  Documents  proceeding  from  a  foreign 
country  when  duly  authenticated  constitute  full  evidence.  Ibid.  1911  Con- 
vreur  y  Compania  v.  Lack  (Oct.  30,  1909)  19  Ibid.  729. 

"  7  c.  c. 


818  LATIN-AMERICAN  COMMERCIAL  LAW 

Venezuela,  ^^  it  is  not  compulsory  to  draw  instruments  accord- 
ing to  the  law  of  the  place  in  which  they  are  executed;  the 
party  may  choose  between  the  law  of  the  country  in  which 
the  instrument  is  made  and  that  of  the  country  in  which 
it  must  have  effect. 

The  codes  of  Spain  ^^  and  BoUvia  ^^  provide  that  when 
the  aforesaid  instruments  are  to  be  authenticated  by  diplo- 
matic or  consular  officials  of  those  countries  abroad,  the 
formalities  required  by  the  respective  law  of  Spain  or  Bohvia 
must  be  observed. 

Colombia, ^^  Costa  Rica,^^  Ecuador, ""^  Honduras,^''  Nic- 
aragua,^^ San  Salvador,"*^  and  Venezuela  ^^  have  another 
limitation  upon  the  above  rule  concerning  the  formal  req- 
uisites of  instruments,  which  provides  that  in  case  the 
codes  or  laws  of  said  countries  require  the  public  instrument 
as  evidence  in  matters  within  the  jurisdiction  of  national 
courts,  private  instruments  are  invalid  no  matter  what 
force  they  have  in  the  country  in  which  they  were  executed. 

Argentina,"*^  Nicaragua  ^^  and  San  Salvador  ^°  also  limit 
the  general  principle  by  providing  that  contracts  concluded 
in  a  foreign  country  conveying  rights  in  real  estate  situated 
in  the  Republic  have  the  same  force  as  those  made  within 
the  state,  provided  they  are  executed  in  a  public  instrument 
and  are  presented  legalized.  Where  the  title  of  real  property 
is  sought  to  be  conveyed  to  them,  such  conveyance  is  with- 
out effect  unless  the  contract  is  protocolized  by  a  decree 
of  a  judge  of  competent  jurisdiction. 

In  treating  below  of  wills  we  shall  consider  certain  pro- 
visions referring  to  legal  forms. 

V.    EFFECTS  OF  CONTRACTS 

Argentina  ^^  provides  that  contracts  entered  into  in  the 
republic  or  out  of  it,  to  be  performed  within  its  territory, 


S8  9  c.  c. 

39  11  C.  C. 

«  37  c.  c. 

"  22  c.  c. 

«  8  C.  C. 

«  17  c.  c. 

"  16  c.  c. 

«  18  c.  c. 

«  18  c.  c. 

«  9  c.  c. 

«  1245  c.  c. 

«  16  c.  c. 

^  16  c.  c. 

"  1239  c.  c. 

CONFLICT   OF   LAWS  819 

are  governed  as  to  their  validity,  nature  and  obligation  by 
laws  of  the  republic  whether  the  contracting  parties  be 
nationals  or  foreigners.  Contracts  entered  into  in  the  re- 
public to  be  performed  outside  of  it  are  governed  as  to  their 
validity,  nature  and  obligation  by  the  laws  and  usages  of 
the  country  in  which  they  are  to  be  performed,  whether 
the  contracting  parties  be  nationals  or  foreigners. 

In  Brazil  ^^  the  obligations  are  governed  as  to  the  sub- 
stance and  effects  they  produce  by  the  law  of  the  place  where 
they  were  contracted.    But  the  law  of  Brazil  governs: 

1.  Contracts  entered  into  a  foreign  country  which 
must  be  performed  in  Brazil. 

2.  Obligations  contracted  between  Brazilians  in 
foreign  countries. 

3.  Acts  relative  to  real  estate  situated  in  Brazil. 

4.  Acts  relative  to  the  Brazilian  mortgage  system. 
In  Chile,^^  Colombia,^^  Guatemala,^^  Honduras, ^^  Mexico," 

Peru  ^^  and  San  Salvador,  ^^  the  effects  of  contracts  made  in 
a  foreign  country,  to  be  performed  in  the  aforesaid  countries, 
are  governed  by  the  law  of  those  respective  countries. 

Peru  ^°  provides  that  an  obligation  contracted  between 
foreigners  cannot  be  enforced  in  that  country  unless  they 
have  submitted  themselves  to  the  jurisdiction  of  the  Peruvian 
courts. 
The  Costa  Rican  civil  code  provides  that  ^^ 

''In  interpreting  a  contract  and  in  determining  its 
immediate  and  remote  effects,  the  law  of  the  place 
where  it  was  made  shall  be  taken  into  consideration; 
but  if  the  contracting  parties  have  the  same  citizenship 
their  national  law  must  prevail." 

62 13  c.  c.  "  16  c.  c.  "  20  c.  c. 

66 14  and  15  c.  c.  66 14  ^  g 

"  16  c.  c.  See  Dorsay  v.  Diaz  Barriga  (Apr.  12,  1911,  Segunda  Sala  del 
Dist.  Fed.,  Mexico).  If  the  obligations  created  in  a  foreign  country  are  to  be 
fulfilled  in  Mexico  they  must  bo  governed  by  the  Mexican  laws:  Cutelli  de 
Contri  v.  Contri  (Feb.  1,  1909,  Segunda  Sala  del  Trib.  Sup.  del  Dist.  Fed., 
Mexico)  23  Diario  de  Jurisp.  (1900)  154.  Peru,  1156,  1157  c.  p.;  Uruguay, 
512,  513  c.  p.;  and  Venezuela,  722  c.  p. 

68  40  C.  C.  69  16  c,  c,  00  43  c.  c. 

61  7  c.  0. 


820  LATIN-AMERICAN  COMMERCIAL  LAW 

VI.    WILLS 

We  have  already  seen  that  in  most  of  the  Latin-American 
countries  the  legal  formal  requisites  of  wills  are  governed 
by  the  law  of  the  country  in  which  they  are  executed;  but 
this  general  rule  suffers  some  exceptions  which  we  are  going 
to  review. 

In  Argentina,^^  Chile,^^  Colombia,^''  Honduras,^^  San  Sal- 
vador,^^  Nicaragua,"^  Panama  ^**  and  Uruguay/^  it  is  pro- 
vided that  a  written  will  made  by  a  citizen  ia  a  foreign  coun- 
try must  be  executed  by  a  minister  plenipotentiary  of  his 
government,  a  charge  d'affaires  or  a  consul  and  two  wit- 
nesses domiciled  in  the  place  where  the  will  is  made,  and 
bearing  the  seal  of  the  legation  or  consulate.  When  it  is 
not  executed  before  a  head  of  legation,  it  must  be  viseed  by 
the  latter,  if  there  is  a  head  of  legation,  at  the  end  thereof 
in  an  open  will,  and  on  the  wrapper  in  a  sealed  one.  An  open 
will  must  always  be  rubricated  by  the  head  of  legation,  at  the 
beginning  and  end  of  each  page,  or  by  the  consul  if  there 
is  no  legation.  If  there  be  neither  consulate  nor  legation 
of  his  country,  these  formalities  must  be  fulfilled  by  the 
minister  or  consul  of  a  friendly  nation.  The  head  of  legation 
or  the  consul  must  forward  a  copy  of  the  open  will,  or  of 
the  inscription  on  the  wrapper  of  the  sealed  one,  to  the  min- 
ister of  foreign  affairs  of  the  country  that  he  represents, 
and  the  minister,  after  authenticating  the  signature  of  the 
head  of  legation  or  consul,  must  transmit  it  to  the  judge  of 
the  last  domicil  of  the  deceased,  in  order  that  the  judge 
may  cause  it  to  be  incorporated  in  the  protocols  of  the  notary 
public  of  the  same  domicil.  When  the  domicil  of  the 
testator  in  the  country  is  unknown,  the  minister  of  foreign 
relations  must  forward  the  will  to  the  judge  of  first  instance 
of  the  capital  for  incorporation  'm.  the  protocol  of  said  notary 
as  the  judge  may  determine. 

«2  3670-3672  c.  c.  "  1027-1029  c.  c. 

6<  1053,  1084,  1086  c.  c.  «*  1011,  1012,  1015  c.  c. 

"8  1058-1060  c.  c.  "  127-129  c.  c. 

«8  767-769  c.  c.  "  828,  829  c.  c. 


CONFLICT    OF    LAWS  821 

In  Argentina,  Chile,  Colombia  and  Honduras,  the  will 
of  a  person  who  is  outside  of  the  respective  country  produces 
effect  within  it  only  if  made  with  the  formalities  prescribed 
by  the  law  of  the  place  in  which  he  resides,  or  according  to 
those  observed  in  the  nation  to  which  he  belongs,  or  accord- 
ing to  those  which  the  national  law  prescribes. 

According  to  the  code  of  Brazil ""  legal  or  testamentary 
successions,  the  order  of  succeeding,  the  rights  of  the  heirs 
and  the  intrinsic  validity  of  a  will  are  governed  by  the  law 
of  the  country  of  the  deceased,  whatever  the  nature  of  the 
property  and  the  country  in  which  he  is,  except  as  otherwise 
provided  by  the  Brazilian  law  in  regard  to  vacant  inherit- 
ances. If  the  testator  was  married  to  a  Brazilian  woman 
or  if  he  left  Brazilian  children  the  rights  of  inheritance  are 
governed  by  Brazilian  law. 

The  Brazilian  consular  agents  may  serve  as  officers  in 
the  execution  and  approval  of  wills  made  by  Brazilians  in 
foreign  countries,  of  serving  the  prescriptions  of  the  Brazilian 
code. 

The  Chilean  code  ^^  and  the  Colombian  code  ^^  provide 
in  the  matter  of  inheritances  that  foreigners  are  called  to 
the  legal  succession  in  Chile  or  Colombia,  in  the  same  man- 
ner and  accordmg  to  the  same  rules  as  the  citizens  of  those 
countries.  In  the  legal  succession  of  a  foreigner  who  dies 
within  or  without  the  territory  of  those  republics,  citizens 
must  have  as  hereditary  or  conjugal  portion  or  as  alimony 
the  same  rights  which  belong  to  them  according  to  the  Chil- 
ean and  Colombia  law  in  the  legal  succession  of  a  Chilean 
or  a  Colombian.  Citizens  interested  in  a  succession  of  that 
kind  may  ask  for  the  application  of  property  belonging  to 
the  deceased,  within  the  territory  of  the  country,  up  to  the 
amount  that  may  belong  to  them  in  the  succession  of  the 
foreigner.  The  same  rule  is  applied  to  the  case  of  the 
succession  of  a  citizen  of  those  countries  who  leaves  an 
estate  in  a  foreign  country. 

In  Guatemala  the  civil  code  ''^  provides  that  in  regard  to 

7"  14  c.  c.  "  997,  998  c.  c.  "  1052,  1053  c.  c. 

"  13-15  c.  c. 


822  LATIN-AMERICAN  COMMERCIAL  LAW 

legal  formalities  and  wills,  the  laws  of  the  countries  in  which 
they  are  executed  must  prevail.  Natives  or  foreigners  resid- 
ing outside  the  territory  of  the  republic  may,  however,  com- 
ply with  the  legal  formalities  provided  for  by  the  law  of 
Guatemala  in  cases  in  which  the  will  must  be  complied  with 
in  that  republic. 

The  rights  and  obligations  arising  from  wills  executed  in 
a  foreign  country  by  citizens  of  Guatemala  are  governed 
by  the  law  of  Guatemala  in  all  that  must  take  effect  in  the 
republic. 

In  regard  to  the  essential  requisites  of  a  will,  the  testator 
may  choose  between  his  national  law  and  that  of  Guatemala, 
when  the  testament  must  be  executed  in  the  territory  of  the 
latter  and  the  testament  refers  to  personal  property.  As  to 
real  estate  situated  in  Guatemala  the  laws  of  the  republic 
must  be  observed. 

According  to  the  code  of  Haiti  "^^  and  the  code  of  Santo 
Domingo,^^  citizens  of  those  republics  who  are  in  a  foreign 
country  may  draw  their  wills  in  a  private  document,  written, 
dated  and  signed  in  their  own  handwriting,  or  in  a  pubhc 
instrument  with  the  formalities  established  in  the  country 
in  which  they  are. 

Testaments  made  in  a  foreign  country  cannot  be  executed 
so  far  as  they  refer  to  property  situated  in  those  republics, 
except  after  being  filed  in  the  registry  at  the  domicil  of  the 
testator,  or  if  that  be  unknown,  in  the  registry  at  his  last 
known  domicil.  In  case  the  testament  contains  provisions 
relating  to  real  property  situated  in  those  republics,  it  must 
also  be  filed  in  the  office  of  the  place  in  which  it  is  situated. 

The  code  of  Mexico  "^^  provides  that  the  Mexican  law  gov- 
erns real  property  whether  owned  by  citizens  or  foreigners, 
and  that  foreigners  have  no  capacity  to  inherit  either  by 
will  or  by  legal  succession  when,  according  to  the  laws  of 
their  countries,  Mexicans  are  not  permitted  to  receive  legal 
or  testamentary  inheritances.^'' 

The  code  of  Peru  ^^   prescribes  that  foreigners  residing 

'^  805,  806  c.  c.  ^«  999,  1000  c.  c.  ^s  13  c.  c. 

"  3300  c.  c.  ^8  475  c.  c. 


CONFLICT    OF    LAWS  823 

in  that  country  can  devise  to  other  foreigners  the  real  prop- 
erty that  they  possess  in  their  own  country,  or  bequeath 
personal  property,  jewelry,  money  or  merchandise  which 
they  have  in  the  territory  of  Peru,  according  to  their  national 
law.  But  in  disposing  of  the  real  property  located  in  Peru, 
they  are  subject  to  the  laws  of  Peru. 

VII.    FOREIGN  JUDGMENTS 

Procedure 

It  is  a  general  principle  that  final  judgments  rendered  in 
foreign  countries  have  in  the  territory  of  a  nation  that  force 
provided  for  in  the  respective  treaties  with  those  countries. ^^ 

Some  nations,  accepting  the  principle  of  reciprocity  as  a 
basis,  prescribe  that  when  there  are  no  special  treaties  with 
a  foreign  nation  in  which  the  judgment  was  rendered,  the 
judgment  shall  have  the  same  force  that  is  given  in  that 
nation  to  final  judgments  of  the  country  in  which  it  is  to  be 
enforced.  If  it  is  rendered  in  a  country  under  whose  laws 
judgments  rendered  in  the  other  nation  are  not  executed, 
the  judgment  is  not  enforceable  in  the  latter.^" 

"^  Spain,  951  c.  c;  Argentina,  558  c.  p.;  Bolivia,  7  c.  c;  Chile,  239  c.  p.; 
Colombia,  876  c.  p.;  Cuba  and  Porto  Rico,  950  c.  p.;  Ecuador,  235  c.  p.;  Guate- 
mala, 1563  c.  p.;  Honduras,  235  c.  p.;  Mexico,  780  c.  p.;  Peru,  1155  c.  p.;  San 
Salvador,  450  c.  p.;  and  Uruguay,  511  c.  p. 

^  Spain,  952,  953  c.  p.  A  decision  by  the  courts  of  Argentina,  In  re  Bueno  v. 
Royal  Insurance  Co.  (Aug.  5,  1912)  stated  that  judgments  of  foreign  courts 
have  no  extraterritorial  effect.  Rev.  de  Leg.  y  Jurip.  de  la  Rep.  Argentina 
(1914)   568. 

Chile,  240,  241  c.  p.;  Colombia,  876,  877  c.  p.  Judgments  of  foreign  courts 
shall  be  without  force  in  Colombia,  unless  a  treaty  otherwise  provides.  See 
Medellin  (Aug.  2,  1906)  378;  Garavito,  Jurisp.  de  los  Trihs.  de  Colombia;  In 
re  Echeverria  (Jan.  11,  1900,  No.  5,  Tribunal  Superior,  Cuba).  See  also  4 
Jurisp.  del  Trib.  Sup.  en  materia  civil  (1908)  10,  and  the  case  of  In  re  Anglada 
de  Serres  v.  Giro  y  Manzano  (No.  54). 

In  this  matter  of  proving  foreign  laws  in  Colombia,  the  provision  of  article 
13,  law  no.  124,  1890,  is  also  important.    It  reads  as  follows: 

"  Powers  of  attorney,  acts  referring  to  the  civil  status  of  persons  and  other 
documents  executed  in  foreign  countries,  which  the  interested  parties  may 
produce  before  the  courts  and  tribunals  of  Col;)mbia,  in  order  to  prove  their 
claims,  shall  be  considered  valid  if  they  have  been  authenticaterl  according 
to  the  Colombia  laws.  After  they  have  been  so  authenticated,  they  are  i)rp- 
.sumed  to  have  been  executed  in  conformity  with  the  law  of  the  place  of  their 
^.rigin,  unless  the  adverse  party  presents  proof  to  the  contrary." 


824  LATIN-AMERICAN  COMMERCIAL  LAW 

The  following  conditions  must  be  satisfied  before  a  foreign 
judgment  may  be  enforced: 

1.  That  it  is  final,  and  that  it  was  rendered  in  a  per- 
sonal action. 

2.  That  it  is  not  a  judgment  by  default. 

3.  That  the  obligation  for  the  enforcement  of  which 
the  action  was  instituted  was  lawful  according  to  the 
laws  of  the  country  in  which  the  request  is  made  for  its 
execution. 

4.  That  the  letter  rogatory  possesses  the  formal 
requisites  which  are  necessary  for  its  validity  as  evidence 
in  the  country  in  which  it  was  issued  and  in  the  country 
in  which  its  enforcement  is  requested.^^ 

Chile  prescribes  that  when  a  foreign  judgment  is  to  be 
enforced  there  by  reason  of  a  special  treaty  or  through  reci- 
procity, the  judgment  shall  have  in  the  territory  of  Chile 
the  same  force  which  the  decisions  of  Chilean  courts  have 
in  the  country  in  which  the  judgment  was  rendered,  provided 
it  has  the  following  requisites: 

1.  That  it  does  not  conflict  with  the  laws  of  the  re- 
public. 

2.  That  it  does  not  encroach  upon  the  national  juris- 
diction. 

81  Spain,  954  c.  p.;  Argentina,  559  c.  p.;  Colombia,  878  c.  p.;  Costa  Rica,  1067 
c.  p. ;  Cuba  and  Porto  Rico,  953  c.  p. ;  Ecuador,  500  c.  p. ;  Guatemala,  1566  c.  p. ; 
Honduras,  238  c.  p.;  Mexico,  785  c.  p.  See  Cutelli  dc  Contri  v.  Contri,  note  60 
supra.  In  order  to  execute  a  foreign  judgment  in  Mexico  it  is  necessary  that 
the  judgment  has  been  rendered  in  a  personal  action. 

The  action  of  divorce  is  not  a  personal  action:  Diario  Jurisp.  loc.  cit. 
There  is  no  treaty  between  Mexico  and  the  United  States  referring  to  the 
enforcement  of  judicial  decisions  rendered  in  the  courts  of  any  of  the  two 
nations  in  the  territory  of  the  other.  In  the  absence  of  such  treaty  it  is  nec- 
essary for  the  party  who  tries  to  enforce  in  Mexico  a  decision  of  the  courts  of 
the  United  States,  to  prove  that  in  the  latter  country  the  Mexican  decisions 
are  enforced.  Even  in  the  case  in  which  such  proof  was  produced  a  decision 
rendered  in  the  United  States  is  not  enforceable  in  Mexico  when  it  is  rendered 
in  a  real  acci6n,  because  real  property  being  a  part  of  the  Mexican  soil  can 
only  be  governed  by  national  laws  and  courts.  Mexico  Suprema  Corte  de 
Justicia  de  la  Naci6n  Amparo,  Wehner  v.  Judge  of  First  Instance  of  Santiago 
Txcuintta.  April  7,  1907;  Diario  de  Jurisp.,  v.  12  p.  373.  San  Salvador,  451 
c.  p.;  Uruguay,  514  c.  p. 


CONFLICT   OF    LAWS  825 

3.  That  it  is  not  a  judgment  by  default. 

4.  That  it  has  been  declared  enforceable  by  the  laws 
of  the  country  in  which  it  was  rendered. 

In  Peru  the  code  of  civil  procedure  prescribes,  in  matter 
of  foreign  judgment  or  decrees,  as  follows: 

Art.  1159:  "In  order  that  a  foreign  judgment  be 
declared  enforceable  by  the  superior  courts  of  the  coun- 
try it  is  required:  that  it  shall  not  pass  upon  matters 
pertaining  to  the  jurisdiction  of  the  Peruvian  courts, 
as  set  forth  in  the  following  article;  that  it  is  not  con- 
trary to  good  customs  or  to  prohibitory  laws  of  the 
republic;  that  it  has  the  character  of  a> final  and  enforce- 
able judgment  in  accordance  with  the  laws  of  the  coun- 
try in  which  the  action  was  brought;  and  that  the 
judgment  debtor  be  served  with  process  in  the  manner 
prescribed  by  the  laws  of  the  place." 

Art.  1160:  ''Peruvian  courts  have  exclusive  juris- 
diction in  cases  relating  to  the  following  matters: 

"1.  Real  estate  located  in  the  territory  of  the  re- 
public. 

"2.  Vessels  under  the  Peruvian  flag. 
"3.  Civil   actions   arising   out    of   crimes,    quasi- 
crimes,  or  negligence  which  occurred  in  Peru. 

"4.  Inheritances  of  Peruvians  or  of  foreigners 
domiciled  in  Peru,  whenever  citizens  of  or  foreigners 
residing  in  Peru  or  a  Peruvian  charitable  institution 
or  the  state  of  Peru  have  an  interest  in  the  estate."  ^^ 

^^  In  this  connection,  Colombia  has  an  important  provision  relating  to  the 
manner  in  which  the  legality  of  a  judgment  must  be  proved,  which  is  often  a 
difficult  matter.    Art.  879  c.  p.  reads: 

"The  force  and  legality  of  a  judgment  rendered  in  a  foreign  country  are 
proved  by  means  of  a  certificate  from  the  diplomatic  or  consular  agent  of 
Colombia  or  of  a  friendly  nation  residing  in  the  aforesaid  country.  This  certif- 
icate must  state: 

"I.  That  the  judgment  was  rendered  in  accordance  with  the  laws  of  that 
coimtry. 

"2.  That  according  to  said  laws,  the  judgment  debtor  has  cxhaust(vl  his 
legal  remedies. 

"Should  there  be  no  diplomatic  or  consular  agent  of  Colombia  or  of  any 
other  friendly  nation  in  the  country  in  which  the  judgment  was  rendered,  the 


826  LATIN-AMERICAN  COMMERCIAL  LAW 

VIII.    INTERNATIONAL  CONGRESS  OF  MONTEVIDEO 

One  of  the  most  notable  events  in  the  history  of  Latin- 
American  private  international  law  was  the  meeting  of  the 
South  American  International  Congress  in  Montevideo 
during  the  years  1888  and  1889.  At  that  Congress  the 
following  countries  were  represented:  Argentina,  BoU\da, 
Brazil,  Chile,  Paraguay,  Peru  and  Uruguay. 

Eight  treaties  were  drafted  on  the  following  matters: 
International  ci\dl  law,  legal  procedure,  copyright,  inter- 
national commercial  law,  international  criminal  law,  the 
liberal  professions,  patents  and  trade-marks,  and  an  ad- 
ditional protocol.^^ 

Brazil  and  Chile  did  not  accept  those  treaties.  The  main 
reason  for  their  refusal  was  that  in  their  law  they  follow 
the  rule  derived  from  the  principle  of  nationaUty  for  solving 
the  conflicts  of  law,  whereas  the  treaties  accept  the  principle 
of  domicil. 

Dr.  Andrade  Figueiras,  representative  of  Brazil,  in  oppos- 
ing the  acceptance  of  the  Montevideo  treaties  on  the  ground 
of  their  acceptance  of  the  principle  of  domicil  instead  of 
that  of  nationality,  summarized  his  objection  thus: 

''The  law  of  the  domicil  for  governing  the  relations 
whether  of  citizens  or  foreigners,  means  a  retrogression 
in  the  evolutionary  progress  of  our  science,  and  is  almost 
the  derogation  of  the  principles  which  constitute  the 
basis  of  private  international  law. 

''The  economic  interest  of  the  new  countries  in  itself 
makes  the  adoption  of  the  law  of  nationaUty  advisable 
for  the  solution  of  questions  relating  to  the  status  and 
civil  capacity  of  foreigners,  and  for  their  succession." 
The  same  representative  considered  the  principle  of  domi- 
cil, far  from  protecting  new  countries,  as  an  obstacle  to  the 
attraction  of  capital  and  to  the  settlement  of  immigrants; 

certificate  referred  to  in  this  article  may  be  obtained  from  the  secretary  of 
state  of  said  country,  through  the  Minister  of  Foreign  Affiairs  of  Colombia." 
8'  These  treaties  were  ratified  by  the  Argentine  Congress  on  December  6, 
1894;  by  the  Congress  of  Peru  on  October  25,  1889;  by  that  of  Paraguay  on 
September  10,  1889,  and  by  that  of  Bolivia  on  February  25,  1904. 


CONFLICT   OF    LAWS  827 

this  principle  aims  to  break  the  relations  of  the  immigrants 
with  the  country  of  origin. 

Among  the  rules  established  in  the  treaty  on  international 
civil  law,  the  following  are  worth  noticing: 

Art.  1.  The  capacity  of  persons  is  governed  by  the  law 
of  their  domicil. 

Art.  2.  A  change  of  domicil  cannot  alter  the  capacity 
already  acquired  as  a  result  of  emancipation,  legal  majority 
or  judicial  declaration  of  competency. 

Art.  5.  The  law  of  the  place  where  a  person  resides  deter- 
mines the  conditions  necessary  to  constitute  a  domicil. 

Art.  6.  Parents,  guardians  and  curators  ^'^  have  their 
domicil  in  the  territory  of  the  state  from  whose  laws  they 
derive  their  functions. 

Art.  8.  The  domicil  of  husband  and  wife  is  where  the 
legal  partnership  of  marriage  has  been  established,  and  in 
default  thereof  it  is  presumed  to  be  that  of  the  husband. 
A  woman  judicially  separated  from  her  husband  retains  his 
domicil  so  long  as  she  does  not  establish  another. 

iVrt.  9.  Persons  not  having  a  known  domicil  are  con- 
sidered as  domiciled  in  the  place  of  their  residence. 

Art.  13.  The  law  of   the  matrimonial  domicil  governs : 
(a)  The  separation  of  husband  and  wife. 
(6)  Their  divorce,  provided  the  reason  alleged  there- 
for is  admitted  by  -the  law  of  the  place  in  which  the 
marriage  took  place. 

Art.  26.  Property,  whatever  its  nature,  is  governed  ex- 
clusively by  the  law  of  its  situs,  in  matters  relating  to  its 
character,  possession,  and  alienation,  absolute  or  relative, 
and  to  all  the  legal  relations,  real  in  character,  of  which  it 
is  capable. 

Art.  29.  Debts  are  considered  as  situated  in  the  place 
in  which  the  corresponding  obligations  are  to  be  performed. 

Art.  30.  A  change  in  the  location  of  property  does  not 
affect  rights  acquired  in  accordance  with  the  law  of  the 
place  where  it  was  at  the  time  of  the  acquisition.  The  in- 
terested persons,  however,  are  bound  to  fulfill  the  formal 

*■•  A  curator  is  a  per,son  appointfid  to  suporviso  the  acts  of  th(!  fj;uar(iian. 


828  LATIN-AMEKICAN  COMMERCIAL  LAW 

and  substantial  requisites  necessary  by  the  law  of  the  place 
of  the  new  location  in  order  to  acquire  or  preserve  the  afore- 
said rights. 

Art.  31.  Rights  acquired  by  third  parties  in  such  property 
according  to  the  law  of  its  new  location,  after  the  change 
has  been  made,  prevail  over  those  of  the  first  owner. 

Art.  33.  The  same  law  governs  their  creation,  nature, 
validity,  effects,  consequences  and  performance:  in  short, 
all  matters  of  whatever  nature  concerning  contracts. 

Art.  34.  It  follows  that  contracts  relating  to  certain  and 
specific  things  are  governed  by  the  law  of  the  place  where 
such  things  are  at  the  time  of  the  execution  of  the  contract. 

Those  relating  to  things  determined  only  by  their  class, 
by  the  law  of  the  domicil  of  the  obligor  at  the  time  of  enter- 
ing into  the  contract. 

Those  relating  to  fungible  things,  by  the  law  of  the  domi- 
cil of  the  debtor  at  the  time  of  the  agreement. 

Those  dealing  with  the  performance  of  services: 

(a)  If  they  refer  to  things,  by  the  law  of  the  place 
where  they  were  at  the  time  of  the  execution  of  the  con- 
tract. 

(&)  If  their  efficacy  is  related  to  some  special  place, 
by  that  in  which  they  are  to  produce  their  effect. 

(c)  In  other  cases,  by  that  of  the  domicil  of  the 
debtor  at  the  time  the  agreement  was  entered  into. 

Art.  35.  A  contract  for  the  sale  of  goods  in  different  places 
where  conflicting  laws  prevail  is  governed  by  the  domicil 
of  the  contracting  parties,  should  it  be  common  at  the  time 
of  the  agreement ;  otherwise  by  the  law  of  the  place  in  which 
the  contract  was  entered  into,  should  their  domicil  be 
different. 

Art.  36.  Accessory  contracts  are  governed  by  the  law  of 
the  principal  obligation  to  which  they  refer. 

Art.  37.  The  final  conclusion  of  contracts  entered  into  by 
means  of  correspondence  or  agents  is  governed  by  the  law 
of  the  place  whence  the  offer  started. 

Art.  39.  The  form  of  public  instruments  is  governed  by 
the  law  of  the  place  where  they  are  executed. 


CONFLICT   OF   LAWS  829 

Art.  51.  Negative  prescription  of  personal  actions  is  con- 
trolled by  the  law  to  which  the  obligations  out  of  which  they 
arose  are  subject. 

Art.  52.  Negative  prescription  of  real  actions  is  governed 
by  the  law  of  the  place  where  the  burdened  property  is  situ- 
ated. 

Art.  53.  If  the  burdened  property  is  chattel  and  its  loca- 
tion has  been  changed,  prescription  is  governed  by  the  law 
of  the  place  where  the  necessary  period  of  prescription  has 
been  completed. 

Art.  54.  Acquisitive  prescription  of  chattels  or  of  realty 
is  governed  by  the  law  of  the  place  in  which  the  property 
is  situated. 

In  the  convention  relating  to  legal  procedure  we  find  the 
following  rules: 

Art.  1.  Actions  at  law  and  their  incidents,  whatever  their 
character,  shall  be  presented  in  accordance  with  the  law  of 
the  nation  in  which  they  are  instituted. 

Art.  2.  Evidence  shall  be  admitted  and  evaluated  or 
righted  according  to  the  law  governing  the  subject-matter 
of  the  action.  From  this  rule  is  expected  such  evidence  as 
is  not  authorized  by  the  law  of  the  place  in  which  the  action 
is  proceeding. 

Art.  3.  Judgments  of  courts  and  decisions  of  arbitrators 
duly  confirmed,  rendered  in  civil  or  commercial  cases;  public 
instruments,  and  those  issued  by  officers  of  the  state,  which 
have  been  authenticated  and  letters  rogatory  or  requisitorial 
shall  be  given  effect  by  each  of  the  high,  contracting  parties 
according  to  the  stipulations  of  this  treaty,  provided  they 
are  properly  legalized. 

Art.  4.  A  legalization  is  considered  properly  made  when 
it  takes  place  according  to  the  law  of  the  country  where  the 
document  originated,  provided  it  has  been  authenticated 
by  the  diplomatic  or  consular  agent  of  the  country  in  which 
its  enforcement  is  asked.  This  consular  agent  must  reside 
in  the  place  where  the  document  is  legalized. 

Art.  5.  Judgments  or  decisions  by  arbitrators  and  acts 
of  non-contentious  jurisdiction  issued  in  civil  or  commercial 


830  LATIN-AMERICAN  COMMERCIAL  LAW 

matters  in  one  of  the  countries  which  is  a  party  to  this  agree- 
ment, shall  have  the  same  force  in  the  territory  of  the  others 
that  they  have  in  the  issuing  country,  provided  they  possess 
the  following  requisites: 

(a)  That  the  judgment  was  rendered  by  a  court  which 
is  competent  in  the  international  acceptance  of  that 
word. 

(b)  That  it  had  the  character  of  a  final  judgment, 
considered  as  res  judicata  in  the  coimtry  in  which  it  was 
rendered. 

(c)  That  the  party  against  whom  it  was  rendered  was 
legally  summoned  and  represented  in  the  suit  or  else 
that  he  was  declared  to  be  in  default  in  accordance 
with  the  laws  of  the  country  where  the  action  was  insti- 
tuted. 

(d)  That  it  is  not  contrary  to  the  public  policy  of 
the  country  in  which  it  is  to  be  executed. 

Art.  6.  In  requesting  the  enforcement  of  a  judgment  the 
following  documents  shall  be  required: 

(a)  A  complete  copy  of  the  judgment  or  arbitrator's 
decision. 

(6)  A  copy  of  all  the  papers  necessary  to  prove  that 
the  parties  were  cited. 

(c)  An  authenticated  copy  of  the  judicial  decree  in 
which  it  is  declared  that  the  judgment  or  arbitrator's 
decision  has  the  character  of  a  final  judgment  and  has 
been  established  as  res  judicata,  as  well  as  a  copy  of 
the  laws  upon  which  said  decree  is  based. 
Art.  7.  The  character  of  executive  or  compulsory  judg- 
ments or  arbitrator's  decisions  and  the  proceedings  which 
must  be  followed  in  order  to  execute  them  shall  be  determined 
by  the  law  of  procedure  of  the  country  in  which  execution 
is  demanded. 

Art.  8.  Matters  falling  within  non-contentious  jurisdiction, 
such  as  inventories,  opening  of  last  wills,  appraisements 
or  other  acts  of  like  nature  performed  in  one  state  shall  have 
in  the  other  contracting  states  the  same  force  and  effect 
as  if  they  had  been  performed  in  their  own  territory,  pro- 


CONFLICT    OF    LAWS  831 

vided  they  have  the  requisites  established  in  the  previous 
articles. 

Art.  9.  Letters  requisitorial  or  rogatory  whose  object  it 
is  to  serve  legal  notices,  to  receive  testimony  of  witnesses 
or  to  perform  any  other  judicial  act,  must  be  complied  with 
in  any  of  the  contracting  countries,  when  such  letters  have 
all  the  requirements  exacted  by  this  treaty. 

Art.  10.  When  the  letters  requisitorial  or  rogatory  refer 
to  attachment  of  property,  appraisements,  inventories  or 
provisional  remedies,  the  judges  shall  do  everything  nec- 
essary respecting  the  appointment  of  experts,  appraisers, 
depositories; — i.  e.,  everything  that  may  lead  to  the  best 
fulfillment  of  the  commission. 

Art.  11.  Letters  requisitorial  or  rogatory  shall  be  carried 
out  in  accordance  with  the  laws  of  the  country  in  which 
the  execution  is  requested. 

Art.  12.  Persons  interested  in  the  execution  of  letters 
requisitorial  or  rogatory  may  at  their  expense  appoint 
attorneys. 


GLOSSARY 

Abanderar.    To  register  (a  ship). 

Abandono.    Abandonment. 

Abasto.    Supply  of  provisions.    A  certain  municipal  duty.    Slaughter  house 

(Mexico). 
Abdicar.    To  voluntarily  renounce  dominion  of  a  thing  or  a  right. 
Abertura  or  Apertura  de  testambnto.    To  probate  a  will. 
Abigeato.    Theft  of  cattle. 
Ab  intestato.    Intestate. 
Abjxjrar.    To  forswear. 
Abolengo.    Ancestry,  lineage. 
Abogado.    Attorney  at  law,  barrister,  lawyer. 
Abogado  en  ejercicio.    Practicing  lawyer. 
Abogado  del  estado.    Attorney  for  the  State. 
Abogado  de  pobres.     Attorney  paid  by  the  State  and  charged  with  the 

defense  of  the  poor  in  courts. 
Abogar.    To  argue  or  plead  a  case. 
Abolir.    To  abolish. 
Abonar.     To  be  surety  for  another.     To  make  an  entry  on  the  credit  side 

of  an  account. 
Abordaje.    Collision. 
Abortivo.    Abortive. 
Aborto.    Abortion. 

Abrevadero.    Watering  place  for  cattle. 
Abrogaciox.    Abrogation,  act  of  amaulling  a  law. 
ABSOLtrci6N.    Acquittal. 
Absolver  de  la  instancia.    To  acquit,  reserving  the  privilege  of  reopening 

the  case  if  new  evidence  is  found. 
Absolver  posiciones.     The  act  of  one  of  the  parties  to  a  suit  denying  or 

admitting  the  truthfulness  of  facts  placed  in  evidence  by  the  other 

party. 
Abuela.    Grandmother. 
Abuelo.    Grandfather. 
Abuso.    Misuse  of  a  thing  or  power. 
Abuso  de  autoridad.     Abuse  of  power,  the  inflicting  of  penalties  beyond 

what  is  legal. 
Abuso  de  confianza.    Embezzlement.    To  convert  to  one's  own  benefit  that 

which  has  been  intrusted  to  him. 
Acaparador.    One  who  comers  the  market. 
Acaparar.    To  comer  the  market. 
Accesi6n.    Means  of  acquiring  property,  by  which  a  thing  owned  produces 

accruals,  or  when  something  is  attached  to  it. 
AccEsoRio.    Accessory. 

833 


834  GLOSSARY 

AcciDENTB  DE  MAR.    Maritime  average. 

Acci6n.    Legal  action;  law  suit;  share  of  stock. 

Acci6n  ad  exhibbndum.    Action  of  a  party  interested  in  recovering  a  movable 

requesting  the  possessor  thereof  to  produce  it  in  court. 
Acci6n  al  portador.    Unregistered  share  of  stock  payable  to  bearer. 
Acci6n  confesoria.    Action  relating  to  an  easement  or  any  other  real  right, 

not  including  ownership,  against  a  person  who  hinders  the  use  of  such 

right  in  order  that  he  confess  or  admit  the  existence  of  the  same  and 

cease  to  disturb  its  possession. 
Acci6n  criminal.    Criminal  action. 

Acci6n  de  deslinde.    Action  to  delimit  contiguous  properties. 
Acci6n  de  despojo.    Action  against  the  despoiler  of  realty,  his  accomplices 

and  heirs. 
Acci6n  de  divorcio.    Action  of  divorce. 
Acci6n  de  dominio.    Action  claiming  ownership  in  a  thing. 
Acci6n  de  filiaci6n.     Action  of  a  son  against  his  father  demanding  that 

the  latter  acknowledge  him. 
Acci6n  de  hurto.    Action  vesting  in  a  person  who  has  been  dispossessed  of 

personal  property. 
Acci6n  de  nulidad.    Action  of  nullity  of  an  act  or  contract. 
Acci6n  de  partici6n  de  herencia.    Action  of  partition  of  an  inheritance. 
Acci6n  de  reducci6n.     Action  of  an  heir  demanding  that  the  portion  of 

another  be  reduced  to  the  limit  assigned  by  the  law  to  the  testator  as  the 

maximum  he  is  free  to  dispose  of. 
Acci6n  dolosa.    Act  tending  to  deceive  in  order  to  derive  a  benefit  to  another's 

detriment. 
Acci6n  ejecutiva.    Action  which  starts  by  the  execution  against  the  debtor's 

property  and  is  based  upon  an  instrument  which  implies  a  confession  of 

judgment. 
Acci6n  hereditaria.    Action  demanding  an  inheritance. 
AcciON  HiPOTECARiA.    Action  in  forclosure  of  mortgaged  property. 
Acci6n  nbgatoria.    Action  of  the  owner  of  realty  denying  that  his  property 

is  subject  to  an  easement  in  favor  of  the  property  of  the  defendant. 
Acci6n  no  endosable.    Share  of  stock  which  cannot  be  negotiated,  e.  g.,  the 

share  of  an  associate  who  contributes  his  services  only. 
Acci6n  nominativa.    Registered  share  of  stock. 
Acci6n  ordinaria.    Action  subject  to  regular  proceedings. 
Acci6n  pauliana.    Action  of  a  creditor  demanding  the  nullity  of  an  act  or 

contract  of  his  debtor,  made  with  a  view  to  defrauding  the  creditor. 
Acci6n  personal.    Action  derived  from  a  merely  personal  right. 
Acci6n  pbtitoria.    Action  demanding  the  ownership  of  a  thing. 
Acci6n  por  evicci6n  or  de  bvicci6n.    Action  demanding  of  the  transferor 

of  a  thing  the  warranty  of  the  title  thereof  or  the  payment  of  proper  in- 
demnity in  case  the  transferee  loses  possession  to  the  rightful  owner. 
Acci6n  posesoria.    Action  to  acquire,  retain  or  recover  possession  of  a  thing 

without  the  question  of  ownership  being  raised. 
Acci6n  pignoraticia.    Action  derived  from  a  contract  of  pledge. 
Acci6n  publiciana.     Action  of  a  good  faith  possessor  against  any  detainer 

except  the  rightful  owner. 


GLOSSARY  835 

Acci6n  publica.  Action  which  can  be  begun  by  any  person  on  behalf  of  the 
community. 

Acci6n  reivindicatoria.    Action  to  recover  dominion  of  a  thing. 

AccioN  REDHiBiTORiA.  Actiou  of  the  transferee  of  a  thing  against  its  trans- 
feror on  account  of  vices  therein. 

Acci6x  SOLIDARIA.  Action  of  any  of  the  various  creditors  demanding  from 
the  obligor  the  total  amount  or  the  total  obligation  due. 

Acci6iV  REAL.    Action  relating  to  real  rights. 

AcciONisTA.    Shareholder. 

AcENSUAR.    To  impose  an  income  on  realty. 

Aceptaci6n.    Acceptance. 

Aceptaci6n  for  intervhnci6n.    Acceptance  for  honor. 

AcEPTANTE.    Acceptor  of  a  bill  of  exchange. 

AcBQUiA.    Irrigation  canal. 

AcERBO.    The  whole  of  an  undivided  estate  or  property. 

Aclaraci6n.    Explanation. 

Aclaraci6n  de  sentbncia.  a  judicial  remedy  to  have  the  judge  explain  an 
obscure  part  of  his  decision. 

AcRBCER  (derecho  de).  Right  of  coheirs  or  co-owners  to  have  the  va- 
cant portion  of  the  common  thing  accrue  to  their  portion  when  one 
of  the  coheirs  or  co-owners  renounces  his  right  or  is  incapable  of 
acquiring  it. 

Acreedor.    Creditor. 

AcREEDOR  privilegiado.  Creditor  who  has  a  right  to  be  paid  before  others 
in  case  of  bankruptcy,  or  out  of  the  price  of  a  certain  thing. 

Acreedor  de  dominio.  Creditor  whose  claim  is  based  upon  his  being  the 
owner  of  a  thing  in  the  bankrupt  estate. 

Acreedor  hereditario.  Creditor  of  a  debt  contracted  by  a  decedent  testator 
or  intestate. 

Acreedor  hipotecario.    Creditor  secured  by  a  mortgage. 

Acreedor  quirografario.  Creditor  whose  right  is  evidenced  by  a  private 
instrument. 

Acreedor  refaccionario.  Creditor  whose  credit  originates  in  monej'  lent 
for  the  promotion  of  a  business  or  industry. 

Acreedor  solidario.  Creditor  who  can  demand  the  whole  thing,  subject- 
matter  of  the  obligation,  from  any  of  the  obligors. 

Acreditar.  To  evidence  the  truthfulness  of  a  statement.  To  make  an  entry 
in  the  credit  side  of  an  account. 

Activo.    The  assets  of  a  person  or  association. 

AcTivo  y  PASivo.    Assets  and  liabilities. 

Acta.    Memorandum,  minute. 

AcTO.    An  act. 

AcTos  conservativos.  Steps  taken  by  a  creditor  in  order  to  safeguard  his 
rights. 

Acres  DB  administraci6n.  Acts  of  an  attorney  or  representative  which  do 
not  include  dispo.sal  of  property,  except  such  personal  property  as  the 
management  of  the  business  of  the  principal  may  require. 

Acres  DB  comercio.  Acts  or  contracts  governed  by  the  commercial  law,  even 
though  they  are  performed  by  a  non-merchant. 


836  GLOSSARY 

AcTos  DB  posesi6n.  Acts  which  prove  that  the  person  performing  them 
considers  himself  a  rightful  possessor  of  a  thing. 

AcTOs  juRiDicos.    Voluntary  acts  tending  to  establish  legal  relations. 

Actor.    Plaintiff. 

AcTUAR.    To  perform  legal  fimctions,  to  act  in  legal  matters. 

AcTUACioNES.    The  record  of  pleadings  and  evidence  in  a  law  suit. 

AcTUARio,  or  ESCRiBANO  DE  ACTUACIONES.  Judicial  oflficer  who  authenticates 
documents  in  a  suit. 

AcuBRDo.  Resolutions  adopted  by  a  court,  or  administrative  authority. 
Agreement. 

Acumulaci6n  de  acciones.    Consolidation  of  actions. 

Acumulaci6n  de  autos.    Consolidation  of  records  of  proceedings. 

Acusaci6n.    Impeachment,  indictment. 

AcusADO.    Accused,  person  who  is  impeached  or  indicted. 

AcusADOR.    Accuser,  prosecutor. 

AcusAR  rebeldIa.  Act  of  a  party  calling  attention  of  the  judge  to  the  non- 
appearance or  lack  of  answer  of  the  other  party,  and  asking  the  continua- 
tion of  the  proceedings  in  default. 

Ad  corpus.  Sale  of  a  thing  as  a  whole,  as  compared  with  sale  made  by  the 
measure, 

Adelantado.  a  Spanish  governing  officer  formerly  employed  in  the  American 
colonies. 

Adeudar.    To  owe;  to  make  an  entry  in  the  debit  side  of  an  account. 

Adici6n  de  sentencia.  Judicial  remedy  in  cases  where  the  judge  omitted  to 
refer  in  his  decision  to  one  of  the  issues  of  the  case. 

Adici6n  de  herencia.    The  express  acceptance  of  an  inheritance. 

Aditamento.     Addition. 

Adjudicaci6n.  Allocation  of  a  thing  by  a  judge  or  administrative  authority 
in  cases  of  inheritance,  judicial  sale  or  auction. 

Adjudicaci6n  en  pago.  Allocation  of  a  thing  to  a  creditor  in  pajonent  of 
his    credit. 

Adjudicatario.    Person  to  whom  a  thing  was  allocated  by  proper  authority. 

Adjunto.    Assistant  or  associate  judge  or  functionary. 

Adminicular.    To  complement  (used  in  reference  to  evidence  principally). 

Administraci6n.    Management;  government;  manager's  office. 

Administraci6n  de  justicia.    Administration  of  justice;  judicial  power. 

Administrador.     Manager. 

Adolecencia.  Years  of  adolescence,  over  fourteen  in  a  boy,  and  twelve  in 
a   girl. 

Adopci6n.    Adoption  of  a  person  as  a  son  or  daughter. 

Adoptivo.     Adoptive  son. 

Adquisici6n.     Acquisition. 

Adquirir.    To  acquire. 

Aduana.     Custom-house. 

Adulterar.    To  commit  adultery.    To  falsify  or  misrepresent. 

Adulterio.     Adultery. 

Adulterino.     The  offspring  of  adultery. 

Adulto.     Adult,  one  who  has  ceased  to  be  impUher. 

Adventicio.    Property  obtained  by  one's  own  industry. 


GLOSSARY  837 

Afianzamiento.    The  act  of  guaranteeing  a  debt  by  means  of  a  guarantor 

or  surety. 
Afin.     Relative  by  affinity. 
Afinidad.     Affinity. 
Afirmarse.     To  ratify. 
Aforado.     Privileged  person.     Merchandise  appraised  for  the  payment  of 

duties. 
Aforo.    Appraisal  of  dutiable  things. 
AFRE^^^A.     Affront,  dishonor. 
Agencia.     Agency;  agent's  bureau. 
Agenda.      Note-book. 
Agente.     Agent,  attorney. 

Agente  de  negocios.    Attorney  in  court,  solicitor. 
Agente  fiscal.    Assistant  of  the  public  prosecutor. 
Agio.    Benefit  obtained  through  the  exchange  of  paper  for  money;  usury. 
Agiotista.    Stock-jobber;  usurer. 

Agnacion.    Consanguinity  among  male  descendants  of  the  same  father. 
Agotado.     Exhausted;  out  of  print. 
Agraria.    Agrarian  (referring  to  law  or  husbandry). 
Agravacion,  or  agravante.    Aggravating  circumstances  of  a  crime. 
Agra  VIC.    Offense.    Error.    Assignment  of  error  on  appeal. 
Agresion.      Aggression. 
Agresor.     Aggressor. 

AGRfcoLA.     Matters  referring  to  agriculture. 
Agricultor.     Husbandman,  farmer. 
Agricultura.     Agriculture. 
Agrimensor.     Land  surveyor. 
Ahijado.     Godchild,  protege. 
Ahogado.     Drowned,  Suffocated. 
Ahorcado.     Person   hung. 
Ahorcar.    To  kill  by  hanging. 
Ahorrar.    To  free  a  slave.    To  economize. 
Ahorro.     Saving,  thrift. 

Ajuar.    Household  furniture,  bridal  apparel  and  furniture. 
Ajustar.    To  settle  the  price  of  things  or  the  terms  of  a  transaction,  to  accept 

the  services  of  a  person  as  a  servant. 
Ajuste.      Agreement. 

Ajtjsticiado.     Criminal  who  has  been  put  to  death. 
Ajusticiar.    To  execute  a  criminal. 
Albacea.     Testamentary  executor;  representative  of  the  estate  appointed 

by  the  heirs  of  an  intestate.  (Mex.). 
Albaceazgo.    Functions  of  the  executor  or  assignee  of  an  inheritance. 
Alcabala.    Duty  paid  on  conveyance  of  property.    Duty  paid  in  local  custom- 
houses within  the  same  country  at  the  time  a  thing  is  imported  into  the 

town.  (Mex.) 
Alcaide.     Governor  of  a  castle;  jailer. 
ALCAinfA.     Office  of  the  alcaide. 
Alcalde.    Municipal  officer  vested  with  administrative  and  judicial  functions. 

Mayor. 


838  GLOSSARY 

Alcalde  Mayor.     In  New  Spain  the  representative  of  the  king  in  towns 

which  were  not  a  capital  of  a  province. 
Aleatorio.     Contract  in  which  the  loss  or  gains  depend  upon  an  uncertain 

event,  as  gambling,  insurance,  annuity,  etc. 
Alegar.    To  argue  in  a  law  suit. 
Alegato.    Argument  or  brief  in  a  law  suit. 
Aleve.     Treacherous,   perfidious. 
ALEVosfA.    Perfidy,  breach  of  trust. 
Alguacil.    Bailiff,  lowest  officer  in  the  scale  of  oflBcers  in  the  administration 

of  justice. 
Alhaja.     Jewel,  gem,  valuable  furniture. 
Alianza.     Alliance. 

Alistamiento.     Enlistment,  levy,  conscription. 
Alimentos.     Maintenance,  alimony. 
Alindamiento.    Setting  of  landmarks  or  monuments. 
Almacen.    Warehouse.    Store. 
Almirantazgo.     Admiralty  court. 
Almojarifazgo.     Customs  duty. 
Almoneda.     Public   auction. 
Alojamiento.     Lodging,  quartering  soldiers. 
Alquilar.     To  let,  to  hire. 
Alcvi6n.     Alluvion,  one  of  the  ways  of  acquiring  property  through  accretion 

by  river  action. 
Alzada.     Appeal. 
Alzado.     Fraudulent  bankrupt. 
Alzamiento.     Fraudulent  bankruptcy. 
Alzarse.    To  rise  in  rebellion.    To  be  a  bankrupt  who  defrauded  his  creditors. 

To  appeal  from  a  judgment. 
Allanamiento.     Order  given  by  judicial  authority  to  enter  a  building  to 

make  an  arrest  or  search.    Trespass.    Acquiescence  in  judicial  decisions 

or  the  performance  of  an  obligation. 
Amancebados.    Man  and  woman  who  live  in  concubinage. 
Ambiguo.      Ambiguous. 
Amenaza.      Threat. 

Amicable  componedor.     Friendly  arbitrator. 
Amillaramiento.     Assessment  for  taxes. 
AMNiSTfA.     Amnesty. 
Amo.    Head  of  a  family,  owner,  boss. 
Amojonamiento.    Setting  of  landmarks  or  monuments. 
Amonestaci6n.     Admonition,   warning. 

Amortizaci6n.     Render  inahenable.     Amortization.     Payment. 
Amovible.     Removable. 
Amparo.     In  Mexico  a  constitutional  remedy,  similar  to  the  writ  of  habeas 

corpus,  in  case  any  of  the  rights  recognized  as  common  to  all  men  by  the 

constitution  is  violated  by  any  authority. 
Amparo  de  posesi6n.      To  replace  a  person  in  the  possession  of  something 

which  was  taken  violently  from  him,  or  to  maintain  him  in  that  possession 

against  any  disturber. 
ANARQufA.     Anarchy. 


GLOSSARY  839 

An6nimo.    Anonymous. 

Anatocismo.     Compound   interest. 

Anexidades.    Rights  or  things  united  to  another  or  derived  from  it. 

Anticresis.  a  kind  of  mortgage  in  which  the  creditor  becomes  possessor 
of  the  mortgaged  thing  and  applies  its  income  to  the  pajTnent  of  interest 
and  principal  of  the  debt. 

Antinomia.     Antinomy. 

Antidata.     Antedating  an  instrument. 

Anual.      Annual. 

Anualidad.     Annuity. 

Anulable.     Voidable. 

And.      Year. 

And  bisiesto.    Leap  year. 

And  fiscal.     Fiscal  year. 

ApARCERfA.  Partnership  principally  in  reference  to  agriculture  and  cattle 
raising. 

Aparejar  ejecuci6n.  Character  of  a  document  which  offers  ground  for 
an  execution  or  attachment  of  property. 

Aparejos.      Equipment. 

Apear.    To  survey  land  and  set  its  marks  or  boundaries. 

Apelable.     Appealable. 

Apelacion.     Appeal  proper. 

Apelaci6n  en  el  efecto  devolutivo.    Appeal  for  review  only. 

Apelacion  en  ambos  efectos.  Appeal  for  a  review  and  stay  of  proceed- 
ings. 

Apelaci6n  desierta.     Appeal  abandoned. 

Apellido.      Family   name. 

Aped  \  deslinde.  Judicial  proceedings  in  which  a  survey  and  a  demarkation 
of  land  takes  place. 

Apercibimiento.     Judicial  warning. 

Apersonarse.    To  appear  in  court  as  plaintiff  or  defendant. 

Apoderado.    Grantee  of  a  power  of  attorney. 

Apoderarse  .  To  take  possession  of  a  thing  with  a  view  to  becoming  owner 
thereof. 

Aprehender.     To  take  hold  of  a  thing. 

Apremiar.  To  compel  a  person  by  judicial  decree  to  perform  an  act  or  obli- 
gation. 

Apremio  judicial.     Judicial  compulsion. 

Aprendizage.     Apprenticeship. 

Aprobaci6n.      Approval,    ratification. 

Apuesta.     Bet,  wager. 

Apuntamiento.     Extract  from   records. 

Arancel.    Tariff  of  duties,  fees,  etc. 

Arancel  de  aduanas.     Custom-house  tariff. 

Arancel  de  honorarios.     Scale  of  fees. 

Arbitrador.      Friendly    arbitrator. 

Arbitrage.     Arbitrament;  arbitratorship;  arbitration. 

Arbitbamiento.     Decision  rendered  by  arbitrators. 


840  GLOSSARY 

Arbitrariedad.     Unlawful  procedure;  act  unsupported  by  law  or  honest 

judgment. 
Arbitrio  del  juez.     Power  of  a  judge  to  use  his  own  discretion  in  deciding 

a  question. 
Arbitrios.     Municipal  duties  and  incomes. 
Arbitro.     Arbitrator,  bound  to  decide  according  to  law, 
Archivo.     Archives. 
Aristocracia.     Aristocracy. 

Area.    Surface  measure  equivalent  to  ten  thousand  square  meters. 
Aviador.     Merchant  who  hires  and  equips  a  boat. 
Arqueo.    Verification  of  papers  and  money  in  a  safe. 

Arraigado.    Person  who  possesses  real  estate  in  a  given  place.    Person  sub- 
ject to  a  writ  of  ne  exeat. 
Arraigar.    To  submit  a  person  to  a  writ  of  ne  exeat.    To  order  him  to  give 

security  for  costs. 
Arraigarse.    To  establish  oneself  permanently  in  a  place. 
Arraigo.      Real  property,  used  only  in  phrases  like  hombre  de  arraigo,  tiene 

arraigo.     Writ  of  ne  exeat. 
Arras.    Earnest  money.    Bridal  gift. 
Arrendador.      Lessor. 
Arrendamiento.     Renting,  lease. 
Arrendatarto.     Lessee. 
Arrestar.     To  arrest. 

Arribada.    Putting  into  port  by  stress  of  weather. 

Arrogaci6n.    Adoption  of  a  person  as  a  son  with  governmental  authorization. 
Arrogarse.    To  take  another's  property,  right  or  power. 
Arsenal.     Shipyard. 
Arte.     Art,  craft. 
Artesano.     Artisan,   craftsman. 
Articular.    To  ask  questions  of  witnesses,  or  to  state  facts  which  must  be 

acknowledged  or  denied  by  the  opposing  party  in  a  law  suit. 
ARTfcuLO  DE  PREVio  Y  ESPECIAL  PRONUNCiAMiENTo.    Incidental  issue  which 

needs  decision  by  the  judge  before  the  main  issue. 
Artista.     Artist. 
Asamblea.    Assembly. 

Asamblea  general  de  accionistas.    General  meeting  of  stockholders. 
Asamblea  general.     Congress  (in  Uruguay). 
Asamblea  directiva.     Board  of  directors. 
Ascendencia.      Ancestry. 
Ascendiente.     Ancestor. 
Aseguraci6n.     See  Seguro. 
Asegurado.     Insured. 
Asegurador.     Underwriter,  insurer. 
Aseguramiento.     Insurance,  security. 
Asentamiento.    Possession  given  by  the  judge  to  a  plaintiff  of  defendant's 

property  in  case  of  default  of  the  latter  (Law  1,  tit.  8,  Part.  2). 
Asentista.     Contractor.     Person  who  contracts  with  the  government  or  a 

community  to  provide  food  or  other  articles  to  an  army,  town,  etc. 
Asesinato.     Murder. 


GLOSSAEY  841 

AsESiNo.     Assassin,  murderer. 

AsEsoR.    Lawyer  appointed  as  legal  adviser  to  a  lay  judge. 

AsESORADO.     Lay  judge  who  is  advised  by  a  lawyer. 

AsiENTo.    Entry,  record;  contract  for  the  supply  of  food  or  materials. 

AsiGNATURA.    Curriculum,  course  of  studies. 

A  SILO.      Asylum. 

AsisTENTE.    Soldier  in  attendance  upon  officer  as  an  orderly. 

AsociAcioN.    The  act  of  associating;  association. 

AsoNADA.     Tumultuous  crowd. 

AsuETO.    School  holiday,  one  day  vacation. 

Atentado.     Criminal  attempt. 

Atenuante.     Attenuating  circumstance. 

ATE^^UAR.     To  attenuate. 

Atestiguar.    To  give  testimony. 

Atestacion.     Testimony  of  witness. 

Atribuir  jurisdiccion.    To  extend  the  jurisdiction  of  a  judge. 

AuDiENCiA.     Superior  court  of  a  province. 

AuDiENciA  VERBAL.     Oral  hearing. 

Auditor.  Judge  who,  under  the  supervision  of  a  captain  or  military  com- 
mander in  chief,  takes  cognizance  of  military  crimes. 

AtJSENciA.  Absence.  The  technical  legal  meaning  of  this  word  implies  the 
disappearance  of  a  person  from  a  place  without  leaving  any  attorney  or 
representative,  when  the  whereabouts  of  such  person  are  unknown. 

AusENTE.     Absent;  see  Aiisencia. 

AuTENTicAR.     To  authenticate. 

AuTENTiciDAD.     Authenticity. 

AuTENTico.      Authentic. 

Auto.  Decree  or  decision  of  a  judicial  body  which  is  neither  a  final  judgment 
(senteiicia)  nor  one  referring  only  to  matters  of  procedure.     A  ruling. 

Autos  y  vistos.  Formula  used  by  a  judge  to  notify  the  parties  that  he  is 
going  to  decide  and  that  the  issues  are  closed. 

Auto  para  mejor  proveer.  Order  made  by  a  judge  ex  officio  calling  for 
some  evidence  which  he  considers  substantial  and  which  was  over- 
looked by  the  parties. 

Autos.    Record,  documents  in  a  law  suit. 

AuTocRAcfA.     Autocracy. 

Aut6grafo.     Autograph. 

AuTONOMiA.     Autonomy. 

AuToxoMO.      Autonomous. 

AuTOR.      Author. 

AuTORiDAD  de  cosa  juzgada.  The  force  of  a  final  and  irrevocable  judgment 
either  where  the  law  does  not  give  any  remedy  against  it,  or  because  the 
legal  remedies  have  been  exhausted,  or  no  appeal  has  been  taken  in  proper 
time. 

AuxiLio.     Aid,    assistance. 

Aval.  Guaranty  by  third  person  of  the  payment  of  a  bill  of  exchange  recorded 
u.sually  in  separate  instrument.     Sucli  instrument  it.self. 

Avalista.    Thirfl  person  guarantor  of  a  bill  of  exchange. 

AvALtJO.     Valuation,  appraisal. 


842  GLOSSARY 

AvERfA.     Damage,  impairment. 

AvERiA  coMUN  o  GRUESA.    General  average. 

AvERfA  SIMPLE.     Particular  average. 

AviADO.  In  Mexico  a  person  who  receives  money  from  another  to  carry  on 
a  mining  business  in  partnership  with  the  giver  of  the  money. 

AviADOR.  In  Mexico  a  person  who  supplies  money  to  a  miner  in  consideration 
of  a  share  in  the  profits  of  the  mine. 

AvocARSE  EL  coNociMiENTO.  To  assume  cognizance  of  a  case  by  a  court 
or  judge. 

Avulsi6n.  Piece  of  land  suddenly  detached  from  a  tract  of  land  by  the  force 
of  a  river  and  attached  to  other  land  below  stream  belonging  to  differ- 
ent owner. 

Ayudante.    Assistant,  adjutant. 

Ayuntamiento.     Municipal  government  assembly;  board  of  aldermen. 

AzAR.     Hazard,  chance,  gambling. 

Balance.     Balance  sheet. 

BALofo.     National  land,  uncultivated  land. 

Banca.    Money  exchange  and  dealing  in  negotiable  instruments. 

Banco.     A  bank. 

Banco  de  emisi6n.    Bank  of  issue. 

Banco  hipotecario.     Mortgage  bank. 

Banco  refaccionario.     Bank  of  promotion. 

Bandera  de  paz.    Flag  of  truce. 

BanderIa.     Band  or  faction. 

Bandido.     Bandit,   highwayman. 

Bando.    Band,  faction.    Proclamation  of  a  law  or  decree. 

Banquero.      Banker. 

BaraterIa..     Fraud  committed  in  contracts  of  purchase  and  sale,  deposit, 

etc.     Crime  of  a  judge  who  receives  money  while  administering  justice. 

Barratry. 
Baratero.    Person  who  defrauds  another,  who  obtains  money  from  winning 

gamblers. 
Baratillero.    Seller  of  second-hand  goods. 
Baratillo.     Second-hand  shop. 
Barato.    Bargain  sale,  object  bought  at  low  price.    Money  given  by  winning 

gamblers. 
Barbecho.     Ploughed  land. 
Barca.     Boat,  barge,  bark. 
Barcada.    Passage  in  ferry  boat. 
Barca  JE.     Ferriage. 
Barra.     Sand-bank  at  the  mouth  of  a  harbor.     Bar.     Share  in  a  mining 

company   (Mexico). 
Barragana.      Concubine. 
Barraqueros.    Warehousemen  (Argentina). 
Barrenar.    To  drill,  to  blast  a  rock. 
Barreno.     Blast-hole. 

Barretero.    In  mining,  one  who  works  with  a  crow  or  pick. 
Barrio.    City  district  where  a  municipal  official  called  Alcalde  de  Barrio  sits. 


GLOSSARY  843 

Bastanteah.  The  act  of  a  lawyer  examining  the  power  of  a  solicitor  and 
declaring  it  sufficient  in  order  that  the  solicitor  may  be  admitted  to  repre- 
sent his  party  in  a  suit. 

Bastardo.     Bastard,  illegitimate. 

BASTiirENTO.     Supply  of  provisions. 

Becerro.  Registry  of  privileges,  franchises  or  property,  usually  bound  with 
calf -skin. 

Beligerante.     Belligerent. 

Bellaco.     Artful,  sly,  swindler. 

Bexdicion  nupcial.    Religious  ceremony  of  marriage. 

Beneficencia.     Poor  laws,   charity, 

Beneficio.     Right,  privilege. 

Beneficio  de  competencia.  Right  of  a  debtor  not  be  to  compelled  to  pay 
his  creditor  more  than  the  debtor  can  after  separating  what  is  necessary 
for  his  maintenance;  this  privilege  is  granted  on  account  of  kinship  or 
other  considerations. 

Beneficio  de  deliberaciox.  The  right  of  an  heir  to  consider  for  a  certain 
time  whether  acceptance  of  the  inheritance  is  advisable. 

Beneficio  de  divisi6n.  Right  of  a  cosurety  to  ask  the  creditor  to  demand 
contribution  from  the  other  cosureties. 

Beneficio  de  excusion.  Right  of  a  guarantor  to  demand  that  the  creditor 
levy  on  property  of  the  principal  debtor  for  the  pajmaent  of  the  obligation 
before  bringing  any  action  against  said  guarantor. 

Beneficio  de  invent ario.  Right  of  an  heir  not  to  be  comp)elled  to  pay  the 
liabilities  of  the  person  he  succeeded  beyond  the  value  of  the  property 
he  inherited  from  the  latter. 

Beneficio  de  restituci6n.  Right  of  minors  and  some  other  persons  or  in- 
stitutions specially  privileged  to  recover  property  or  rights  alienated  by 
their  representatives  or  by  themselves  in  certain  cases. 

BiENES.    Property;  assets;  estate. 

BiBNEs  AB  iNTESTATos.  Estate  left  by  a  person  who  died  without  making  any 
will  or  when  the  will  is  void. 

BiENES  ADVENTicios.  Property  acquired  by  a  minor  while  under  valri.i 
polestas  through  an  artcraft,  profession  or  labor. 

BiENHS  CASTRENSBs.    Property  acquired  by  a  minor  in  military  service. 

BiENES  CUASi  CASTRENSBS.  Property  acquired  by  a  minor  through  practice  of 
a  liberal  profession,  or  public  employment,  or  by  a  gift  of  the  sovereign. 

BiENES  coMUNES.  Things  which,  belonging  to  none,  can  be  utilized  by  every- 
body, as  the  air,  the  ocean,  etc. 

BiENES  DOTALEs.  Property  given  to  a  husband  on  marriage  to  support  the 
expenses  of  the  household. 

BiENES  PARAFEUNALBS.    Property  of  the  wife  besides  her  dowry. 

BiENES  FUNGIBLES  Y  NO  FUNGIBLES.    Fungible  and  unfungible  property. 

BiENES  GANANCiALES.  Property  acquired  by  the  husband  or  the  wife  during 
their  marriage,  while  they  live  together  under  the  regime  of  legal  matri- 
monial partnership. 

BiENES  iNMUEBLES.    Real  estate. 

BiENES  MOSTRENCos.  Lost  property  whose  owner  cannot  be  ascertained; 
strayed  animals  or  things. 


844  GLOSSARY 

BiENES  MUEBLES.    Personal  property. 

BiENES  PATRiMONiALES.    Property  inherited  from  parents. 

BiENts  PROFEcncios.  Property  acquired  by  a  son  or  daughter  under  patria 
polestas  by  dealing  with  the  property  of  his  or  her  parents. 

BiENES  PUBLicos.    National  or  communal  property. 

BiENES  RBALENGOS.    Property  belonging  to  the  king. 

BiENES  RE.SBRVABLES.  Property  which  the  widower  or  the  widow  who  re- 
marries is  obliged  to  reserve  for  the  children  of  the  former  marriage. 

BiENES  SEMOviENTES.    Property  consisting  of  animals. 

BiENES  VACANTES.    Unowned  property. 

BiBNES  viNcuLADOs.    Entailed  property. 

BiGAMfA.    Bigamy. 

BiLLHTE.    Bill,  promissory  note,  ticket. 

BiLLETE  DE  BANCO.    Bank-note. 

Blanco.    Blank. 

Blasfemia.    Blasphemy. 

Blasonar.    To  boast. 

BoDA.    Marriage,  wedding. 

BoLETf  N.    Newspaper  destined  to  special  purposes. 

BoLSA.    Exchange. 

BoLSA  DB  coMERCio.    Commercial  exchange. 

Bonificaci6n.    Act  of  crediting  an  account. 

Bono  db  prenda.  Certificate  issued  by  a  warehouse  in  the  name  of  the  bailor 
of  merchandise,  who  can  use  such  paper  as  a  token  of  pledge  of  the  goods 
deposited. 

Boticario.    Apothecary,  pharmacist. 

Boya.    Buoy. 

Buena  fb.    Good  faith,  bona  fides. 

BuLA.    Papal  bull. 

BuFETB.    Lawyer's  office;  desk. 

BuQTJE.    Vessel,  ship. 

CABALLERfA.  Cavalry.  Portion  of  land  which  after  the  conquest  of  a  terri- 
tory was  given  to  cavalry  soldiers  who  served  in  the  war.  Measure  of 
land,  variable  in  the  different  countries. 

Cabeza  db  partido.    Capital  of  a  district. 

Cabeza  db  procbso.  Judicial  decree  initiating  legal  proceedings  for  the 
punishment  of  a  crime. 

Cabildo.    Town  government  of  mayor  and  aldermen;  chapter  of  a  cathedral. 

Cabo.    Corporal. 

Cabot AJE.    Coastwise  trade. 

Cacique.    Political  chief,  "boss." 

Cadalso.    Scaffold. 

CadXvbr.    Corpse. 

Caducar.  To  lapse,  to  become  extinct  by  lapse  of  time  or  other  circum- 
stances. 

Caducidad  db  la  instancia.    Failure  of  the  action  for  lack  of  prosecution. 

Cadtjco.    Extinct. 

Caja.    Case,  box,  safe,  cash. 


GLOSSAEY  845 

Caja  db  ahorros.    Savings  bank. 

Cajero.    Cashier. 

Caj6n.    Term  applied  to  some  acts,  made  as  a  matter  of  course,  which  do  not 

require  study  or  special  attention.    Dry-goods  store  (in  Me.xico). 
Calabozo.    Dungeon;  cell  of  a  jail. 

Calumnia.    False  imputation  of  crime,  either  oral  or  \vritten,  slander. 
Camara  de  compbnsaci6n.    Clearing  house. 
CXmara  de  diputados.    House  of  representatives. 
CXmara  db  senadorbs.    Senate. 
Cambiar.    To  exchange,  to  barter. 
Cambio.    Exchange. 
Cambista.    Exchange  trader. 
Campo.    Country  place,  field,  space. 
Canal.    Canal. 
Cancelar.    To  cancel. 

Canciller.    Chancellor.  , 

Candidato.    Candidate. 
Canon.    Pension,  rent,  Canonic  rule. 
Capacidad.    Capacity. 
CapellIn.    Chaplain. 
CAPELLANfA.     The  Capital  and  interest  of  a  foundation  consisting  in  the 

obligation  of  having  a  certain  number  of  masses  celebrated  every  year  in 

a  certain  chapel  or  altar. 
Capilla.    Chapel. 
Capitaci6n.     Taxes  levied  per  capita  on  individuals  irrespective  of  their 

capital  or  income. 
Capital.    Estate,  assets,  property;  sum  of  money  which  produces  interest.     , 
Capitalista.    Capitalist. 
Capitalizar.     To  add  the  interest  to  capital  in  order  to  have  compound 

interest.    To  capitalize. 
Capitan.    Captain. 
Capitulaci6n.    Capitulation. 

Capitulacionbs  matrimoniales.    Articles  of  marriage. 
Capitular.    To  capitulate,  conclude  an  agreement. 
CAPfTULO.     Chapter  of  a  cathedral,  meeting  of  a  community,  chapter  of  a 

book. 
Captura.    Capture,  seizure,  arrest  of  a  criminal. 
CArcel.    Jail. 
Carear.     To  confront  the  witnesses  with  the  accused  or  with  one  another 

for  the  purpose  of  cross-examining  them. 
Careo.    The  confrontation  of  witnesses  with  the  accused  or  with  one  another 

for  cross-examination. 
Carga.    Burden;  tax;  cargo. 
Cargador.    Freighter,  shipper. 
Cargo.    Charge,  public  function. 
Carrera.    Road  of  about  four  feet  wide  for  the  passage  of  persons,  animals 

and  small  vehicles.    Career.    Race. 
Carrhtbra.    High-road. 
Carretero.    Cartwright. 


846  GLOSSARY 

Carta.    Letter. 

Carta-orden  dr  cr^idito.    Letter  of  credit. 

Carta  de  pago.    Receipt. 

Carta  de  porte.    Bill  of  lading. 

Carta  de  fletamento.    Charter  of  a  vessel. 

Carta  de  naturaleza.    Letter  of  naturalization. 

Carta  de  recomendaci6n.    Letter  of  introduction. 

Carta  poder.    Power  granted  in  a  private  instrument,  as  a  mere  letter. 

Carta  rbquisitoria.    Letters  requisitorial. 

Cartel.    Placard;  poster;  challenge  sent  in  writing. 

Cartulario.    Notary. 

Casa.    House,  home,  household;  business  concern. 

Casa  de  moneda.    Mint. 

Casa  solariega.    Mansion-house  of  a  family. 

Casa  de  comercio.    Commercial  firm  or  establishment. 

Casaci6n.    Annulment  or  quashing  of  a  judgment. 

Casado.    Married. 

Casamiento.    Marriage. 

Casar.     The  act  of  a  parson  or  public  functionary  performing  a  marriage 

ceremony.    To  nullify  or  quash  a  judgment. 
Caso.    Case. 

Caso  fortuito.    Unforeseen  event. 
Castigo.    Punishment. 
Castillo.    Castle. 
Castrense.     Belonging  to  the  army,  only  in  certain  phrases  like  vicario 

caslrense,  chaplain  of  the  army;  peculio  castrense  property  acquired  by  a 

minor  in  the  profession  of  arms. 
Casual.    Unforeseen. 

Cat  ASTRO.     Official  assessment  and  description  of  real  property  in  any  dis- 
trict, made  for  the  purpose  of  justly  apportioning  the  taxes  payable  on  such 

property. 
Cauci6n.    Security. 
Causa.    Thing  which  is  given  or  act  done  by  one  of  the  contracting  parties,  or 

affection,  liberality  or  consideration  which  motivates  an  obligation. 
Causa  criminal.     Criminal  case. 

Causahabiente.    Successor  in  the  right  of  another  (not  good  Spanish). 
Causante.    Person  from  whom  the  rights  of  another  are  derived. 
Cedente.     Transferor,  assignor. 
C^dula.     Warrant  against,  or  summons  of  a  defendant.     Notice  affixed  to 

the  house  of  a  debtor  to  summon  him  or  to  notify  the  public  of  an  action 

against   him. 
Celada.     An  ambush. 
Celibato.    Status  of  a  single  person. 
C£libe.    Unmarried  person. 
Cementerio.     Cemetery. 
Cencerrada.      a  disturbance  of  the  peace  in  the  form  of  mock  serenades 

with  horns  and  bells  upon  the  marriage  of  widows  or  mismated  couples. 
Censatario.    Payer  of  ground  rent,  or  one  who  pays  an  ajonuity  out  of  hia 

estate  to  another. 


GLOSSARY  847 

Censo.  Census.  The  contract  whereby  a  burden  is  created  on  realty  as  a 
guaranty  of  a  right  to  receive  an  annual  payment  in  consideration  for 
something  given.  The  right  itself  of  receiving  the  annuity.  Ground 
rent. 

Censo  al  quitar.  Ground  rent,  the  debtor  of  which  can  liberate  himself  by 
paying  the  capital  guaranteed  with  his  estate. 

Censo  consignativo.  Ground  rent  originating  in  the  delivery  of  money 
or  any  other  consideration,  the  possession  of  the  thing  burdened  being 
left  in  the  hands  of  the  debtor. 

Censo  de  por  vida.  Ground  rent  for  the  life  of  one  or  more  persons  in  suc- 
cession. 

Censo  enfiteutico.  Ground  rent  originating  in  a  contract  in  which  one 
party  gives  another  forever  or  for  a  long  time  the  use  of  realty,  reserving 
the  title  to  the  first  party. 

Censo  irredimible.  Ground  rent,  the  debtor  of  which  cannot  liberate  him- 
self by  paying  the  capital  guaranteed  by  his  estate. 

Censor.     Censor. 

Censuausta  or  censuario.    Person  to  whom  a  ground  rent  is  paid. 

Censura.      Censorship. 

Certidumbre.     Certainty. 

Cesante.     Dismissed  public  officer. 

Cesantia.    Pension  received  by  a  dismissed  public  officer. 

Ceder.     To  assign. 

Cedente.     Assignor. 

Cesi6n.    Cession,  transfer,  assignment. 

Cesionario.     Transferee. 

Cesi6n  de  bienes.  Surrender  of  the  estate  of  an  insolvent  non-merchant 
debtor  into  the  hands  of  his  creditors. 

Chapopote.     Tar    (Mexico). 

Chapopotera.     Oil  sieve  (Mex.). 

Cheque.     Check. 

Cheque  cruzado.    Crossed  check. 

Choque.     Collision. 

Ciclista.    CycUst. 

Cicl6n.      Cyclone. 

CiEGO.     Blind.    Swayed  by  violent  passion. 

CiFRA.     code;  cipher. 

CiMiENTo.     Ground  work. 

Circulaci6n.    Circulation,  currency. 

Circular.     Circular. 

CiRcuNSTANCiA.      Circumstancc. 

CiRCUNSTANciAS  AGRAVANTES  o  ATENUANTES.  Aggravating  or  attenuating 
circumstances. 

CiRCUNSTANciAL.     Circumstantial. 

CiRUJANO.     Surgeon. 

CiTA.    Summons,  citation,  quotation. 

Citaci6n.     Summons,  judicial  notice. 

Citaci6n  de  remate.  Notice  to  debtor  that  his  property  is  going  to  be  sold 
at  auction  to  pay  his  debts. 


848  GLOSSARY 

CiTAR.    To  serve  a  summons,  to  call  a  meeting;  to  quote. 

CiUDAD.     City. 

CiUDADANO.     Citizen. 

CiUDADANfA.     Citizenship. 

Civil.  Civil,  as  compared  with  criminal,  commercial,  constitutional,  etc., 
in  matters  of  law. 

Clandestino.     Clandestine,   secret. 

Clausula.    Stipulation  which  fonns  a  part  of  a  contract  or  document. 

CL.iusuLA  coDiciLAR.  Addition  made  by  a  testator  to  his  will  providing  that 
in  case  it  is  not  valid  as  such  will,  it  be  valid  as  a  codicil. 

Clausula  de  constituto.  Acknowledgment  made  by  a  person  that  he  pos- 
sesses some  property  in  the  name  and  on  behalf  of  another. 

Clausula  derogatoria.  Clause  which  amends  or  nullifies  a  previous  stipu- 
lation. 

Clausula  guarentigia.     Clause  containing  a  confession  of  judgment. 

Clausula  penal.     Penalty  clause. 

Clausula  resolutoria.  Stipulation  that  in  case  one  of  the  parties  fails  to 
comply  with  a  contract  it  shall  be  de  jure  rescinded. 

Clerigo.     Clergyman. 

Cliente.     Client. 

Clausura  del  procedimiento  de  quiebra.  Stopping  of  the  bank- 
ruptcy proceedings,  when  the  debtor's  estate  is  not  enough  to  cover 
the  expenses  thereof,  leaving  him  subject  to  suit  by  every  individual 
creditor. 

Clausura  de  sesiones.    Adjournment. 

Club.    Social  or  political  association. 

Coacci6n.     Violence,  compulsion. 

CoACTivo.     Compulsory. 

C  cart  AD  A.     Alibi. 

CoARTAR.     To  restrict. 

CoAUTOR.    Joint  author. 

CoBRAR.     To  collect  cash,  recover,  obtain. 

CoDEUDOR.     Co-debtor. 

CoDiciLo.     Codicil. 

C6digo.     Code. 

CoDiFicAR.    To  codify. 

CoERCiTivo.     Coercive. 

CoFRADiA.    Fraternity,  brotherhood,  or  sisterhood,  sorority. 

Cognaci6n.    Cognation;  kinship  by  consanguinity  from  female  line. 

CoGNADO.     Kinsman  or  kinswoman  by  female  line. 

CoHABiTACiON.     Cohabitation. 

CoHECHO.     Bribery. 

CoHEREDERO.     Coheir. 

Colaci6n  DE  BiENES.  Computation  made  of  advances  or  property  received 
by  a  legitimate  heir  during  the  life  of  the  testator  in  order  to  proportion- 
ately diminish  the  amount  he  is  entitled  to  receive  in  the  distribution 
of  the  estate. 

CoLACioNABLE.     Property  subject  to  colacion. 

CoLATERAL.     Collateral  relationship   in  family. 


GLOSSARY  849 

CoLEGio.  College,  body  of  persons  of  the  same  profession  governed  by  rules, 
e.  g.,  Colegio  de  corredores,  colegio  de  abogados. 

CoLiTiGANTE.  Person  who  carries  on  a  law  suit  with  another  against  a  third 
person. 

CoLONiA.     Colony,   settlement. 

Colorado.  Referring  to  title  based  on  some  appearance  of  justice  and  legal- 
ity; colorable. 

Colt:si6n.     Collusion. 

CoMADRE.      Godmother. 

CoMA^a)ITA.    Commercial  association  in  limited  partnership. 

CoMANDiTARio.     Limited  partner. 

CoMENTADOR.     Commentator. 

CoMERCiANTE.     Merchant. 

CoMERCio.     Commerce. 

CoMiSARio.    Delegate.    Auditor  or  superintendent  in  a  stock  company  (Mex.). 

Comisi6n.    Trust;  charge;  commission;  commercial  agency. 

Comisi6n  permanente.    Standing  committee. 

CoMisioNisTA.     Commission  merchant. 

Comisionista-ftador.     Del  credere  agent. 

CoMiso.  Every  description  of  confiscation;  forfeiture.  The  confiscated 
property  is  also  styled  comiso. 

CoMisoRio.  Stipulation  to  the  effect  that  in  case  of  a  certain  event  occurring 
or  an  obligation  not  being  complied  with  a  contract  be  ipso  jure  rescinded. 

CoMiTENTE.     Constituent,  principal. 

Comodante.  The  lender  of  a  non-fungible  thing  which  should  be  specifically 
returned. 

CoMODATARio.  Borrower  of  an  unfungible  thing  who  is  bound  to  surrender 
the  same  specific  thing. 

CoMODATo.  Lending  of  non-fungible  things  which  must  be  returned  specifi- 
cally. 

CoMPADRAZGo.  Spiritual  affinity  between  the  parents  of  a  baptized  chUd 
and  his  godparents. 

CoMPADRE.      Godfather. 

CoMPA^fA.    Company,  corporation  or  partnership. 

CoMPANfA  an6nima.     Stock  company. 

CoMPAfJiA  coLECTivA,  OR  EN  NOMBRE  coLECTivo.    General  partnership. 

CompaSIa.  en  comandita.    Limited  partnership. 

CoMPARECENCiA.    Appearance  before  a  judge. 

Comparecer.    To  appear  in  an  action. 

CoMPARENDO.    Summons,  citation  to  appear  before  a  court. 

Compeler.     To  compel. 

Compensaci6n.     Set-off,   compensation. 

CoMPETENCiA.  Jurisdiction.  Privilege  of  some  debtors  not  to  be  compelled 
to  pay  except  in  so  far  as  they  can  after  separating  what  they  may  need 
for  their  maintenance.  Competition.  Contention  between  judges  or 
functionaries  both  of  whom  claim  to  have  jurisdiction  of  a  certain  case. 

C6MPLICE.     An   accomplice. 

CoMPLOT.     Plot. 

CoMPRA-VENTA.     Purchasc  and  sale. 


850  GLOSSARY 

Comprador.     Buyer. 

Comprobaci6n.     Comprobation,  proof. 

CoMPROMETER.    To  Submit  a  case  to  the  decision  of  an  arbitrator. 

CoMPROMiso.    Agreement  to  submit  an  issue  to  the  decision  of  an  arbitrator. 

The  instrument  which  contains  such  agreement. 
CoMPULSA.    Copy  of  an  instrument  or  proceeding  compared  with  its  original. 
CoMPULSAR.    To  take  a  copy  of  an  instrument  or  proceeding. 
Compulsion.      Compulsion. 
CoMPULSivo.    Term  applied  to  a  judicial  order  to  one  of  the  parties  to  a  suit 

to  execute  an  act. 
CoMUN.     Common,  as  compared  with  what  is  individually  and  exclusively 

owned. 
CoMUNERO.    Co-owner. 
CoMTiNiDAD.    Community. 

CoMtnsriCACi6N.    Communication.    Official  despatch,  notification. 
Comunt6n.    Co-ownership. 
Cox  ARREGLo  A.    In  Conformity  with. 
CoNATO.    Crime  attempted  but  not  executed. 
CoNCEjiL.    Relating  to  the  municipal  council,  or  to  what  is  common  to  the 

inhabitants  of  a  town. 
CoNCEJO.    Town  council. 
Concesi6n.    Concession. 
CoNCESioNARio.    Grantee,  concessionaire. 

Conciliaci6n.    Conciliation,  mediation  of  or  settlement  of  disputes. 
CoNCiLio.    Council.    Assembly  of  bishops. 
Conclusi6n.    Conclusion. 
Concordato.    Covenant  made  by  a  government  with  the  Pope.    Composition 

with  creditors. 
CoNCUBiNA.    Concubine. 
CoNCUBiNARio.    One  who  keeps  a  mistress. 
CoNcuBiNATO.    Concubinage. 
CoNCURRENCiA.  EquaUty  of  rights  of  several  creditors  to  be  paid  with  their 

debtor's  property. 
CoNCURSAR.    To  start  a  suit  for  insolvency. 
CoNCURSo.    Suit  for  insolvency.    Meeting  of  creditors. 
CoNcusiON.    Concussion,  extortion,  shaking. 
CoNcusioNARio.    Coucussivc. 
CoNDENA.    Sentence  of  a  condemned  criminal.    Statement  extended  by  the 

clerk  of  a  court  of  such  sentence. 
Condenaci6n.    Sentence  to  punishment. 
CoNDiciON.    Condition. 

CoNDiciON  CASUAL.    Condition  which  does  not  depend  upon  the  will  of  man. 
Condici6n  potestativa.    Condition  depending  exclusively  upon  the  will  of 

one  of  the  contracting  parties. 
Condici6n  resolutoria.     Condition  which  on  being  fulfilled  produces  the 

revocation  of  the  contract  and  places  matters  in  statu  quo,  as  they  were 

before  the  contract  was  entered  into.    Condition  subsequent. 
Condici6n  suspensiva.    Condition  precedent. 
CoNDOMiNio.    Co-ownership. 


GLOSSARY  851 

Condonaci6n.    Remitting  of  a  debt;  pardoning  of  an  offense. 
Conducci6n.    Hiring  of  services. 
CoNFESAR.    To  admit. 

CoNFESAR  DE  PLANO.    Plain  and  full  admission  of  facts  by  an  accused  criminal. 
Confesi6n.    Admission.    Confession. 

Confesi6n  EXTRAJUDICIAL.      Extrajudicial  admission,  made  out  of  the  pres- 
ence of  the  judge. 
Confesi6n  calificada.     Admission  made  under  circumstances  which  limit 

the  effect  thereof. 
Confesi6n  divisible.    Admission  of  acts  under  circumstances  which  do  not 

form  a  unit  with  the  fact,  so  that  the  opposite  party  can  avail  himself  of 

the  evidence  of  the  fact  without  being  obliged  to  accept  the  truthfulness 

of  the  circumstances. 
Confesi6n  ficta.    Admission  arising  from  certain  facts,  principally  from  the 

default  to  appear  in  certain  cases. 
Confinaci6n.    Banishment  with  indication  of  the  place  where  the  exile  is  to 

reside. 
Confiscaci6n.    Confiscation. 
Confrontaci6n.     Confrontation  of  accused  with  witnesses,  or  of  witnesses 

with  one  another  for  cross-examination. 
Confusi6n.    One  of  the  ways  to  acquire  ownership  according  to  civil  law.    It 

consists  in  the  mixing  of  two  or  more  liquids  or  stocks  of  grain  belonging 

to  different  persons,  so  as  to  make  a  separation  impossible.    The  merging 

in  a  single  person  of  the  characters  of  creditor  and  debtor  of  the  same 

obligation  by  inheritance  or  otherwise. 
Congreso.    Congress. 

CoNGRESO  DE  LOS  DiPUTADOS.    Lower  body  of  the  Spanish  parliament.    Cortes. 
CoNJETURA.    Conjecture.    Circumstantial  evidence. 
CoNJUEZ.    Cojudge. 
CoNJTJNTo.    Associate  judge.    Joint  with  another  in  a  title  or  right.    AUied  by 

kinship  or  friendship.    Spouse. 
Conjuraci6n.    Conspiracy. 
Conminaci6n.    Warning. 

CoNMUTACiON  DE  PENA.    Exchange  of  one  penalty  for  another. 
Connivencia.    Connivance. 
CoNociMiENTo.    Act  of  a  judge  taking  cognizance  of  a  case  in  order  to  decide 

it.    Bill  of  lading. 
CoNSANGUiNiDAD.    Consanguinity. 
CoNSEjAL.    Member  of  a  council.    Alderman. 
CoNSEJO.    Advice,  opinion,  monition,  counsel. 
CoNSEJO  DE  GUERRA.    Court-martial.    Council  of  war. 
Consignaci6n.    Consignment.    Deposit  made  by  a  debtor  of  the  thing  due 

when  the  creditor  refuses  to  accept  payment,  is  not  known,  or  his  rights 

are  in  doubt. 
CoNsiGNATARio.    Consignee. 
Consolidaci6n.    The  union  in  a  single  person  of  the  usufruct  and  the  ownership 

of  a  thing. 
CoNsoRTES.    Consorts.    Husband  and  wife. 
Conspiraci6n.    Conspiracy. 


852  GLOSSARY 

CoNSTiTtJci6N.    Constitution. 

Consul.    Consul. 

CoNSULADO.    Consulate. 

CoNSULTA.    Consultation. 

CoNSULTivo  (voTo).  Vote  which  serves  only  as  an  advisory  opinion,  without 
deciding  power. 

CoNTADO,  al.    With  ready  money,  for  cash. 

CoNTADOR-PARTiDOR.    Person  designated  to  divide  an  inheritance. 

CoNTADOR.    Accountant. 

CoNTADURiA.    Auditor's  office. 

CoNTENCioso.  Contentious.  Judicial  proceedings  between  plaintiff  and 
defendant. 

CoNTENCioso-ADMiNiSTRATivo.  Remedy  given  against  acts  or  decisions  of 
an  administrative  authority  in  violation  of  a  statutory  right  of  the 
claimant. 

CoNTESTACiON.    Auswer. 

CoNTESTE.    Witness  whose  testimony  agrees  entirely  with  that  of  another. 

CoNTiNENCiA  DE  LA  CAUSA.  Unity  which  must  exist  in  a  law  suit,  including 
unity  of  action,  parties  and  purpose. 

CoNTRABANDO.    Smuggling.    Contraband. 

CoNTRACAMBio.    Re-cxchangc. 

CoNTRADiCTORio.  Term  appUed  to  legal  proceedings  in  which  opposing 
parties  must  be  heard. 

CoNTRAMAESTRE.    Oversccr. 

CoNTRAREPLiCA.  Countcrclaim  advanced  by  the  plaintiff  to  offset  the  counter- 
claim of  defendant. 

CoNTRATA.  Contract  referring  to  the  undertaking  of  works  for  the  govern- 
ment. 

CoNTRATO.    Contract. 

CoNTRATO  A  LA  GRUESA.    Bottomry  bond. 

CoNTRATO  CONSENSUAL.  Contract  which  becomes  effective  by  the  mere 
agreement  of  the  parties. 

CoNTRATO  LITERAL.    Contract  which  must  be  in  writing  to  be  valid. 

CoNTRATO  REAL.  Contract  which  requires  the  delivery  of  the  thing,  subject- 
matter  of  the  same,  to  become  binding. 

CoNTRiBucioN.    Tax,  contribution. 

CoNTRiBUTENTE.    Taxpayer,  contributor. 

CoNTUMACiA.    Contumacy,  contempt  of  court,  default. 

Convenci6n.    Convention,  pact. 

CoNVENio.    Agreement,  contract. 

CoNvicTo.    Convict. 

CoNvocATORU..    Convocation,  caUing  of  a  meeting. 

C6NYUGES.    Married  couple. 

CoPiA  CERTiFicADA.  Exemplified  copy  authenticated  by  a  notary  or  pubhc 
functionary. 

CoPROPiETARio.    Joint  owner,  coproprietor. 

Corona.    Crown,  throne. 

CoRREDOR.    Broker. 

CoRREDOR  DE  CAMBio.    Exchange  broker. 


GLOSSARY  853 

CoRREDURfA.    Brokerage. 

CoRREGiDOR.  Administrative  head  of  a  district  vested  also  with  civil  and 
criminal  jurisdiction. 

CoRREO.    Post,  mail. 

Correspond ENCiA.    Correspondence,  mail. 

CoRRETAJE.    Broker's  functions,  broker's  fees. 

Corrtjpci6n.    Curruption,  bribery. 

CoRSARio.    Privateer. 

CoRso.    Privateering. 

CoRTE.    City  where  the  king  resides.    Court. 

Cortes.    Congress;  Senate  and  Chamber  of  Deputies  in  Spain. 

CoRTEsfA.    Term  of  grace  for  the  payment  of  a  debt. 

CosA.    Thing,  object. 

CosA  FUERA  DEL  coMERCio.  Things  which  cannot  be  the  subject-matter  of 
private  transactions  or  bargains,  e.  g.,  the  executive  mansion,  historical 
monuments,  animals  contaminated  with  contagious  diseases. 

CosA  JUZGADA.    Res  judicata. 

COSTAS.      Costs. 

CosTAS  jUDiciALES.     Costs  paid  to  judicial  functionaries  or  public  fees  for 

judicial  proceedings. 
CosTAS  PERSONALES.    Costs  Consisting  of  lawyer's  fees,  etc. 

COSTUMBRE.      Custom. 

CoTEJo  DE  LETRA.    Comparison  of  handwritings  in  order  to  ascertain  whether 

they  were  made  by  the  same  person. 
Cotizaci6n.    Quotation,  price  current. 
CoTO.    Landmark. 
Credencial.    Credential. 
Cr^dito.    Credit. 
Cr^ditos  activos.    Assets,  credits. 
Cr^ditos  pasivos.    Liabilities. 

Cr^dito  quirografario.    Credit  evidenced  by  a  private  document. 
Cr^dito  privilegiado.    Privileged  or  preferred  claim  or  credit. 
Crimen.     Crime. 
Criminal.     Criminal. 
Criminalista.      Criminalist. 
Criminologia.     Criminology. 
CuARTEL.    District,  ward  of  a  city.    Barracks. 
CuARTEL  maestre  GENERAL.    Quartermaster  general. 
CuASi  coNTRATo.     Quasi-contract. 
CuASi  delito.     Wrong  made  unintentionally. 
CuENTA.     Account,  calculation. 
A  CuENTA.    On  account. 
CuENTA  coRRiENTE.     Current  account. 
CuENTA  DE  RESACA  Y  RECAMBio.     Memorandum  of  expenses  of  redraft  and 

re-exchange  when  a  bill  of  exchange  is  not  honored. 
CuENTA  DE  VENTA.    Sales  account. 
CuERPO  DEL  DERECHO.     Authentic  compilation  of  laws. 
CuERPO  DEL  DELITO.     Corpus  delicti. 
Cuesti6n  db  tormento.     Inquiry  by  torture. 


854  GLOSSARY 

Culpa.    Fault,  offense  committed  wilfully  but  without  malice. 

Culpable.     Guilty,  negligent. 

CuMPLiMiENTO.     Performance. 

CuPONES.     Coupons. 

CuRADOR.    Administrator  of  property  of  a  minor,  insane  person  or  absentee; 

one  appointed  to  see  that  the  guardian  does  his  duty,  and  to  represent 

the  ward  in  and  out  of  court  when  his  interest  is  adverse  to  that  of  the 

guardian. 
CuRADOR  AD  BONA.    Persou  appointed  by  a  judge  to  manage  a  minor's  estate. 
CuRADOR  AD  LITEM.    Person  appointed  by  a  judge  to  defend  an  incompetent 

person  in  a  suit. 
CuRADURfA  OR  cuRATELA.    The  functions  of  a  curador. 
CuRANDERO.    A  medical  charlatan  or  quack. 
Curia.     Ecclesiastical  tribunal. 
CuRiAL.    Minor  officer  of  a  court. 

Daci6n.    Actual  delivery  of  the  thing,  subject-matter  of  an  obligation. 
Daci6n  en  PAGO.    DeUvery  of  a  thing  certain  instead  of  cash  in  payment  of 

a  debt. 
DXdiva.    Gift. 

Dad  OR.    Drawer  of  a  bill  of  exchange. 
Da5Jo.     Damage,  money  detriment  sustained. 
DaSo  emergente.    Damage  caused  by  having  one's  money  lent,  or  by  one's 

debtor  retaining  that  money. 
DaSo  MARfTiMO.     Average. 
Danos  y  perjuicios.      Damages  which  cover  the  detriment  sustained  as  well 

as  the  benefit  or  profit  lost  arising  out  of  a  tort. 
Dar.     To  give. 

Dar  por  QUITO.    Discharge  a  debtor. 
Datos.     Data,  facts. 
Deber.     Duty,  obligation. 
Debito.      Debit. 
Decano.     Senior,  dean. 
Decapitaci6n.     Beheading. 
Decenio.     Ten-year  period,  decennial. 
Decisi6n.     Decision,  judgment. 
Decisorio.    Term  applied  to  the  sworn  testimony  of  one  of  the  parties  to  a 

suit  when  the  other  party  agrees  to  abide  by  such  testimony. 
Declaraci6n.      Deposition. 
Declinar  jurisdicci6n.    To  deny  the  jurisdiction  of  a  judge  by  asking  him 

to  send  the  proceedings  to  the  competent  judge. 
Declinatoria.     Petition  to  an  incompetent  judge  to  send  the  proceedings 

in  a  law  suit  to  the  proper  judge. 
Decretales.    Decretals,  papal  decrees. 
Decreto.      Decree. 

Decreto  de  caj6n.    Judicial  decree  in  routine  matters. 
Defensa.     Defence. 
Deferir  el  juramento.    To  abide  by  the  sworn  statement  of  the  opposing 

party. 


GLOSSARY  855 

Deficit.     Deficit,  shortage. 

Definici6n.    Definition,  decision  of  a  doubtful  point  by  competent  authority. 

Definitivo.     Conclusive. 

Defraudaci6n.     Fraudulent  misappropriations. 

Degradaci6n.     Degradation. 

Dehesa.     Fenced  pasture  ground. 

Dejaci6n.    Abandonment  of  things  or  rights. 

Delaci6n.     Information  of  a  crime. 

Delator.     Informer,  accusing  witness. 

Delegaci6n.    Delegation,  power  conferred  by  a  judge  on  a  person  in  order 

that  such  person  may  take  cognizance  of  and  decide  a  case  according 

to   instructions   given. 
Delegaci6n  de  deuda.    Substitution  of  one  debtor  instead  of  another  with 

the  consent  of  the  creditor. 
Delegado.     Delegated  judge,  referee. 
Deliberar.     To  deliberate. 
Delincuente.     Offender,   criminal. 
Delinquir.    To  transgress  the  law,  to  commit  a  crime. 
Delito.      Crime. 

Delito  consumado.     Consummated  crime. 
Delito  frustrado.    Crime  which  was  not  consummated  due  to  circumstances 

entirely  independent  of  the  will  of  the  actor. 
Delito  intentado.     Attempted  crime  not  consummated  because  of  impos- 

sibihty  or  of  the  inadequacy  of  the  means  employed. 
Demanda.    Claim,  complaint,  action. 
Demandado.      Defendant. 

Demandador  or  demandante.    Plaintiff,  petitioner. 
Demencia.     Lunacy. 
Demente.     Lunatic. 
Demora.     Delay,  default. 
Denuncia.     Denunciation. 
Denunciador.     Denunciator,   informer. 
Denuncia  de  obra  nueva.    Action  to  stop  the  construction  of  a  new  building 

or  a  part  thereof  when  detrimental  to  individual  rights  or  injurious  to 

public  welfare. 
Denuncia  de  obra  vieja  or  ruinosa.     Action  demanding  the  demoUtion 

or  proper  repair  of  a  building  which  threatens  to  fall,  thereby  injuring 

a  private  or  public  interest. 
Deponente.     Bailor,  testifying  witness,  deponent. 
Deponer.     To  testify. 
Deportaci6n.     Deportation. 

Deposici6n.    Testimony,  ouster  from  office  or  dignity,  deposition. 
Depositante.     Bailor,   depositor. 
Depositar.     To  deposit. 
Depositario.     Bailee,    depositary. 
Dep6sito.     Deposit. 

Dep6sito  irregular,    a  kind  of  loan  bearing  interest. 
Derecho.    Right,  law  in  general,  body  of  laws. 
Debecho  can6nico.    Ecclesiastical  or  canon  law. 


856  GLOSSARY 

Derecho  civil.     Civil  law. 

Derecho  comercial.    Commercial  law. 

Derecho  comun.  Civil  law  as  compared  with  special  laws,  such  as  military, 
ecclesiastical,  commercial,  constitutional  law. 

Derecho  de  gentes.    International  law,  as  compared  with  Roman  law. 

Derecho  internacional.    International  law. 

Derecho  personal.  Rights  inherent  in  a  person.  Right  of  a  creditor  who 
does  not  possess  any  real  action. 

Derecho  POLfiico.  Law  relating  to  political  rights  and  obUgations  of  citi- 
zens or  to  the  administrative  functions  estabhshed  by  the  political  consti- 
tution. 

Derecho  positivo.  Positive  or  declared  law,  as  compared  with  the  merely 
scientific  conception  of  the  law. 

Derecho  procesal.     Procedural  law. 

Derecho  real.     Right  in  rem. 

Derecho  de  aduana.    Custom  duty. 

Derogaci6n.     Repeal. 

Desaforar.  To  deprive  a  person  of  a  privilege  he  enjoys  as  a  penalty  for 
having  committed  a  crime,  e.  g.,  the  privilege  of  holding  public 
office. 

Desafuero.    Open  violence,  downright  injustice,  infraction  of  law. 

Desagravio.     Indemnity,  satisfaction  for  injury. 

Desahucio.     Ejectment  of  tenant. 

Desamortizar.    Disentail,  to  break  an  entail. 

Desamparo.    Abandonment. 

Descargo.    Discharge  of  an  obligation,  defense. 

Descendencia.     Descent,  extraction. 

Descendiente.    Descendant,  offspring. 

Descuento.     Discount. 

Desembargar.    To  free  from  a  levy. 

Deserci6n.     Desertion.    Abandonment  of  an  appeal  by  appellant. 

Desglosar.  To  separate  sheets  or  documents  from  the  proceedings  or  record 
in  a  suit. 

Desheredaci6n.     Disinheritance. 

Desierta.    Term  applied  to  an  appeal  which  is  abandoned. 

Desistimiento.    The  abandonment  of  a  right  or  action. 

Deslinde.    Survey  and  marking  of  boundaries  of  rural  property. 

Despacho.  Despatch.  Order  issued  by  a  judge.  Commission  given  to  an 
officer.      Office. 

Despojar.    To  despoil  one  of  his  property. 

Despojo.     Spoliation. 

Destajo.    Job  or  lump  work,  as  distinguished  from  piece  or  day  work. 

Destierro.     Exile,  banishment. 

Detenci6n.     Arrest. 

Detentaci6n.    Possession  held  in  the  name  of  another. 

Detentador.    Possessor  in  another's  name,  e.  g.,  a  lessee,  a  depositary. 

Detxda.     Debt. 

Deudor.     Debtor. 

Devengar.    To  gain,  to  earn  salaries,  fees,  etc. 


GLOSSARY  857 

Devoluci6n.     Restitution. 

Devolutivo.     Term  applied  to  an  appeal  for  review  only  which  does  not 

suspend  the  execution  of  the  judgment  appealed  from. 
DfA  FERiADO.    Legal  holiday. 
DfA  FESTivo.    Sundays  and  holidays. 
DiARio  DE  AVISOS.    Official  gazette. 
DfAS  UTILES.    Working  days. 
DiETAS.    Daily  salary  of  public  officials;  per  diem. 
DiCTAMBN  PERiciAL.    Opinion  of  expert  witnesses  at  a  trial. 
DiEZMO.    Tithe;  duty  of  a  tenth  per  cent. 
DiGESTO.    Digest.    Systematic  compilation  of  the  Roman  law. 
Dilaci6n.    Period  established  by  law  or  a  judge  to  answer  a  complaint  or  to 

produce  evidence. 
DiLiGENCiA.    Judicial  order,  execution  of  a  judicial  order,  or  its  notification. 
DiLiGENCiA  PARA  MEJOR  PROVEER.    Judicial  or  court  order  to  produce  certain 

evidence  which  the  parties  overlooked  and  which  is  material  to  a  proper 

decision. 
DiLUCiDAR.    Elucidate. 
Dimisi6n.    Resignation  of  position  or  action. 
DiNBRO.    Money. 

Diploma.    Diploma,  title,  credential. 
DiPLOMATico.    Diplomat. 

DiPUTADO.    Representative  in  the  lower  house  of  the  congress. 
Diputaci6n.    Deputation,  committee. 

Direcci6n  GENERAL  DE  ADUANAs.    General  custom-house  bureau. 
Direcci6n  GENERAL  DE  RENTAs.    General  tax  bureau. 
Direcci6n  DE  ESTADisTicA.    Bureau  of  Statisitics. 
DiRiMENTE.    Term  applied  to  legal  impediments  to  marriage,  which  make  it 

void,  if  performed. 
DiRiMiR.    To  make  void;  to  decide  a  contested  issue. 
DiscERNiR.    To  endow  a  person  with  authority. 
DiscERNiMiENTO.    Appointment,  principally  when  made  by  a  judge. 
DiscoRDiA.    Disagreement  of  arbitrators  or  expert  witnesses. 
DisFRUTAR.    To  reap  benefits,  to  gain  advantage. 
Disipaci6n.    Dissipation,  dissolute  living. 
Disoluci6n  del  matrimonio.    Dissolution  of  marriage. 
DisPENSA.    Exemption  from  a  prohibition  of  law. 
Disposici6n.    Disposition. 
DisposiTivA.    Term  applied  to  that  part  of  a  judgment  in  which  the  decision 

is  contained,  as  compared  with  the  other  parts  of  the  decision  relating 

the  facts  of  the  case  or  the  legal  grounds  referred  to  by  the  judge  or 

alleged  by  the  parties. 
Divisi6n.     Division  or  partition  of  inheritance  or  thing  possessed  in  co- 
ownership. 
Dividendo.    Dividend. 
DivoRCio.     Divorce.     In  most  of  flic  Spanish-American  countries  this  word 

applies  to  the  mere  separation  of  the  consorts,  without  breaking  th(> 

matrimonial  tics. 
Documental.    Documentary. 


858  GLOSSARY 

DocuMENTO.    Document. 

DocuMENTO  EJECuTivo.    Document  implying  a  confession  of  judgment. 

DocuMENTO  NEGOCIABLB.    Negotiable  instrument. 

DoLO.    Deceit. 

DoLO  BUENO.    Shrewdness  which  every  one  is  bound  to  use  in  order  to  defend 

himself. 
DoLO  MALO.    Malicious  deceit. 
DoMESTico.    Servant. 

DoMiciLio.    Permanent  dwelling,  place  of  residence,  domicil. 
Dominic.    Ownership. 
DoMiNio  DiRECTO.    Right  of  a  person  to  or  in  a  thing  which  may  or  may  not 

imply  the  right  to  take  the  products  of  the  same  and  utilize  them  in  any 

way,  as  long  as  the  right  of  the  beneficiary  of  those  products  or  benefits 

subsists.    Bare  legal  owner  or  trustee. 
Dominic  eminente.    Eminent  domain. 
Dominic  tJTiL.    Right  of  person  to  enjoy  the  products  and  benefits  of  a  thing 

which  belongs  to  the  possessor  of  the  dominio  directo. 
Dominic  plenc.    Fee  simple. 
Donaci6n.    Donation,  gift. 
Dcnaci6n  incficicsa.    Gifts  to  an  amount  greater  than  a  person  can  dispose 

of  in  favor  of  strangers,  overlooking  the  rights  of  his  legal  heirs. 
DoNATivc.    Contribution  to  a  fund  for  public  benefit. 
DoTAR.    To  endow. 
Dote.    Dowry;   property  given  to  the  husband  on  account  of  his  marriage  to 

sustain  the  expenses  of  the  household. 
DuBLO.    Duel.    Mourning. 
DueSc.    Proprietor,  owner. 
DuPLicA.    Counterclaim  by  the  defendant. 

Echaz6n.    Jettison. 

Ed  AD.     Age,  mayor  edad,  majority;  mayor  de  edad,  of  age;  menor  de  edad,  minor. 

Edictc.    Public  order  of  a  judge  or  court  issued  after  default  of  a  party  or  to 

notify  a  large  number  of  persons. 
Efecto.    Effect. 
Efecto  devolutivc.    An  appeal  for  a  review  only,  without  suspending  the 

execution  of  the  judgment. 
Efectc  retrcactivc.    Retroactive  effect. 

Efecto  suspensivo.    An  appeal  for  a  review  and  stay  of  proceedings. 
Efectos.    Effects,  merchandise,  movables,  securities. 
Efectcs  bn  cartbra.    Bills  or  securities  in  hand. 
Efectcs  PtJBLicos.    Public  securities. 

Ejercer.    To  practice  (a  profession),  to  enforce  or  use  a  right. 
Ejecuci6n.    Execution.    Attachment  of  property  by  judicial  decree. 
Ejbcuci6n  aparejada.    Attachment  of  property  of  a  debtor  on  the  basis  of 

an  instrument  which  implies  a  confession  of  judgment. 
Ejecutadc.    Debtor  whose  property  has  been  attached  for  debt. 
Ejecutante.    Creditor  who  attaches  property  of  his  debtor. 
Ejecutivo.    Executory;  executive  power. 
Ejecutcr.    Judicial  officer  charged  with  the  execution  of  an  attachment. 


GLOSSARY  859 

Ejecutor  testamentario.    Executor  of  a  last  will. 

Ejecutoria.  Document  in  which  a  final  judgment  is  transcribed;  causar 
ejecutoria,  to  vest  a  judgment  with  the  force  of  res  judicata. 

Ejemplar.    The  original  form  or  model,  copy  of  a  book  or  instrument. 

Ejido.  Tract  of  land  at  the  outskirts  of  a  town  which  is  left  for  the  common 
benefit  of  its  residents  and  is  used  as  pasture-ground. 

Elecci6n.    Election. 

Emancipaci6n.    Emancipation. 

Embajador.    Ambassador. 

Embarcaci6n.    Vessel  or  ship  of  any  size  or  description. 

Embargo.    Attachment  of  a  debtor's  property;  embargo. 

Embargo  provisional  or  preventivo.  Preliminary  or  preventive  attach- 
ment. 

Embriaguez.    Drunkenness. 

Emergbnte.    Emergent,  issuing. 

Emigraci6n.    Emigration. 

Emisi6n  de  obligaciones.    Issue  of  bonds. 

Empadronamiento.    Census,  tax-list. 

Empate.    Tie  vote. 

Empenar.    To  pledge,  to  pawn. 

Emplazamiento.    Summons,  citation. 

Emplazar.    To  summon. 

Empleado.    Employee. 

Empleo.    Employment,  position. 

EmpleomanI A.    Rage  for  public  oflBce. 

Empresario  de  transportes.    Transportation  contractor. 

Emprestito.    Government  loan. 

Enajbnaci6n.    Alienation. 

Enajenaci6n  forzosa.  Sale  which  owner  is  forced  to  eflfect  for  public  utility; 
forced  sale. 

Enajenaci6n  mental.    Insanity. 

Enajenar.    To  alienate. 

Encabezamiento.    Tax-roll;  head-line. 

Encomendero.  Grantee  of  a  concession  in  the  Spanish-American  colonies, 
consisting  in  a  certain  number  of  Indians  being  assigned  to  him  for  their 
Christian  education  and  defense,  in  exchange  for  the  services  or  tribute 
of  the  Indians  encomendados. 

Encubridor.  Concealer;  one  who  conceals  a  criminal  or  the  means  or  effects 
of  a  crime. 

Encuentro.    Collision,  stroke,  clash. 

Encuesta.    Inquiry. 

Endosante.    Endorser. 

Endosatario.    Endorsee. 

Endoso.    Endorsement. 

Endoso  en  BLANCO.    Blank  endorsement. 

Enemigo.    Enemy,  inimical. 

Enfiteusis.  Contract  by  virtue  of  which  the  owner  of  realty  cedes  to  another 
the  dominio  Mil  (see  this  word)  of  \\\v.  {)roperty  in  (consideration  ff)r  a  rent 
called  canon;  the  lieneficiary  of  the  enfiteitsis  can  sell  or  mortgage  his  rights 


860  GLOSSARY 

and  dispose  of  them  by  will.  The  usual  period  of  the  enfiteusis  is  ninety 
years. 

Enfiteuta.  Person  who  owns  the  dominio  dir  do  in  a  contract  of  enfitettsis 
(see  these  words). 

EngaNo.    Deceit,  falsehood. 

Enjambre.    Swarm  of  bees. 

Enjuiciamibnto.    Judicial  procedure. 

Enmienda.    Correction  of  some  error;  satisfaction  of  losses  sustained. 

Ensayador.    Essayer. 

Exsayb.    Essay  (of  metals). 

Entradas  y  salidas.  Right  of  the  owner  of  realty  to  pass  through  land 
nearby;  right  of  way. 

Entredicho.    Interdiction. 

Entrega.    Delivery. 

Entroncar.    To  prove  that  a  person  has  the  same  descent  as  another. 

Entroncamiento.    Kinship,  relation. 

Envenenamiento.    Poisoning. 

Enviado  extraordinario.  Minister  plenipotentiary  ranking  below  am- 
bassador. 

Equidad.     Equity. 

Equitativo.     Equitable. 

Equivalente.     Equivalent. 

Equivocaci6n.     Mistake. 

EQufvoco.    Equivocal,  ambiguous. 

Era.     Era. 

Erario.    Exchequer,  public  treasury. 

Error.     Error,  mistake. 

Error  de  derecho.    Ignorance  of  law. 

Es  BASTAXTE.  "It  is  Sufficient,"  formula  used  in  certifying  to  sufficiency  of 
powers  of  attorney. 

EscALA.    In  maritime  commerce,  a  sea  port  where  vessels  usually  arrive. 

EscALA  FRANCA.     Free  port. 

EscALAR.  To  scale,  to  climb  walls,  etc.,  to  get  clandestinely  in  or  out  of  a 
building. 

EscALo.    Breaking  of  a  way  into  or  out  of  a  place. 

Esc.4ndaix3.     Scandal. 

EscLAViTHD.     Slavery. 

EscLAVO.    Slave. 

EscopETA.     Shot-gun. 

EscribanIa.     The  office  of  a  notary. 

EscRiBANO.  Notary  public;  professional  public  officers  charged  with  authen- 
ticating judicial  proceedings,  contracts,  last  wills,  and  other  acts. 

EscRiTO.     Judicial  application  in  writing. 

EscRiTOR.      Writer. 

EscRiTURA.     Deed,  instrument. 

EscRiTURA  PUBLicA.  Document  executed  with  legal  formalities  usually  be- 
fore a  notary,  or  is.sued  by  a  public  officer  in  the  exercise  of  his  functions. 

EscRiTURA  PRiVADA.  Instrument  executed  by  private  parties  without  any 
notary's   authentication. 


GLOSSARY  861 

EscRiTURARio.  Referring  to  public  instruments,  e.  g.,  acreedor  escriturario, 
creditor  whose  right  is  baaed  on  a  pubUc  instrument. 

EscRUT.u)OR.  Teller,  inspector  of  election  charged  with  collecting  and  com- 
puting the  votes. 

EscRUTiNio.     Scrutiny;  election. 

EsPECiERO.     Grocer. 

Especificaci6n.  Specification  (title  by),  manner  of  acquiring  property  by 
accession  in  the  case  of  a  combination  of  things  which  produce  a  new 
species  that  belongs  to  the  maker  of  the  new  species,  as  the  painter  be- 
comes the  o%\'ner  of  the  materials  used  in  painting,  or  the  sculptor  of  the 
marble  of  the  statue  made  by  him ;  he  must,  however,  pay  the  price  of  the 
material. 

Especificar.     To   specify. 

Espera.    Extension  of  time  in  a  debt. 

EsPERANZA.  Hope;  Venta  de  esperanzas,  contract  by  which  a  person  assigns 
an  eventual  right  to  the  buyer. 

EspoNSALES.     Promise  of  marriage. 

EsposA.     Wife. 

EsposAS.      Handcuffs. 

Esposo.     Husband. 

EspURio.  Child  whose  father  cannot  be  ascertained  on  account  of  the  loose 
conduct  of  the  mother. 

EsTADO.     State,  commonwealth,  status. 

EsTADO  HONESTO.     Status  of  a  single  woman. 

EsTADO  DE  siTio.    Rule  of  martial  law. 

EsTAFA.     Swindle. 

EsTANco.     Monopoly,  embargo. 

EsTANQUE.     Pond,   reservoir. 

EsTAR  A  DERECHO.  To  appear  in  court  by  oneself  or  by  representative,  and 
to  bind  oneself  to  abide  by  the  judicial  decision  of  the  case. 

EsTATUA.     Statute. 

EsTATUTo.  Statute,  principally  used  for  regulations  of  a  town,  university, 
clergy,  etc.    In  the  plural,  it  is  used  for  the  by-laws  of  a  company. 

EsTELioNATo.  A  kind  of  fraud  in  contracts,  principally  apphed  to  fraud  in 
selling,  mortgaging  or  pledging  things  which  were  already  the  subject- 
matter  of  the  same  transaction  by  the  same  seller,  mortgagor  or  pledgor. 

EsTERiLiDAD.     Sterility,  barrenness. 

Estimaci6n.     Estimation,  appraisal. 

EsTiPENDio.     Salary,  wage,  fee. 

Estipulaci6n.     Stipulation. 

EsTiPULAR.    To  stipulate. 

Estirpe.    Stock  of  a  family;  (relationship)  by  blood. 

EsTRADos.     Court  rooms. 

EsTRAGO.     Ravage,  destruction. 

EsTUPRO.     Violent  deflowering. 

EvACUAR  XJN  TRASLADO.  To  give  an  answer,  the  party  returning  at  the  same 
time  the  records  of  proceedings  given  him  for  his  information. 

Evasi6n.     Evasion,  subterfuge. 

EvASivo.     Evasive. 


862  GLOSSARY 

Eventual.     Eventual,  fortuitous. 

Evicci6n.  Eviction.  Judicial  dispossession  of  a  thing,  and  also  judicial 
recovery  of  a  thing  which  was  possessed  by  another.  Garantia  de  emccion, 
warranty  of  title  in  sales,  inheritance  or  common  property  partition,  etc. 
Salir  a  la  eviccion,  the  appearance  of  the  seller,  etc.,  in  court  to  defend  the 
title  of  the  thing  he  sold  or  transferred.  Cita  de  eviccion,  citation  served 
upon  a  person  bound  to  guarantee  the  title  of  a  thing  to  appear  in  court 
in  a  case  in  which  the  title  is  disputed. 

Examen.      Examination. 

Excepci6n.     Defense,  plea,  exception. 

Excepci6n  dilatoria.    Dilatory  pleading;  demurrer. 

ExcEPCiON"  PERENTORiA.  Defense  consisting  in  alleging  a  fact  which  destroys 
the  action  of  the  plaintiff. 

ExcusA.  Reason  given  by  a  judge  to  excuse  himself  from  the  cognizance 
of  a  case. 

Excusi6n.    See  Benefido  de  excusion. 

ExENCiON.     Exemption. 

Exhibitoria.     See  Accion  ad  exhibendum. 

ExHORTO.    Letters  requisitorial  sent  by  one  judge  to  another. 

Exhumaci6n.     Exhumation. 

Exigible.     Exigible,  demandable. 

Expatriaci6n.      Expatriation. 

Expedidor.     Shipper,  consignor. 

Expediente.    File  of  papers  bearing  on  one  case;  record. 

ExPENSAS.    Expenses,  charges,  costs. 

Experto.      Expert. 

Exportaci6n.     Exportation. 

Exp6sito.     Foundling. 

Extorsi6n.     Extortion,  overcharge. 

Extracto.     Abstract,  summary. 

Extradici6n.     Extradition. 

Extrajudicial.     Extrajudicial. 

ExTRANjERfA.    Status  of  a  foreigner. 

ExTRANjERO.     Foreigner  (from  different  country). 

ExtraiJamiento.     Banishment,  exile,  reprimand. 

ExTRAvio.     Deviation. 

Faccion  de  testamento.     Capacity  of  leaving  property  bj'  will  or  being 

a  beneficiary  of  a  last  will. 
Factor  de  comercio.    Factor  representative  of  a  merchant,  with  power  to 

transact  business  in  his  name. 
FACTORfA.    Place  where  factors  transact  business  in  behalf  of  their  principals, 

entrepot. 
Factura.     Invoice. 
Facultad.     Faculty;  capacity. 
Facultad  econ6mico-coactiva.    Power  given  by  law  to  collectors  of  taxes 

and  revenues  to  compel  payment  of  duties. 
Faculatativo.     Optional;   physician. 
Fallido.     Insolvent,  bankrupt. 


GLOSSARY  863 

Fallo.     Judicial  decision,  judgment. 

Falsario.     Forger,  counterfeiter,  perjurer. 

Falsedad.     Falsehood. 

Falsificaci6n.     Counterfeiting,  forgery. 

Falta.     Misdemeanor,  fault. 

Falta  de  aceptaci6n.     Non-acceptance. 

Falta  de  pago.    Non-payment. 

Fama.    Reputation. 

Familia.     Family. 

Familiar.     Familiar,  domestic. 

Farmac^utico.    Pharmacist. 

Fautor.     Countenancer,  abettor,  accomplice. 

Fe.     Faith,  confidence,  credit. 

Fecha.     Date. 

Fehaciente.      Authentic. 

FelonIa.     Felony,  treachery. 

Feria.     Fair. 

Feriado.     Holiday. 

Fiado.    Bonded  debtor. 

FiADOR.      Guarantor. 

Fianza.     Guarantee. 

FiANZA  de  aduana.    Custom-house  bond. 

Fianza  de  la  haz.    Security  for  payment  of  the  judgment  debt. 

Fianza  de  estar  a  derecho.    See  Fianza  de  la  haz. 

Fianza  carcelera,  or  de  cIbcel  seguba.     Bail. 

FiAR.     To  guarantee. 

Fiat.     Consent,  fiat. 

Ficci6n.     Fiction. 

Fideicomisario.  a  devisee  or  legatee  who  is  bound  to  deliver  the  de- 
vise or  legacy  at  some  future  time  to  another;  also  a  legatee  beneficially 
interested  in  property  left  to  another  in  trust;  also  an  executor;  cestui  que 
trust. 

FiDEicoMiso.     Feoffment  to  use. 

FiDUciARio.    The  heir  of  a  legatee  trustee. 

FiEL  ALMOTAC^N.  Functionary  charged  with  keeping  the  standard  of  weights 
and    measures. 

FiELDAD.    Function  of  the  fiel  almotac^n;  custody. 

Fiesta.    Holiday;  feast. 

F^liaci6n.     Descent,  lineage. 

FiLosoFfA.     Philosophy. 

Finca.    Real  estate. 

FiNiQUiTO.     Final  release,  quittance. 

FiRMA.      Signature. 

FiRMA  ENTERA.  The  Complete  signature  comprising  the  Christian  name,  the 
surname  and  the  r-Cibrica  (flourish).  Media  firma  comprises  only  the 
surname  and  the  r-Obrica. 

Fiscal.     State's  attorney;  prosecutor. 

FiscALfA.     Functions  or  office  of  a  fiscal. 

Fiscalizaci6n.     Inspection,   censorship. 


864  GLOSSARY 

Flagr.\nte  delito.    Flagrant  crime  in  process  of  commission. 

Fletador.     Charterer,   freighter. 

Fletamento.     Affreightment. 

Fletante.      Shipowner. 

Fletar.    To  charter  a  vessel. 

Flete.      Freight. 

FoNDO  piADOSO.     Pious  fund. 

FoNDO  de  amortizacion.     Sinking  fund. 

FoNDO  DE  RESERVA.    Rcserve  fund. 

FoNDOs  puBLicos.     PubUc  funds. 

FoNDO,  ARTicuLo  DE.     Editorial  article. 

FoNDO  viTALicio.     Life  annuity. 

FoRAGiDO.     Outlaw  who  is  fleeing  from  justice. 

FoRAL.     Pertaining  to  charters  granted  or  customs  recognized  by  the  king 

of  Spain  for  the  government  of  the  provinces. 
FoRASTERO.    Foreigner  as  between  the  provinces  of  the  same  country. 
FoREXSE.    Referring  to  the  bar  or  legal  profession. 
Forma.    Way  of  proceeding;  Ante  usled  en  debida  forma,  usual  form  included 

in  petitions  to  courts  or  public  officials. 
Formaci6n  de  catjsa.     Process  of  law. 
Formalidades.     Requirements;   red  tape. 

Formalizar.    To  execute  an  act  or  contract  with  due  formalities  of  law. 
Formula.     Fomiula. 

FoRMULARio.     Book  containing  legal  forms. 
Fornicaci6n.      Fornication. 
FoRO.     Forum;  legal  profession,  bar. 
Fortaleza.     Fortress,   fortitude. 
FoRTUiTO,  CASO.    Unforeseen  event;  act  of  God. 
FoRZADO.    Subject  to  or  obtained  through  violence. 
FoRZOSO.     Compulsory. 
Fractura.     Breakage;  fracture. 
Fragante.     See  Flagrante. 
Fraile.    Friar. 
Franqueo.     Postage. 

Franquicia.    Exemption  from  duty,  privilege. 
Fratricida.    Fratricide,  murder  of  a  brother  or  sister. 
Fraude.     Fraud. 
Fructuario.    Usufructuary,  person  who  receives  the  products  and  benefits 

derived  from  a  thing  whose  o^\'nership  is  in  another. 
Frutos.    All  that  a  thing  can  produce. 

Frutos  crviLES.    Rentals  produced  by  a  thing,  interest  on  money,  etc. 
Frutos  industriales.     Products  of  a  thing  obtained  through  labor  and 

industry  apphed  to  it. 
Frutos  naturales.    Spontaneous  products  of  land. 
FuENTE.     Water  spring. 

FtlENTES  DE  DERECHO.      SoUTCeS  of  laW. 

FuERO.  Ancient  compilation  of  laws,  customs  and  usages  of  a  town  or  prov- 
ince; charter  granted  by  the  king  of  Spain  to  towns  or  pro\ances.  Juris- 
diction, e.  g.,  fuero  comercial,  Juero  de  guerra,  jurisdiction  and  law  in 


GLOSSARY  865 

commercial  and  in  military  matters.  Exemption  from  arrest  enjoyed 
by  certain  functionaries. 

FuERO  EXTERNO.    Court  in  which  cases  are  decided  according  to  law. 

FcERO  INTERNO.    Settlement  of  conduct  according  to  conscience. 

FuERZA.  Force,  violence.  Act  of  an  ecclesiastical  court  exceeding  its  juris- 
diction. 

FuERZA  MAYOR.  Force  majeure;  act  originating  in  act  of  man,  as  compared 
with  caso  fortuito,  or  act  of  God. 

FuLLERfA.     Fraud  committed  in  gambling. 

Fxjndaci6n.  Foundation;  endowment  established  for  a  particular  pur- 
pose. 

FuNDO.     Land  property. 

FuNDO  LEGAL.  Land  property  assigned  to  a  town  by  the  law  in  the  Spanish- 
American  colonies. 

FuNcioNARio.     Official,   officer,   functionary. 

FuNERALES.     Funeral  service. 

Fungible.     Fungible. 

FuRTivo.      Clandestine. 

FusiLAMiENTO.     Execution  by  musketry. 

Gabela.     Tax,  heavy  service. 

Gabinete.    Cabinet,  body  of  ministers  of  the  administration. 

Gaceta.  Government  paper  where  laws,  government  decrees  and  judicial 
decisions   are  published. 

Gacetilla.    Personal  news  column  in  a  paper. 

Galeras.    Punishment  of  rowing  on  board  of  galleys. 

Ganancia.     Gain,    profit. 

GanaderIa.     Cattle-raising,  cattle-brand. 

Ganado.     Live  stock. 

Gananciales.     See  Bienes  gananciales. 

Ganancias  y  perdidas.     Profit  and  loss, 

Ganzua.     Skeleton-key. 

GaSan.     Day  laborer;  farm-hand. 

Garante.     Guarantor. 

GARANxfA.     Guaranty. 

GARANTfA  DE  evicci6n.    Warranty  of  title. 

Garantia  de  saneamiento.  Warranty  of  paying  indemnity  in  case  of  evic- 
tion or  of  hidden  defects. 

Garito.     Gambling  house. 

Garrote.  The  screw  or  apparatus  used  in  Spain  for  the  execution  of  crim- 
inals. 

Gastador.     Spendthrift. 

Gasto.     Expenditure. 

Gastos.     Expenses,  disbursements. 

Gemelos.     Twins. 

GENEALoofA.      Genealogy. 

Generaci6n.     Generation. 

General.     General. 

Generales  de  ley.      Questions  generally  asked,  by  provision  uf  the  law, 


866  GLOSSARY 

from  witnesses,  such  as  age,  status,  profession,  relationship  with  the 

parties,  interest  in  the  case,  etc. 
GE^fTE.    People,  folk. 
Geodesia.    Geodesia;  land  surveying. 
GEOLOGfA.     Geology. 
Ge6logo.     Geologist. 
GEOMETRfA.     Geometry. 
Gestaci6n.     Gestation. 

Gestionar.     To  procure,  to  promote,  manage. 
Gesti6n  de  negocios.     Quasi-contract  in  which  a  person  takes  under  his 

care  the  business  of  another  without  power,  and  even  without  the  latter's 

consent. 
Gestor.     Manager. 
Gestor  oficioso.     Manager  who  undertakes  certain  business  in  behalf  of 

another  without  his  power  of  attorney  or  even  his  knowledge. 
GiRADO.     Drawee. 
GiRADOR.    Drawer. 
GiRAR.     To  draw. 

GiRAR  EN  DESCTJBiERTO.    To  Overdraw. 
Glosa.    Explanation  of  a  text  of  law;  auditing  of  an  account. 
GoBERNADOR.     Govemor. 
GoBiERNO.     Government. 
GoLPE.     Blow,  stroke. 

GOLPE   DE  ESTADO.      Coup   d'etat. 

GoLPE  DE  GRACiA.    Finishing  stroke. 

Grado.    Degree;  different  grades  or  instances  of  a  suit. 

Grado  de  parentezco.    Degree  of  kinship. 

Graduaci6n  de  acreedores.     Classification  of  creditors  in  a  bankruptcy, 

according  to  the  rank  of  preference  in  which  they  must  be  paid. 
Granos.     Grains,  cereals. 
Gravamen.    Lien,  encumbrance,  burden. 
Grave.     Grave,  mortal. 
Gremio.     Guild,  fraternity. 
Gruesa  VENTURA.     Bottomry. 

GuANTES.    Extra  pay  in  case  of  sale  of  commercial  enterprise. 
GuARDA.     Guardianship,  custody. 
Guardacostas.     Revenue  cutter. 
Guard ARRAYA.    Boundary  of  a  mining  claim. 
Guardia.     Guard. 
GuERRA.     War. 
Guerrilla.     Guerrilla. 

GufA.    Custom  house  permit  or  certificate  of  the  payment  of  duties. 
GuBERNATivo.     Administrative,  governmental. 

Haber.     Assets,  in  bookkeeping. 
Habil.     Capable. 

Habilitaci6n.     License,  qualification,  equipment. 

Habilitaci6n  de  edad.    Conferring  legal  capacity  on  a  minor  by  means  of 
a  decree. 


GLOSSARY  867 

Habilitar  las  horas.     Judicial  decree  authorizing  proceedings  in  judicial 

matters  before  sunrise  or  after  sunset. 
Habitacion.    Right  to  lodging  in  another's  house  without  paying  rent  there- 
for. 
Habitante.    Resident,  but  not  necessarily  citizen. 
Hacer  fe.    To  suffice  as  a  means  of  evidence. 
Hacienda.     Landed  property,  estate,  fortune. 
Hacienda  publica.     Exchequer,  public  treasury. 
Hacienda  de  beneficio.    Mining  reduction  works  in  Mexico. 
Hallazgo.    Act  of  finding  what  was  lost;  thing  found. 
Hecho.    Fact,  act;  done,  made. 
Hecho  JURfoico.    Any  act  or  event  considered  as  operative  of  a  change  in  the 

legal  relations  of  the  parties  concerned. 
Hbchos  justificativos.    Facts  which  may  show  the  innocence  of  a  person 

accused  of  a  crime. 
Heredero.    Heir. 

Heredero  instituido.    Heir  designated  in  a  last  will. 
Heredero  forzoso.     Heir  to  whom  the  testator  is  obliged  by  law  to  leave 

a  portion  of  his  estate. 
Heredero  hxtraSJo,  or  volxjntario.     Heir  voluntarily  appointed  by  the 

testator,  as  compared  with  the  heredero  forzoso  and  heredero  legitimo. 
Heredero  fiduciario.    Heir-trustee. 
Heredero  fideicomisario.    Heir  to  whom  the  heir-trustee  must  deliver  the 

inheritance. 
Heredero  universal.     Heir  who  succeeds  to  the  whole  property  of  the 

deceased,  or  to  an  aliquot  part  thereof. 
Heredero  particular.    Legatee,  or  successor  to  a  certain  kind  of  property. 
Herbncia.    Inheritance. 
Herbncia  vacantb.    Unclaimed  inheritance. 
Herencia  yacente.     Inheritance  which  has  not  been  received  by  the  heirs 

or  has  not  been  distributed  among  them. 
Herida.    Wound. 
Herido.    Wounded  person. 
Herir.    To  wound,  hurt. 
Hermandad.    Fraternity. 
Hermana.    Sister. 

Hermano.    Brother;  medio  hermano,  stepbrother. 
Hermanos.    Brothers  or  brothers  and  sisters. 
Hermanos  carnales.    Brothers  by  the  same  father  and  mother, 
Hermanos  consanguIneos.     Brothers  by  the  same  father  but  not  by  the 

same  mother. 
Hermanos  uterinos.    Brothers  by  the  same  mother  but  not  by  the  same 

father. 
Hermano  POLfnco  or  cu5Jado.    Brother-in-law. 
Herrar  el  ganado.    To  brand  cattle. 
Hidalgo.    Noble. 
HiDALGufA.    Nobility  by  lineage. 
Hijastro.    Stepchild. 
Hijo.    Son. 


868  GLOSSARY 

Hijo  LEGfTiMO.    Legitimate  child. 

Hijo  ADOPTivo.    Adopted  child. 

Hijo  bastardo,  or  fLEciTiMO.    Bastard. 

Hijo  legitimado.     Child  legitimated  by  the  subsequent  marriage  of  the 

father  and  mother. 
HiJUELA.     Portion  accruing  to  an  heir,  and  the  instrument  in  which  it  is 

described. 
HiPNOTiZAR.    Hypnotize. 
HiPOTECA.    Mortgage. 
HiPOTECA  LEGAL.    Mortgage  imposed  by  law  independently  of  any  agreement 

of  the  persons  concerned. 
HiPOTECA  coNVENCioNAL.    Contractual  mortgage. 
HiPOTECA  NAVAL.    Mortgage  of  a  ship. 
HiPOTECA,  ejecuci6n  de.    Mortgage  foreclosure. 
HiPOTECARio.    Referring  to  a  mortgage. 
HisTORiA.    History. 
HojA  DE  sERVicios.     Certificate  setting  forth  the  rank  and  services  of  a 

military  officer. 
HoJA  voLANTE.    Fly-sheet)  newspaper  extra. 
HoLGAZAN.    Idle,  lazy. 
Hol6grafo.     Document,  principally  a  will,  fully  hand-written  and  signed 

by  its  author;  holographic. 
HoMBRB.    Man. 

HoMBRE  BUENO.    Arbiter,  arbitrator. 
HoMBRE  DE  NEGOCios.    Business  man. 
HoMiciDA.    Murderer. 
HoMiciDio.    Manslaughter. 
HoMiciDio  PRODiTORio.    Treacherous  murder. 
HoNESTO.    Honest. 

Honor.    Honor,  privilege,  chastity  in  women. 
HoNORARio.    Fee. 
Hora.    Hour. 

Horadaci6n.    Perforation,  boring. 
HoRCA.    Gallows. 
Horda.    Horde. 
HoRRO.    Freed  slave. 
Hospicio.    Poor-house;  orphan  asylum. 
Hospital.    Hospital. 
HosTERfA.    Inn. 
HosTiLiDAD.    Hostility. 
Hotel.    Hotel. 
HuELGA.    Strike,  leisure. 
HuELLA.    Track,  footprint,  tread. 
Huerfano.    Orphan. 
HuESPED.    Guest. 
HrrRTO.    Theft,  stealing,  thing  stolen. 

Identificaci6n.    Identification. 
Iglesia.    Church. 


GLOSSARY  869 

Iquala.    Agreement  in  reference  to  professional  services,  or  payment  of  taxes 

in  a  certain  amount  paid  annually,  monthly,  etc. 
iLEcfTiMO.    Illegal,  unlawful. 

Impedimento  matrimonial.    Legal  impediment  to  contract  marriagei. 
Impedimento  impediente.    Impediment  which  hinders  the  performance  of  the 

marriage,  but  does  not  dissolve  it  once  contracted. 
Impedimento  dirimentb.      Impediment   which  hinders  the  performance  of 

marriage  and  dissolves  it  if  contracted. 
Importaci6n.    Importation. 
Impostor.    Impostor. 
Impostura.    False  imputation  of  charge. 
Imposible.    Impossible. 

Impotencia.    Impotence  in  reference  to  matrimonial  duties. 
Imprenta.    Printing,  printing  office,  press. 
Imprescriptible.     Property  or  right  which  is  not  subject  to  the  statute  of 

limitations. 
Imprudencia.    Negligence. 

iMPtJBER.    Male  under  fourteen,  and  female  under  twelve. 
Impuesto.    Tax,  impost. 
Impunidad.    Impunity. 
Imputaci6n.    Imputation. 
Imputabilidad.    Imputableness. 
Inalienable.    Inalienable. 
Inamovible.     Immovable,  term  applied  to  functionaries  appointed  for  life, 

during  good  behavior. 
Inapblable.    Without  appeal. 
Incapacidad.    Incapacity. 
Incendiario.    Incendiary,  guilty  of  arson. 
Incendio  premeditado.    Arson. 
Incertidumbre.    Uncertainty. 
Incbsto.    Incest. 
Incestuosos.    Incestuous. 

Incidencia.    Incidence;  event  which  occurs  in  the  course  of  another. 
Incidente.     Question  arising  between  the  parties  in  litigation  during  the 

course  of  the  principal  action.    Incidental  issue. 
Incitativa.     Writ  from  a  superior  to  a  lower  court  urging  that  justice  be 

administered. 
Inclusa.    Foundling  asylum. 
Inclusive.    Inclusive. 

Incompatibilidad.    Incompatibility,  discordance. 
Incompbtencia.    Lack  of  jurisdiction,  incompetence. 
Incomunicaci6n.    State  of  prisoner  deprived  of  intercourse  with  any  one. 
Inconfbso.    Unconfessed. 

Incongrubncia.    Incongruousness.    Disagreeing. 
Incontinencia.    Incontinence. 
Incontinente.    Incontinent,  unchaste. 
Incontinenti.    Immediately. 
Incorporal.    Incorporeal. 
Inculpar.    To  accuse. 


870  GLOSSARY 

Incdrkir.    To  incur,  become  liable. 

Incursi6n.    Incursion. 

Indagatoria.  First  declaration  of  an  accused  before  the  judge  immediately 
after  his  arrest. 

Indebido.    Undue. 

Indeclinable.  Term  applied  to  the  jurisdiction  of  a  judge  when  it  cannot 
be  waived  or  declined  by  the  parties. 

Indemne.    Undamaged. 

Indemnidad.    Guaranty  of  indemnity. 

Indemnizaci6n.    Indemnity,  reimbursement. 

Indicado.  Referee  in  case  of  need,  for  acceptance  and  payment  of  a  bill  of 
exchange. 

Indiciado.    Accused  whose  responsibility  is  not  fully  proved. 

Indicio.    Circumstantial  evidence. 

iNofGENA.    Indigenous,  native. 

Indigente.    Indigent,  poor. 

Indignidad.    Indignity,  unworthiness. 

Indirectamente.    Indirectly,  tortuously. 

Indisoluble.    Bond  which  cannot  be  dissolved  or  broken. 

Individuo.    Individual. 

Indiviso.    Undivided  property. 

Inducir.    To  induce,  to  persuade. 

Indulgencia.    Leniency  with  criminals. 

Indulto.    Pardon. 

Industria.    Industry. 

Industrial.    Manufacturer;  person  engaged  in  industry. 

Inestimado.  Not  appraised;  dote  inestimada,  dowry  delivered  to  the  husband 
unvaluated. 

Infamador.    Defamer,  libeller. 

Infamia.    Infamy. 

Infancia.    Infancy. 

Infante.    Infant  under  seven  years. 

Infanticidio.    Infanticide. 

Infidencia.     Unfaithfulness. 

Infligir.     To  inflict,  condemn. 

Informaci6n.     Judicial  inquiry. 

Informaci6n  ad  perpetuam.  Preventive  judicial  attestation  by  witnesses 
when  no  action  or  proceeding  has  begun,  made  with  a  view  to  safeguard- 
ing the  interest  and  rights  of  a  person,  when  it  is  to  be  feared  that  the 
witnesses  who  know  the  facts  may  die  or  absent  themselves;  perpetuating 
testimony. 

Informaci6n  testimonial.    Attestation  of  witnesses. 

Informe.    Report,  argument,  pleading. 

Informe  pericial.    Expert  report  produced  as  proof. 

Infracci6n.     Breach,  violation. 

Infragante.     See  Flagrante  delito. 

Ingeniero.     Engineer. 

Ingreso.     Revenue;  entrance. 

InhXbil.    Unable;  dia  inhdbil,  day  in  which  the  courts  do  not  sit. 


GLOSSARY  871 

Inhibir.    To  inhibit  a  court  from  proceeding  further. 

Inhibitoria.  Inhibitory  letter  sent  by  the  judge  who  possesses  jurisdiction 
to  another  who,  in  his  opinion,  has  taken  cognizance  of  a  case  without 
having   jurisdiction. 

Inhxtmacion.     Burial. 

Iniciativa.     Initiative.     Bill  introduced  in  congress. 

Ininteligible.     Unintelligible. 

Iniquidad.      Iniquity. 

Injuria.    Injury;  slander  and  libel;  outrage. 

Injusticia  notoria.    Palpable  injustice;  unjustifiable  wrong  in  judicial  cases. 

iNJfEMORiAL.     Ancient  beyond  memory. 

Inmiscuirse.    To  interfere  in,  to  intermeddle  in  another's  business. 

Inmoral.     Immoral. 

Inmceble.     Real  estate;  immovable  property. 

Inmunidad.     Immunity,  franchise,  privilege. 

Inmune.    Exempt,  immune. 

Inominados.    Contracts  which  lack  special  name  consecrated  by  law. 

Inocente.     Innocent,  guiltless. 

Inoficioso.  Not  in  accordance  with  moral  duty.  Term  used  in  connection 
with  wills  in  which  the  testator  overlooks  legitimate  or  necessary  heirs 
or  fails  to  provide  for  the  support  of  persons  legally  dependent  upon  him. 

Inquilinato.     Leasehold. 

Inquiltno.    Tenant,  lessee. 

Inquisici6n.     Inquest,   inquiry. 

Insacul,aci6n.     Balloting  for  names. 

Inscripci6n.  Record,  registration,  as  pubUc  record  or  registry  for  mort- 
gages,   etc. 

Insolidum.    Joint  and  several  obligation  or  liability. 

Insolvencia.     Insolvency. 

Insolvente.     Insolvent. 

Inspeccion  ocular.  Personal  inspection  by  a  judge  of  a  matter  in  evidence, 
or  place  in  which  event  in  litigation  occurred. 

Instal,aci6n.    Taking  possession  of  an  office. 

Instancia.  Petition.  Grade  of  courts  in  the  hierarchy.  A  instancia  de  parte, 
after  party  petition,  as  compared  with  proceedings  carried  on  ex  officio 
by  the  judge;  primera  instancia,  first  instance;  segunda  instancia,  appeal; 
tercera  instancia,  revision;  absolitcion  de  la  instancia.  See  Absolver  de  la 
instancia. 

Instituci6n.     Institution. 

Instituci6n  de  heredero.    Appointment  of  heir. 

Institoto.     High  school,  institute. 

Instrumental.  Referring  to  public  instruments;  prueba  instrumental,  evi- 
dence consisting  in  public  instruments. 

Instrumento.      Instrument. 

Instrumento  privado.  Instrument  signed  by  private  individuals  without 
notary's  attestation  and  authentication. 

Instrumento  pIiblico.  Instrument  i.ssued  by  an  authority  or  authenticated 
by  a  notary. 

Instrumento  ejecutivo.    Instrument  which  implies  a  confession  of  judgment. 


872  GLOSSARY 

Insultar.    To  insult. 

Insulto.     Insult,  affront. 

Insurgente.     Insurgent,  rebel. 

Insurrecci6n.     Insurrection,  rebellion. 

Intenci6n.    Intention,  design,  purpose. 

Intendente.     Intendant,  subtreasurer  of  the  government. 

Intentar.    To  try,  attempt. 

Intento.     Intent. 

Intentona.     Chimerical  attempt. 

Interdicci6n.  Judicial  declaration  of  incapacity  of  a  person  to  manage  hia 
own  affairs  due  to  insanity.     Interdict. 

Interdicto.    Summary  proceeding  in  claims  referring  to  possession. 

Interdicto  de  adqtjirir  la  posesion.  Summary  proceedings  to  enter  into 
possession  of  property  that  we  did  not  possess  before,  but  is  due  us  by 
evident  title,  as  in  case  of  inheritance. 

Interdicto  de  recobrar  la  posesi6n.  Summary  proceedings  to  recover 
possession  of  realty. 

Interdicto  de  retener  la  posesi6n.  Summary  proceedings  to  retain  pos- 
session which  is  menaced  by  another. 

Interdicto  de  obra  nueva.  Summary  proceedings  enjoining  another  from 
constructing  a  new  building  or  a  part  thereof  which  may  violate  our 
rights. 

Interdicto  de  obra  ruinosa.  Summary  proceedings  to  have  a  dilapidated 
building  destroyed  or  rebuilt  when  it  is  a  menace  to  our  property  or  the 
public  in  general. 

Interes.      Interest. 

Interns  compxiesto.     Compound  interest. 

Interns  legal.  Legal  rate  of  interest,  as  a  rule  fixed  by  the  law  for  cases  in 
which  the  parties  have  not  fixed  any  rate. 

Interns  convencional.    Interest  fixed  by  the  parties  to  a  contract. 

Intereses  moratorios.  Interest  due  on  account  of  default  in  an  ob- 
ligation. 

Interlineal.     Interlineal. 

Interlocutorio.    Judicial  decree  which  decides  an  incidental  issue. 

Interpelacion.    Request  of  payment  or  fulfilment  of  an  obligation. 

Interponer.  To  petition  (principally  in  reference  to  the  taking  of  an  appeal 
or  any  other  remedy). 

Interp6sita  persona.  Intermediary  person  through  whom  one  seeks  to 
do  what  the  law  prohibits  one  from  doing  directly. 

Interpretacion.     Interpretation. 

Interpretaci6n  autentica.     Interpretation  of  law  made  by  the  legislator. 

Interpretaci6n  usual.    Interpretation  of  law  made  by  courts. 

Interpretaci6n  doctrinal.  Interpretation  of  law  made  by  authors  and 
jurists. 

Inti^rprete.  Interpreter;  corredor  interprete  de  brigues,  ship  broker  inter- 
preter. 

Interrogatorio.    List  of  questions  asked  of  a  witness. 

Interrogatorio  de  repreguntas.  List  of  questions  for  cross-examining 
a    witness. 


GLOSSARY  873 

Interrupci6n.  Interruption  (refers  to  the  period  of  the  statute  of  limita- 
tions.) 

Intervaix)s  lucidos.  Periods  of  time  during  which  an  insane  person  shows 
good  judgment  and  can  make  a  will.    Lucid  intervals. 

Intervenciox.  Intervention;  aceptacion  por  intervenciOn,  acceptance  for 
honor;  pago  por  intervencidn,  payment  for  honor. 

Inter  vivos.  Legal  acts  consummated  during  the  life  of  the  parties,  such 
as   gifts,    etc. 

Intrusion.     Intrusion,  invasion,  trespassing. 

Intruso.     Intruder. 

Inundacion.     Inundation,  flood. 

Inutil.     Useless. 

Inutilizacion.     Mutilation. 

Inv^alidar.    To  invalidate,  nuUify. 

Invalido.     Void.     Invalid. 

Invasion.     Invasion. 

In\'enci6n.    Finding  of  a  thing  which  has  no  owner.    Invention. 

Inventario.    Statement  of  assets  and  liabilities. 

Inviolabilidad.    Privilege  of  not  being  subject  to  arrest.    See  Fttero. 

Involuntario.     Involuntary. 

Ira.     Ire,  anger,  fury. 

Irrito.      Void. 

Isla.     Island. 

Item.     Also. 

Jactancia.  Action  to  quiet  title,  or  against  persons  who  boast  of  having 
an  action  against  the  plaintiff.  If  the  boasting  party  does  not  bring 
his  professed  action  within  a  period  provided  by  the  judge,  he  is  enjoined 
to  keep  silent  and  forego  the  action. 

JoRNAL.     Day-work;  day-wage. 

JoRNALERo.     Day-worker. 

JoYAS.     Jewels,  valuable  things. 

Jubilaci6n.  Retirement  of  an  officer  or  employee  of  the  government  on 
a  pension  or  reduced  pay  on  arrival  at  a  certain  age. 

JuDicATURA.    Judicature;  dignity  of  a  judge. 

Judicial.     Judicial. 

JuEGO.      Gambling. 

JuEz.     Judge. 

JuEz  TERCERO  EN  DISCORD lA.    Umpire. 

JuEZ  DE  LETRAS.  Judge  who,  being  a  trained  lawyer,  does  not  have  to  con- 
sult with  a  legal  adviser.    Judge  of  first  instance. 

JuEZ  INSTRUCTOR.    Examining  magistrate  in  criminal  prosecutions. 

JuEZ  DE  PRiMERA  iNSTANciA.    Judgc  of  first  instance. 

JuEZ  DE  Lo  CIVIL.    Judgo  who  takcs  cognizance  of  civil  matters  only. 

JuEZ  DE  LO  CRIMINAL.    Judge  of  Criminal  cases. 

JuEZ  MiXTO.    Judge  with  civil  and  criminal  jurisdiction. 

JuEZ  INFERIOR.     Inferior  judge. 

JuEZ  DE  PAZ.    JiLstice  of  the  peace. 

JuEZ  SUPERIOR.     Superior  judge. 


874  GLOSSAKY 

Jtjez  a  quo.    Judge  from  whose  decision  an  appeal  is  taken. 

JuEZ  AD  QUEM.    Judgc  to  whom  an  appeal  is  taken. 

Juicio.    Proceedings;  form  of  action;  suit. 

Juicio  DE  conciliaci6n.    Proceedings  to  avoid  litigation. 

Juicio  arbitral.    Proceedings  before  an  arbiter. 

Juicio  escrito.    Proceedings  in  which  petitions,  as  a  rule,  must  be  made  in' 

writing. 
Juicio  verbal.    Proceedings  in  which  the  parties  make  their  petitions  orally 

and  a  memorandum  is  taken  by  the  clerk  of  all  the  evidence,  pleas  and 

judgment. 
Juicio  contencioso.    Proceedings  between  contesting  litigants,  as  compared 

with  proceedings  in  voluntary  jurisdiction. 
Juicio  declarativo.    Litigation  in  which  the  judge  has  to  declare  which  of 

the  parties  is  right  in  his  claim. 
Juicio  universal.     Proceedings  in  which  the  whole  estate  of  a  person  is 

involved,  e.  g.,  bankruptcy  and  inheritance  proceedings. 
Juicio  petitorio.    Action  in  which  the  dominion  or  ownership  of  a  thing  is 

contested. 
Juicio  posesorio.    Action  involving  the  mere  possession,  without  reference  to 

the  ownership  of  the  thing  possessed. 
Juicio  de  mayor  cuantIa.    Action  where  the  complaint  demands  property 

value  or  damages  in  excess  of  a  certain  sum  fixed  by  the  law. 
Juicio  de  menor  cuantIa.    Action  claiming  something  whose  value  does  not 

exceed  such  fixed  sum. 
Juicio  ordinario,  or  plenario.    Proceedings  in  which  all  the  requisites  of  law 

are  observed,  a  longer  period  of  time  being  given  the  parties  to  answer  the 

complaint  and  counterclaim,  to  produce  evidence  and  to  prepare  argu- 
ments. 
Juicio  sumario.    Summary  proceedings,  as  compared  with  juicio  plenario. 
Juicio  ejecutivo.     Proceedings  based  on  an  instrument  which  imports  a 

confession  of  judgment,   and  in  which  an  attachment  of  defendant's 

property  is  made  before  summons  is  served  upon  him. 
Juicio  de  concurso  de  acreedores.    Proceedings  on  insolvency  of  a  non- 
merchant. 
Juicio  de  quiebra.    Proceedings  on  bankruptcy  of  a  merchant. 
Juicio  de  apeo.    See  Apeo  y  deslinde. 
Juicio  en  REBELofA.    Proceedings  carried  on  in  the  absence  of  the  defendant 

when  he  fails  to  appear  after  summons  served  upon  him. 
Junta  de  acreedores.      Meeting  of  creditors  in  proceedings  on  bankruptcy 

or  suspension  of  payments. 
Junta  de  comercio.    Board  of  trade. 
Junta  de  gobierno.    Executive  committee. 
Junta  de  sanidad.    Board  of  health. 
JuRADO.    Jury. 
Jurame;nto.    Oath. 
Juramento  decisorio.    Oath  taken  by  deponent  when  the  party  seeking  his 

deposition  admits  his  testimony  as  incontrovertible  evidence. 
Juramento  estimatorio.     Oath  taken  by  plaintiff  at  the  request  of  the 

judge,  declaring  the  value  of  the  thing  he  demands  when  no  other  evi- 


GLOSSARY  875 

dence  can  be  had;  the  evidential  force  of  the  deposition  is  left  to  the  dis- 
cretion of  the  judge. 

JuRAMENio  supLETORio.  Oath  taken  by  a  party  at  the  request  of  the  judge 
when  the  deposition  is  to  complement  the  evidence  adduced. 

JuRfmco.  Juridical,  adjective  applied  to  acts  in  accordance  with  the  law,  or 
considered  as  affecting  legal  relations. 

JuRiscoNSULTO.    Juriscousult,  lawyer. 

Jurisdicci6n.    Jurisdiction. 

Jurisdicci6n  contenciosa.    Contentious  jurisdiction. 

Jurisdicci6n  conthncioso-administrativa.  Jurisdiction  in  cases  of  con- 
iencioso  administrativo.    See  this  word. 

Jurisdicci6n  voluntaria.  Jurisdiction  of  cases  in  which  there  is  no  con- 
tested issue  and  the  functions  of  the  judge  are  confined  to  authenticating 
or  clothing  with  solemnity  certain  acts. 

JtrRisPRUDENCiA.  Jurisprudence.  Interpretation  of  the  law  made  by  judges 
and  courts  in  uniform  decisions. 

JuRiSTA.    Jurist. 

JusTiciA.    Justice. 

JusTiPRECio.    Expert  valuation. 

JusTO.    What  is  just  and  according  to  law. 

JuzGADO.    Court  of  first  instance. 

JuzGAR.    To  adjudge. 

Labor.    Labor,  toil. 

Laboreo.    Work  done  in  mines  to  discover  and  extract  metals. 

Labrador.    Farmer,  husbandman  or  woman. 

Labranza.    Agriculture. 

Ladr6n.    Thief,  robber. 

Ladronicio.    Larceny,  theft,  robbery. 

Lanzamiento.    Ejectment  by  judicial  action. 

Lapso.    Lapse  of  time. 

Lasto.    Voucher,  receipt. 

Lato.    Broad,  as  compared  with  strict. 

Laudo.    Decision  given  by  arbitrators. 

Laudo  omologado.    Decision  of  arbitrators  accepted  by  the  parties  or  against 

which  no  appeal  is  taken. 
Legado.    Bequest,  legacy. 
Legado  ap6stolico.    Papal  legate. 
Legal.    Legal,  lawful. 

Legalizar.    To  legalize,  authenticate  a  document. 
Lbgar.    To  bequeath;  to  depute. 
Lkgatario.    Legatee. 
Legislator.    Legislator,  lawmaker. 
Legislar.    To  legislate. 
Legi.slativo.    Legislative. 
Legislatura.    Legislature. 
Legista.    Lawyer. 
LegItima.    That  part  of  the  paternal  or  maternal  estate  of  which  the  testator 

cannot  disinherit  his  children  without  legal  cause. 


876  GLOSSARY 

Legitimaci6n.     Legitimation;  act  by  means  of  which  a  son  or  a  daughter 

born  illegitimate  is  assimilated  to  legitimate  children. 
Legitimo.    Legitimate. 
Lego.    Layman. 

Legua.    League,  measure  of  land. 
Leguleyo.    Petty  lawyer. 
Lesa  majestad.    Lese  majeste  or  high  treason. 
Lesi6n.     Personal  injury;  hurt;  damage  caused  to  one  of  the  parties  to  a 

contract,  principally  in  the  price  of  the  thing  sold. 
Letra  abierta.    Letter  of  credit  for  an  unlimited  amount. 
Letra  de  cambio.    Bill  of  exchange. 

Letra  perjudicada.    Bill  of  exchange  not  protested  in  proper  time  and  form. 
Letrado.    Lawyer. 

Leva.    Levy;  enrolling  of  men  for  military  service. 
Levantamiento.    Revolution,  revolt.    Withdrawal. 
Ley.    Statute,  act,  law. 
Libelo.    Libel,  petition,  complaint. 
Liberaci6n.    Discharge. 
Liberalidad.    Donation,  liberality. 
Libert  AD.    Liberty. 
LiBRADO.    Drawee. 
LiBRADOR.    Drawer. 

LiBRANZA.    Draft;  bill  of  exchange  payable  at  the  place  where  it  was  drawn. 
LiBROs  DE  coMERCio.    Commercial  books  of  account. 
LiBRO  DiARio.    Journal. 
LiBRO  MAYOR.    Ledger. 
LiBRO  TALONARio.    Stub  book. 
LiBRO  DE  CAJA.    Cash  book. 
LiBRO  DE  iNVBNTARios.    Statements  book. 
LiCBNCiA.    Permission. 

Licitaci6n.    Auction  sale  of  a  thing  which  belongs  to  various  owners. 
LiciTADOR.    Bidder  at  an  auction. 
LfciTO.    Licit,  lawful. 
LiNAjE.    Lineage. 
LfNEA.    Lineage. 

Liquidaci6n.    Liquidation;  winding  up. 
LfQuiDO.    Liquid. 
LiTiGANTE.    Litigant. 
LiTiGio.    Lawsuit,  litigation,  contest. 
Litis.    Lawsuit,  litigation. 
LiTiscoNSORTE.    Associate  in  a  lawsuit. 
Litiscontestaci6n.    Answer  to  a  judicial  demand. 
LiTisPBNDENCiA.    Lds  pendens. 

Locaci6n  conducci6n.    Lease,  hiring  of  thing  or  services. 
Local.    Local. 

Loco.    Lunatic,  insane  person. 
LoGRO.    Interest,  usury,  gain. 
Lonja.    Exchange. 
LoTE.    Lot,  plot  or  allotment  of  land. 


GLOSSARY  877 

LoTERfA.    Lottery. 

LtJcidos,  intervalos.    See  Intervales  lUcidos. 

LucRATivo.    Profitable,  lucrative. 

LucRO.    Lucre,  profit. 

LuGARTENiENTE.    Lieutenant,  substitute. 

LtJJO.    Luxury. 

LujURiA.    Lust,  lubricity. 

LusTRO.    Lustrum. 

LuTO.    Mourning;  mourning  dress. 

Madrastra.    Stepmother. 

Mad  RE.    Mother. 

Madrina.    Godmother. 

Maestro.    Master,  teacher. 

Maestro  dh   obras.     Master  mason  who  supervises  the  construction  of 

buildings  under  the  direction  of  an  architect  and  may  himself  plan  minor 

buildings  or  houses. 
Magistrado.    Magistrate,  judge. 
Magistrado  ponente.    Justice  who  prepares  the  case  for  decision  and  drafts 

it. 
Mala  fe.    Bad  faith. 
Mal:evolo.    Malevolent. 
Malhechor.    Criminal. 
Malicia.    Malice. 

Malversaci6n.    Malversation,  maladministration. 
Manantial.    Spring  water. 
Manceba.    Mistress. 
Mancebo.     Shop-boy. 

Mancomttnadamente.    Jointly  and  severally. 
Mancomunidad.    Joint  and  several  obligation. 
Mancomtjnidad  AcnvA.    Joint  and  several  right  or  credit. 
Mancomunidad  pasiva.    Joint  and  several  obligation. 
Manda.    Bequest. 
Mandamiento.    Judicial  mandate. 
Mandato.    Agency. 

Manifestaci6n.    Declaration,  statement. 
Mano  mxierta.    Mortmain. 
Mantener.    To  maintain,  support,  defend. 
Manuscrito.    Manuscript. 

Mar.    Sea;  alta  mar,  high  sea;  haja  mar,  ebb-tide. 
Marca  DE  coMERCio.    Trade-mark  (seller's). 
Marca  de  fabrica.    Trade-mark  (manufacturer's). 
Marido.    Husband. 
Marina.    Marine,  nautical  art. 
Marina  mercante.    Merchant  craft  or  marine. 
Marina  de  guerra.    Navy. 
Marinero.    Seaman;  seaworthy. 
Masa.     Joint  interest  of  several  persons,  e.  g.,  in  inheritances  and  hank- 

rupties;  the  entire  estate. 


878  GLOSSARY 

Material  rod  ante.    Rolling  stock. 
Materiales.    Materials  for  construction. 
Materia  prima.    Raw  material. 
Matricula  de  comercio.    Register  of  merchants. 
Matrimonio.    Marriage. 

Matrimonio  putativo.     Void  marriage  on  account  of  an  impediment  un- 
known to  the  consorts. 
Matriz.    The  original  of  an  instrument  or  document  in  the  office  of  a  notary. 

Stub  of  a  stub  book. 
Mayor  cuantia.    Term  applied  to  actions  whose  amount  exceeds  a  certain 

limit  fixed  by  law. 
Mayor  de  edad.    Of  full  age. 
Mayorazgo.     Right  of  primogeniture,  first-born  son  entitled  to  an  entailed 

estate.    Entailed  estate. 
MAYORfA.    Majority.    Full  age. 

Media  firma.    Signature  consisting  of  the  surname  and  flourish  only. 
Medianeria.    Right  of  co-owners  of  a  partition  wall. 
Medicamento.    Medicament. 
Medicina.    Medicine,  physic. 
Medico.    Physician. 
Medida.    Measure. 
Medidor.    Measurer,  surveyer. 
Mediero.    Copartner  in  a  farm  or  cattle  ranch. 
MediodIa.    Noon.    South. 
Medio  de  PRUEBA.    Means  of  evidence. 
Mejora.     Improvements  to  property.     Advantage  or  portion  of  the  estate 

of  a  testator  reserved  for  a  child  or  a  descendant  besides  his  legitima 

(see  this  word). 
Mejora  inoficiosa.    Portion  left  to  an  heir  to  the  detriment  of  other  heirs' 

rights. 
Mejorar  I.A  APELACioN.    To  appear  in  a  superior  court  ratifying  the  appeal 

taken  from  a  decision,  and  showing  the  legal  grounds  for  the  remedy. 
Mejorar  el  embargo.    Extension  of  an  attachment  to  other  property  of  the 

debtor  when  the  first  levy  is  not  sufficient  to  cover  the  demand. 
Mellizos.    Twins. 
Memorial.    Petition. 
Mendicidad.    Mendicity. 
Mendigo.    Beggar. 
Menor.    Minor. 
Menor  cUANTfA.    Term  appUed  to  actions  for  an  amount  less  than  a  certain 

limit  fixed  by  law. 
Menoridad.    Minor  age;  minority. 
Menoscabo.     Damage.     Lawful  gain  which  was  prevented  by  another's 

fault. 
Mentecato.    Insane  person. 
Mercader.    Merchant. 
Mercaderia.    Merchandise. 
Mercado.    Commercial  market,  exchange. 
Mes.    Month. 


GLOSSARY  879 

Metro.    Meter. 

Mezcla.    Mixture. 

MiEDO.    Fear. 

MiLiciA.    Art  of  war.    Militia. 

MiLiciANo.    Military,  soldier. 

MiNA.    Mine. 

Mineral.    Mineral;  ore.    Mining  town. 

MiNERALOGiA.    Mineralogy. 

MiNERfA.    Mining  science. 

MfNiMo.    Minimum. 

MiNiSTERio.    Ministry;  each  department  of  the  government. 

MiNiSTERio  DE  FOMENTO.    Department  of  promotion  or  development. 

MiNisTERio  DE  HACIENDA.    Treasury  department. 

MiNiSTERio  PUBLICO.     Department  of  the  public  prosecutor,  and  attorney 

general. 
MiNisTRo  DEL  TRIBUNAL.    Any  of  the  justices  of  a  high  court. 
MiNUTA.    First  draft,  memorandum,  minute. 
MiNUTARio.    Minute-book. 
MisERiA.    Misery. 
Misi6n.    Mission. 
MisioNERO.    Missionary. 
Mono.    Way. 
Moj6n.    Landmark. 
Moling.    Mill. 
Moneda.    Coins. 
MoNEDA  coRRiENTE.    Currency. 
MoNEDA  soNANTE.    Hard  money. 
MoNEDERO  FALSo.    Counterfeiter. 
MoNiciON.    Warning. 
MoNjA.    Nim. 
MoNjE.    Monk. 
MoNOPOLio.    Monopoly. 
MoNSTRuo.    Monster. 
MoNTE.    Mountain. 

Monte  pfo.    Gratuity  fund  for  widows  and  orphans.    Pawnshop. 
MoNTE  DE  PIEDAD.    Pawushop  Controlled  by  the  state. 
Mora.    Delay,  default. 
MoRADA.    Dwelling,  house. 

MoRATORiA  or  MORATORio.    Extension  of  the  period  for  paying  debts. 
MoRDAZA.    Gag;  muzzle. 
MoRiBUNDO.    Dying  person. 

MosTRENCo.    Masterless;  thing  which  has  no  known  owner. 
MoTfN.    Mutiny,  rebeUion. 
MucHACHO.    Boy,  lad. 
MuDO.    Dumb. 
MuELLAGE.    Wharfage. 
MuELLE.    Pier,  wharf;  tender;  licentious. 
MuERTE.    Death. 
MuESTRA.    Sample. 


880  GLOSSARY 

MujER.    Woman. 

MujEK  CASADA.    Married  woman. 

MuLTA.    Fine. 

Munici6n.  Ammunition;  dc  municion,  supplied  by  the  government,  said  with 
reference  to  food,  clothing  or  arms. 

MtJNicioNES  DK  BOCA.    Provisions,  victuals. 

MuNicioNES  DE  GUERRA.    War  storcs. 

Municipal.    Municipal. 

MuNfciPE.    Alderman. 

MuNiciPio.    MunicipaUty. 

MuRALLA.    Rampart,  wall. 

MuRO.    Wall. 

MuRO  MEDiANERO.    See  Medianeria. 

Mutilaci6n.    Mutilation. 

MuTUANTE.    Lender  of  a  fungible  thing,  e.  g.,  money,  grain,  etc. 

MuTUATARio.    Borrower  of  a  fungible  thing. 

MuTUo.  Loan  of  fungible  things,  giving  the  borrower  the  right  to  dispose 
thereof. 

MuTuo  DiSENSo.  Mutual  dissent;  inadequate  expression  applied  to  the  agree- 
ment of  the  parties  to  rescind  a  contract. 

Nacimiento.    Birth. 

Naci6n.    Nation. 

Nacionalidad.    Nationality. 

Nato.    Term  used  to  designate  a  function  which  is  the  legal  consequence  of 

a  position. 
Natural.    Natural.    Native. 
Naturalizaci6n.    NaturaUzation. 
Naufragio.    Shipwreck. 
Navegaci6n.    Navigation. 
Naviero.     Ship  agent,  person  charged  with  securing  freight,  passage,  and 

provisions  for  a  ship  and  to  represent  the  shipowner  in  port. 
Nave.    Ship. 

Negar.    To  deny;  to  refute  an  accusation. 
Negligencia.    Negligence. 
Negociar.    To  negotiate,  to  trade. 
Neutralidad.    Neutrality. 
Nieto.    Grandson. 
NiSez.    Childhood. 
Nino.    Child. 
Nombre.    Name. 
NoMBRAMiENTO.    Appointment. 
NoN  BIS  IN  IDEM.    Latin  phrase  expressing  the  principle  that  no  person  can  be 

accused  or  tried  more  than  once  for  the  same  crime. 
Norma.    Rule,  standard. 
Noi'A.    Note;  annotation. 
NoTAR^o.    Notary. 
Notificaci6n.    Legal  notice. 
Notificaci6n  en  estrados.     Legal  notice  served  on  a  party  in  default  by 


GLOSSARY  881 

reading  the  judicial  order  in  the  court  room  before  witnesses  who  certify 

thereto. 
NoTORiEDAD.    Evidence  of  a  fact  by  its  notoriety. 
Novaci6n.    Novation. 
Novel.    Inexpert. 
NuLiD.u).    NuUity.    Appeal  based  on  the  ground  that  the  judgment  violates 

certain  principles  of  law. 
NuLO.    InvaUd,  void. 
NuNciATURA.    Office  or  house  of  a  nuncio. 
Nuncio.    Papal  legate,  nuncio. 
NuNcuPATivo.    Oral,  nuncupative  will. 
NuPciAL.    Nuptial. 
NrrpciAS.    Nuptials,  wedding. 

Obediencia.    Obedience. 

Objeto.    Object,  purpose,  subject-matter. 

Obligaci6n.    Obligation. 

Obligacion  de  dar.    Obligation  of  delivering  a  thing. 

Obligaci6n  de  hacer.    Obligation  of  rendering  a  service. 

0bligaci6n  pura.    Unconditional  obligation. 

0bligaci6n  alternativa.    Alternative  obligation. 

0bligaci6n  divisible.     Obhgation  which  can  be  performed  in  successive 

parts. 
0bligaci6n  solid  aria.    Joint  and  several  obligation. 
Obligado.    Obliged,  obUgor. 
Obrero.    Workman. 
Occiso.    Murdered,  kUled. 
Ociosidad.    Idleness. 
0cultaci6n.    Concealment. 
OcuLTAR.    To  conceal,  secrete. 
0cupaci6n.    Occupation,  pursuit. 
OcuRRiR.    To  happen,  to  apply. 
OcuRSo.    Petition  (in  Mexico). 
Oeste.    West. 

Ofen*der.    To  offend,  harm,  injure. 
Ofexsa.    Offense,  grievance. 
Ofensor.    Offender. 
Oferta.    Offer,  tender. 
Oficial.    Official,  artificer,  officer. 
Oficial  mayor.    Chief  clerk. 
OFiciALfA.    Clerkship  in  a  public  office. 
Oficina  de  correos.    Post  office. 
Oficina  de  patentes.    Patent  office. 
Oficio.     Occupation,   function;  craft;  de  oficio,   ex  officio.     Official  letter. 

Notary's  office. 
OiDOR.    Judge  of  a  supreme  court. 

Ol6grafo.    Holographic,  document  wholly  written  by  its  author. 
Omisi6n.    Omission. 
Oneroso.    Onerous,  as  distinguished  from  gratuitous. 


S82  GLOSSARY 

Opci6n.    Option. 

Opini6n.    Opinion. 

Oposici6n.    Opposition;  conflict.    Competition  for  a  professorship. 

Opresivo.    Oppressive. 

Ordenador.    Person  on  whose  order  a  bill  of  exchange  is  drawn. 

Orden.    Order. 

ORDENAJnENTO.  Orders  emanating  from  the  king  of  Spain,  and  diflfering 
from  cedula  only  in  form  and  in  mode  of  promulgation. 

Ordenanza.    Ordinance;  military  law.    Soldier  in  attendance  on  officer. 

Ordinaria.  Term  applied  to  the  ordinary  jurisdiction  of  a  judge,  as  compared 
with  the  special  jurisdiction  for  certain  cases  and  persons. 

Original.  The  first  copy  of  an  instrument,  or  the  original  instrument  in  the 
protocolo  of  a  notary. 

Org.    Gold. 

Ostracismo.    Ostracism,  exile. 

Otorgamiento.    Execution  of  an  instrument. 

Otorgar.    To  declare,  grant,  issue. 

Otorgante.    Grantor;  party  who  signs  and  executes  an  instrument. 

Otrosi.  "Moreover."  Technical  word  used  to  introduce  a  paragraph  con- 
taining matters  different  from  or  complementing  the  principal  object  of 
the  petition  or  document. 

Pacto.    Agreement,  pact. 

Padrastro.    Stepfather. 

Padre.    Father. 

Padrino.    Godfather. 

Padr6n.    Census  or  tax-list. 

Paga.    Pajonent. 

Pagare.    Promissory  note. 

Pagare  a  la  orden.    Note  to  order. 

Pago.    Payment. 

Pago  por  intervenci6n.    Pajinent  for  honor. 

Pago.s  en  abonos.    Payment  in  installments. 

Paniaguado.    Protege;  servant. 

Papel  de  comercio.    Securities. 

Papel  moneda.    Paper-money,  fiat  money. 

Papel  sellado.    Stamped  paper. 

Parafernales  (bienes)  .    Paraphernalia.    Property  which  belong  exclusively 

to  the  wife. 
Parentesco.    Relationship. 
Parentesco  espiritual.     Tie  contracted  through  baptism  or  confirmation 

between  the  godfather  or  godmother   and   the  child,  on  the  one  hand, 

and  his  parents  on  the  other  hand,  so  that  there  can  be  no  marriage 

between  them. 
Paridad.    Parity. 

Parricida.    Parricide,  murderer  of  his  father  or  mother. 
Parricidio.    Parricide.    Parricide,  murder  of  father  or  mother. 
Parroquia.    Parish.    Good  will. 
Parroquiano.    Customer. 


GLOSSARY  883 

Parroco.    Rector  or  incumbent  of  a  parish. 

Parte.    Part.    Share.    Party. 

Partera.    Midwife. 

Partero.    Obstetrician. 

Partici6n.    Partition.    Division. 

Partici6n  de  herencia.    Division  or  distribution  of  an  inheritance. 

Participar.    To  give  notice.    To  participate  or  share. 

Participe.    Sharing,  participant. 

Partida.     Entry  made  in  the  parochial  or  in  the  civil  register's  books  in 

regard  to  a  birth,  marriage  or  death  of  a  person. 
Parto.    Childbirth,  parturition. 
Pasajero.    Passenger. 
Pasaporte.    Passport. 
Pase.    Permit;  pass-ticket,  free  pass. 
Pasivo.    Passive.    Liabihties. 
Pasquin.    Pasquinade,  lampoon. 
Pastar.    To  pasture,  to  lead  cattle  to  graze. 
Pasto.    Pasture,  grazing. 
Pastor.    Shepherd. 
Patente  de  coRrERcio.    Trade  hcense. 
Patents  de  invenci6n.    Patent. 
Patente  de  corso.    Letter  of  marque. 
Paternidad.    Fatherhood,  paternity. 
Patibulo.    Gibbet,  gallows. 
PATOLOGiA..    Pathology. 
Patria.    Native  country. 
Patria  potestad.    Parental  power. 
Patrimonio.    Patrimony,  possessions. 
Patron  or  patrono.    Master,  employer,  protector. 
Patronato.    Patronage.    Right  of  presentation  to  benefice  or  office. 
Paz.    Peace. 
Peaje.    Toll. 

Pectjario.    Pertaining  to  cattle. 

Peculado.    Peculation,  embezzlement  of  money  from  the  public  treasury. 
Peculio.    Estate  or  property  possessed  by  a  child,  independent  from  that  of 

his  father. 
Pedimento.    Petition;  a  ■pedirmnlo,  on  petition,  at  the  instance. 
Pedir.    To  ask,  petition. 

Pegujal.    Small  jiortion  of  land  or  cattle.    Small  belongings  or  holdings. 
Pena.    Punishment,  penalty. 
Pena  capital.    Capital  punishment. 
Pena  corporal.    Punishment  inflicted  in  respect  to  the  body  of  the  culprit,  as 

prison,  death,  etc. 
Pena  pecuniaria.    Fine. 
Penal.    Penal;  cldusula  penal,  penalty  clause. 
Pendencia.    Quarrel,  contention. 
PENiTENCiARfA.    Penitentiary,  reformatory. 
Pensamiento.    Thought,  mind. 
Pensi6n.    Rent  imposed  on  landed  estate.    Pension. 


884  GLOSSARY 

Pensionista.    Person  entitled  to  a  pension. 

P^RDiDA.    Loss,  damage. 

Perd6n.    Pardon,  forgiveness. 

Perentorio.    Peremptory,  decisive. 

Peri6dico.    Periodical;  newspaper. 

Periodismo.    Journalism. 

Perito.    Expert. 

Perjuicio.  Prejudice,  injury.  Lawful  gain  which  was  prevented  by  another's 
fault. 

Perjuicio  (sin).    Without  prejudice. 

Perjurio.    Perjury. 

Perjttro.    Perjurer. 

Permuta.    Exchange,  barter. 

Persona.    Person. 

Persona  jurIdica,  or  persona  moral.  Juridical  or  juristic  person; 
lega  entity;  partnerships,  corporations  and  institutions  of  public  in- 
erest. 

Personal.    Personal;  personnel. 

Personarse  en  juicio.    To  appear  by  attorney  in  court. 

Personero.    Solicitor,  attorney. 

PERSoNERf  A.  Capacity  of  a  person  as  representative  of  another  or  his  successor 
in  rights. 

Pertenencia.  Ownership.  Appurtenance.  In  Mexico  a  unit  of  mining 
property  which  consists  in  a  solid  of  indefinite  depth  limited  on  the 
ground  by  four  vertical  planes  corresponding  to  the  projection  of  a  hori- 
zontal square  measuring  100  meters  on  each  side. 

Pertinente.    Pertinent. 

Pesca.    Fishing,  fishery. 

Peso.  Weight.  Silver  coin  which  is  the  monetary  unit  of  various  Spanish- 
American  repubUcs. 

Pesquisa.    Inquiry. 

Petici6n.    Petition,  application. 

Petitorio.  Lawsuit  to  recover  ownership,  as  compared  with  posesorio,  in 
which  the  demand  is  confined  to  the  mere  possession  of  a  thing. 

PicoTA.    Pillory. 

PiEZA  DE  AUTOS.    Papers  bound  together  belonging  to  a  certain  lawsuit. 

Pilot aje.    Pilotage. 

PiLOTO.    Pilot,  first  mate. 

PiLOTO  PRACTico.    Coast  pUot. 

PiRATA.    Pirate. 

PiRATERiA.    Piracy. 

Plagiario.    Plagiarist.    Kidnapper. 

Plagio.    Plagiarism.    Kidnapping. 

Plano.  Plane;  plain;  proceder  de  piano,  to  proceed  without  previous  formal- 
ities or  delay;  confesar  de  piano,  to  make  a  full  admission  of  facts. 

Plantaci6n.    Plantation,  planting. 

PlantIo.    Plantation. 

Platero.    Silversmith,  and  also  goldsmith. 

Plata.    Shore;  beach. 


GLOSSARY  885 

Plaza.     Square;  market  place;  private  soldier;  sentar  plaza,  to  enlLst  as  a 

soldier. 
Plaza  de  armas.    Parade  ground,  main  square  of  a  town. 
Plazo.    Term,  day  of  payment;  a  plazo,  on  credit. 
Plebiscito.    Plebiscite. 
Pleito.    Lawsuit. 
Plenario.     Lawsuit  in  which  the  right   of   the  parties  to  own  or  possess  a 

thing  is  fully  discussed,  as  compared  with  sumario  or  summary  action. 

Second  part  of  a  criminal  suit  in  which  the  evidence  for  and  against  the 

accused  is  produced. 
Pluralidad  absoluta.    Majority. 
Pluralidad  relativa.    Plurality. 

Pluspetici6n.    Act  of  plaintiff  demanding  more  than  is  due. 
PoBRE.    Poor. 
Poder.    Power  of  attorney. 
PoDER  EjECUTivo.    Executive  power. 
Poder  judicial.    Judiciary. 
Poder  legislativo.    Legislative  power. 
PoDERDANTE.    Grantor  of  a  power  of  attorney. 
PoLicfA.    Police. 

Policitaci6n.    Offer  or  promise,  policitation. 
PoLiGAMfA.    Polygamy. 
PoLfxiCA.    The  art  of  government.    Politics. 
P6liza.    Policy. 

PoLizA  DE  fletamento.    Charter  party. 
Porci6n.    Portion,  share. 
PoRDiosERO.    Beggar. 
Pormenor.    Detail;  retail. 
PoRTADOR.    Bearer;  holder. 

PORTAZGO.     Toll. 

PoRTEADOR.    Carrier. 

Porte.    Postage. 

Posada.    Inn. 

Posad  ERG.    Inn-keeper. 

PosEEDOR.    Possessor. 

P6sesi6n.    Possession. 

PosESORio.    Referring  to  possession. 

PosiciONES.  Propositions  set  forth  by  one  of  the  parties  to  a  suit  in  order  that 
the  other  party  may  admit  or  deny  the  facts  therein  mentioned. 

P6siTo.  Granary  in  which  the  supply  of  grain  for  a  town  is  kept  in  order  to 
help  the  agriculturists  in  case  of  need  and  to  supply  the  people  of  the 
community.  It  was  a  credit  as  well  as  beneficent  institution  for  the  wel- 
fare of  the  people  of  the  town  in  Spain  and  the  Spanish  domains. 

Postal.    Postal;  postal  card. 

PosTOR.    Bidder. 

Postulaci6n.    Petition;  postulation. 

P6sTUMO.    Posthumous. 

Postura.    Offer  or  bid  at  an  auction. 

PoTESTAD.    Power,  jurisdiction. 


886  GLOSSARY 

PoTESTAD  MARITAL.  Power  granted  by  the  law  to  the  husband  over  his  wife 
and  her  property. 

PoTESTAD  PATERNA.  Powcr  granted  by  the  law  to  a  father  over  his  children 
and  their  property. 

PoTESTATivo.    Optional. 

Pozo.    A  well. 

PrXctica.    Practice;  usage. 

Practico.    Expert;  harbor  pilot. 

Precario.  Loan  revocable  at  the  will  of  the  creditor.  Possession  depending 
upon  the  o'^\Tier's  wUl. 

Precepto.    Precept. 

Precio.    Price;  precio  fijo,  set  price. 

Predio.    Land  or  immovable  property. 

Predio  dominante.    Dominant  tenement  or  estate  in  case  of  an  easement. 

Predio  sirviente.    Servient  tenement  or  estate  in  case  of  an  easement. 

Prefecto.    Prefect,  kind  of  mayor  of  a  town  or  district. 

Preferexcia.  Preference,  principally  use  in  speaking  of  credits  in  case  of  a 
bankruptcy,  meaning  the  right  to  be  paid  first. 

Pregunta.    Question;  preguntas  generates,  see  Generales  de  ley. 

Prejudicial.  Requiring  a  previous  judicial  decision  before  the  final  judg- 
ment. 

Prelaci6n.    See  Preferencia. 

Premio.  Reward;  prize.  Amount  paid  in  the  exchange  of  money  above  the 
par  value. 

Prenda.    Pledge. 

Prensa.    Press,  printing  press. 

Pre^z.    Pregnancy. 

Preparar  ejecuci6n.  To  prepare  an  "executive"  action  by  means  of  a 
pubUc  instrument  or  of  a  private  one  which  imports  a  confession  of  judg- 
ment. 

Presa.  Capture,  seizure,  spoils  or  booty.  Dike,  dam.  Animal  killed  in 
hunting. 

Prescribir.  To  prescribe;  to  acquire  property  or  to  liberate  oneself  from  an 
obligation  by  the  lapse  of  time  provided  by  the  statute  of  limitations  or 
period  prescription. 

Prescripci6n.    Prescription,  statute  of  limitations. 

Presencia.    Presence. 

Presentaci6n.    Presentation,  presentment.    Personal  introduction. 

Presidexte.    President. 

Presidio.    Imprisonment  at  hard  labor.    Garrison  of  soldiers;  fortress. 

Preso.    Prisoner. 

Prestaci6n.    Obligation  of  paying  or  doing  something. 

Prestamista.    Lender  of  money. 

Prestamo.    Loan. 

Pr^stamo  comodato.  Loan  of  a  specific  thing  which  is  not  to  be  consumed 
and  must  be  specifically  returned  to  the  lender. 

Prestamo  mutuo.    See  Mutuo. 

Prestamo  a  la  gruesa.    Bottomrj'  loan. 

Presuncion.    Presumption;  circumstantial  evidence. 


GLOSSARY  887 

Presunci6n  j»m  tantum.    Legal  but  rebuttable  presumption. 

Presunci6n  juris  et  de  jure.  Irrebuttable  legal  presumption,  really  a  rule  of 
law. 

Presunto.    WTiich  is  presumed. 

Presupuesto.    Budget. 

Pretericion.  Failiu-e  or  omission  to  mention  an  heir  in  a  will  and  to  leave  him 
the  portion  of  the  testator's  estate  to  which  such  heir  is  entitled. 

Prevaricar.    To  prevaricate. 

Prevaricato.    Betrayal  of  a  trust. 

Prevenci6n.  Cognizance  of  a  case  by  a  judge  in  advance  of  another  judge  of 
similar  jurisdiction,  or  when  the  case  is  within  the  jurisdiction  of  different 
judges. 

Prima.    Female  cousin.    Premium. 

Primicia.  Firstlings;  tax  consisting  of  the  first  products  of  land  or  cattle 
during  the  year. 

Primogenitura.    Primogeniture,  seniority. 

Principal.    Principal;  capital. 

Principio  de  prueba  por  escrito.    Written  foundation  of  evidence. 

Prig  RID  AD.    Priority. 

Prisi6n.    Prison. 

Privaci6n.    Degradation. 

Prisionero.    Prisoner. 

Privilegio.    Privilege. 

Probanza.    Proof,  evidence. 

Probatorio.  Probatory;  termino  probaUmo  or  dilacion  probatoria.  Time 
allowed  for  introducing  evidence. 

Procedimiento.    Procedure. 

Procesado.    The  accused. 

Proceso.    Record  of  proceedings  in  criminal  or  civil  actions. 

Proclama.    Proclamation. 

Procuraci6n.    Power  of  attorney. 

Procurador.    Attorney,  solicitor. 

Procurador  judicial.    Attorney  for  judicial  matters, 

Procurador  general.    SoUcitor  general. 

Procurador  voluntario.    See  Gestor  ofidoso. 

PROCURADURfA.    Attorney's  office  or  functions. 

Pr6digo.  Person  who  by  judicial  decree  has  been  deprived  of  the  free  adminis- 
tration of  his  property  by  reason  of  his  being  a  spendthrift;  he  is  put  on 
the  same  footing  as  a  lunatic  and  is  disqualified  from  undertaking  legal 
acts. 

Producir.    To  produce;  to  exhibit  or  show  a  thing  for  inspection. 

Producto.    Product,  proceeds. 

Profano.    Person  outside  of  a  profession;  layman. 

Profesi6n.    Profession. 

Pr6fugo.    Fugitive  from  justice. 

Progenie.    Progeny,  race. 

Prognatismo.     Heavy  jaw. 

Prohibici6n.     Prohibition. 

Prohibir.     To  prohibit. 


888  GLOSSARY 

P^OHiJAR.    To  adopt  as  one's  son. 

Pro  indiviso.     Undivided. 

Proletariado.     Proletarianism,   proletariat. 

Promesa.      Promise. 

Prometer.      To    promise. 

Prometida.     Betrothed. 

Promotor  fiscal.    General  prosecutor. 

Promover.    To  institute  or  advance  an  action. 

Promulgaci6n.     Promulgation. 

PRONXJNCiAinENTO.     Insurrcction ;  issuing  of  a  judicial  decision. 

Pronunciar  sentencia.     To  pronounce  judgment. 

Pronunciarse.     To  rise  in  insurrection. 

Propalar.     To  publish,   di^^ilge. 

Propiedad.      Ownership. 

Propiedad  inmueble.     Real  property. 

Propiedad   literaria.     Copyright. 

Propiedad  mueble.     Personal  property 

Propiedad   raiz.     Real  property. 

Propios  y  arbitrios.  By  propios  is  meant  all  the  real  estate  belonging  to 
a  municipaUty,  and  by  arbitrios,  taxes  levied  by  the  municipality. 

Prorrata.     Quota  pro  rata. 

Prorrateo.    Apportionment,  assignment  of  quota  pro  rata, 

Pr6rroga.     Prorogation  or  extension  of  time. 

Pr6rroga  de  jurisdicci6n.  Extension  of  jurisdiction  of  judge  by  the  pre- 
sumptive or  express  will  of  the  parties. 

Proscripci6n.      Proscription,   outlawry. 

Prostituci6n.     Prostitution. 

Protesta.      Protestation. 

Protestar.     To  protest. 

Protesto.    Protest  of  a  bill. 

Protocolar  or  protocolizar.    To  file  in  the  protocolo. 

Protocolo.  Book  of  a  notary  in  which  contracts  and  other  records  of  acts 
or  instruments  are  entered.  Notarial  file  or  archive  of  original  instru- 
ments. 

Protutor.     See  Curador. 

Proveer.     To  provide,  decide. 

Proveido  or  provtdencia.    Judicial  decision  in  matter  of  procedure. 

Provisi6n.    Remittance  of  funds  by  drawer. 

Proyecto.     Scheme,  design,  plan. 

Proyecto  de  ley.    Bill  introduced  in  a  legislative  body. 

Prueba.     Evidence,  proof. 

Prueba  literal,  or  instrumental.    Documentary  evidence. 

Prueba  testimonial.     Testimony  of  witnesses. 

Prueba  conjetural.     Circumstantial  evidence. 

Prueba  privilegiada.  Evidence  derived  from  facts  which  as  a  rule  are  not 
considered  as  complete  proof,  but  in  some  cases  the  law  admits  as  evidence. 

PuBERTAD.      Puberty. 

Publicaci6n  DE  LEY.    Promulgation  of  a  law. 

Publicaci6n  DE  PRUEBAS.      Communication  to  the  parties  to  a  lawsuit  of 


GLOSSARY  889 

the  evidence  adduced  by  them  in  order  that  they  may  prepare  their 

arguments. 
PuBLicisTA.      A   publicist. 
PuBLicA  voz  Y  FAMA.    General  notoriety. 
Publico.     Public,   notorious. 
Pueblo.     Towti,  village,  people. 
PuENTE.     Bridge. 
PuERTA.     Door  or  doorway. 
Puerto.    Port,  harbor;  pass  through  mountains. 
PujA.     Outbidding  at  a  public  auction. 
PujADOR.     Bidder. 
PupiLO.     Ward. 
PuRO.    Pure,  unconditional. 

Quebrado.     Bankrupt. 

QuEBRADo  ALZADO.    A  bankrupt  who  has  fled  to  avoid  creditors. 

Quebrar.    To  be  declared  a  bankrupt. 

Quebrantamiento  de  forma.    Violation  of  form  or  rule  of  procedure. 

QuERELLA.    Indictment  or  information  in  criminal  investigation. 

Querella  necesaria.  Information  by  the  injured  person  without  which  no 
criminal  investigation  is  legally  possible. 

Querella  voluntaria.  Information  by  injured  party  in  criminal  investi- 
gation without  the  same  being  necessary  for  the  proceedings. 

Querellarse.     To  produce  an  accusation. 

Quiebra.      Bankruptcy. 

QuiNTO  disponible.  Fifth  part  of  estate  which  the  testator  can  dispose  of 
to    strangers. 

QuiROGRAFARio.  Creditor  whose  right  is  evidenced  by  a  private  in- 
strument. 

QuiTA.     Partial  release. 

Kabul  A.     Ignorant,  vociferous  lawyer. 

Radical.     Radical,  fundamental. 

Rama.      Branch. 

Ramera.      Prostitute. 

Ramo.     Line  of  business. 

RANCHERfA.    Settlement  of  rural  workers  or  peons. 

Rancho.     Farm   (Mexico). 

RapiiJa.     Rapine,  robbery. 

Raptada.     Abducted  woman. 

Rapto.     Abduction. 

Raptor.     Abductor. 

Rastro.     Slaughter-house. 

RaterIa.     Larceny,  petty  theft. 

Ratero.     Pickpocket. 

Ratificaci6n.     Ratification. 

Ratificar.     To  ratify. 

Ratihabici6n.     Ratification. 

Raza.     Race. 


890  GLOSSARY 

Raz6n.    Reason;  tomar  raz6n,  to  register  or  take  note  of  an  act  or  thing;  dar 

raz&n,  to  account;  dar  la  razon,  to  approve;  tener  razon,  to  be  right. 
Raz6n  social.     Firm  name. 
Real.     Real,   royal. 
Real  c^dula.     Royal  dispatch  signed  by  the  king  of  Spain  and  issued  by 

a  supreme  tribunal,  wherein  some  favor  is  granted  or  some  interiocutory 

decree  is  issued. 
Real  decreto.     Royal  decree. 

Realengo.    Belonging  to  the  royal  patrimony;  unappropriated  land. 
Realizaci6n.     Sale,  liquidation. 
Rebaja.     Abatement,   deduction. 
Rebalsar.     To  dam  water. 
Rebano.     Flock,  herd. 
Rebasar.     To  overflow,  to  trespass. 
Rebato.     Alarm. 
Rebelarse.    To  rise  in  rebellion. 
Rebelde.    Rebel.     In  contempt  of  court. 

REBELcfA.    Non-appearance  in  court  after  being  simmioned.    Default. 
Rebeli6n.     Rebellion. 
Recado.      Message. 
Recambio.     Re-exchange. 
Recapitx7laci6n.     Recapitulation,  summary. 
Recaudaci6n.     Collection.     Collector's  office. 
Recaudar.    To  collect  rents  or  taxes. 
Receptador.      Abettor. 
Receptar.     To  abet. 
Receptor.     Municipal  treasurer. 
RECEPTORfA.     Treasurer's  office. 
Receso.     Recess  (Mexico). 
Recibir.     To  receive. 

Recibo.    Receipt;  discharge;  acusar  recibo,  to  acknowledge  receipt. 
Reciprocidad.     Reciprocity. 
REcfpROCO.     Reciprocal. 
Recitar.     To  recite. 
Reclamaci6n.     Complaint,  claim. 
Reclamar.     To  claim. 
Recomendaci6n.      Recommendation;    carta    de    recomendacidn,    letter    of 

introduction. 
Recompensa.     Reward. 
Recompensar.     To  compensate. 
Reconducci6n.     Renewal  of  a  lease. 
Reconocer.     To  acknowledge,  recognize;  scrutinize. 
Reconocimiento  de  firma.    Acknowledgment  of  signature. 
Reconvenci6n.     Counterclaim. 
Recopilaci6n  de  leyes.     Compilation  of  laws. 
Recriminaci6n.      Recrimination. 
Rectificacion.     Rectification. 
Rectificar.    To  rectify,  to  amend. 
Rectitud.     Rectitude,   uprightness. 


GLOSSARY  891 

Recuento.     Recount,   inventory. 

Recuperaci6n.     Recovery,    replevin. 

Recurrente.     Appellant. 

Recurrir.     To  appeal. 

Recurso.     Appeal;   remedy. 

Recusaci6n.     Challenge  (of  judges  or  judicial  officers);  exception. 

Redaccion.     Wording  (of  a  document).     Editorial  rooms.     Editorial  staff. 

Redactar.     To  draw  up;  write. 

Redhibitorio.  Redhibitory,  which  may  bring  about  the  rescission  of  a 
contract. 

Redimir.    To  redeem;  liberate;  pay  off. 

Redito.     Interest. 

Redituar.     To  yield  interest. 

Reducci6n.     Reduction,  rebate. 

Redundante.     Redundant,  superfluous. 

Reedificar.     To  rebuild. 

Reelecci6n.      Re-election. 

Reembarcar.     Re-shipment. 

Reemplazar.      To    substitute. 

Reembolso.      Reimbursement. 

Reenganchar.     To  re-enlist. 

Refacci6n.     Financing. 

Refaccionar.    To  finance. 

Refaccionario.  Pertaining  to  refacddn;  Banco  refaccionario,  bank  of  pro- 
motion. 

Refaccionista.    Financial  backer. 

Referencia.    Reference. 

Reforma.    Reform;  reformation. 

Refrendar.    To  countersign. 

Refrendatario.    One  who  countersigns. 

Refrigerador.    Refrigerator. 

Refugio.    Refuge;  shelter;  asylum. 

RegadIo.    Irrigation;  tierra  de  regadio,  irrigated  land. 

Regalar.    To  present,  to  favor  with  a  gift. 

Regatear.    To  chaffer,  bargain,  haggle. 

Regente.    Regent;  foreman  (print). 

Regidor.    Alderman;  councilman. 

RiiGiMEN.    Government,  management. 

Rbgi6n.    Region,  district. 

Regionalista.    Partisan  of  or  relating  to  home  rule. 

Registrado.    Registered. 

Registrador.    Registrar;  clerk  of  records. 

Registro.    Registry.    Search. 

Registro  civil.    The  civil  registry. 

Registro  db  comercio.    Commercial  registry. 

Registro  publico.  Public  register  for  property,  mortgages,  judgments  and 
other  acts  affecting  real  estate. 

Regla.    Rule. 

Reglamentario.    Relating  to  regulations. 


892  GLOSSARY 

Reglambnto.    Regulations. 

Rehabilitaci6n.    Rehabilitation  of  a  bankrupt  in  order  that  he  may  become 

a  merchant  again. 
Rehuir.    To  evade;  shun. 
Rehusar.    To  refuse,  decline,  deny. 
Reincidente.    Backsliding. 
Reincidir.    To  relapse  into  a  crime,  vice  or  error. 
Rbintegrar.    To  reintegrate;  reimburse. 
Reintegro.    Repajonent. 
Reitbraci6x.    Reiteration,  repetition. 
Reivindicaci6n.    Recovery,  replevin. 
Reivindicar.    To  replevy,  to  recover. 
Reivindicatorio.      Replevying;    acci6n    reivindicatoria,    action    to    recover 

specific  property. 
Relaci6n.    Report,  account,  brief. 
Relacionar.    To  relate,  report. 
Relator.    Relator. 
Relevar.    To  exonerate,  acquit. 
Religi6n.    Religion. 

Rematar.    To  auction;  to  knock  down  at  auction. 
Rematador.    Auctioneer. 
Remate.    Auction. 
Remediar.    To  remedy,  repair. 
Remesa.    Shipment,  remittance  of  money. 
Remision.    Remitting;  release. 
Remitir.    To  send;  to  release;  pardon. 
Remolcar.    To  tow,  take  in  tow. 
Rbmolcador.    Tug,  tugboat. 
Remolque.    Towage. 
Rendici6n.    Surrendering. 
Rendici6n  de  cuentas.    Rendering  accounts. 
Rengl6n.    Written  or  printed  line.    Line  of  business. 
Renuncia.    Resignation.    Waiver. 
Renunciar.    To  resign.    To  waive. 
Renir.    To  quarrel,  scold. 
Red.    Offender;  culprit.    Defendant. 
Reorganizaci6n.    Reorganization. 
Reparaci6n.    R,eparation,  indemnity. 
Reparar.    To  indemnify;  to  expiate;  to  give  heed. 
Reparo.    Objection. 
Repartimiento.    Allotment,  division. 
Repartir.    To  divide,  allot. 
Repeler.    To  repel. 
Repertorio.    Repertory. 

Repetir.    To  demand  from  another  money  imduly  received  by  him. 
Repetici6n.    Claim  for  money  unduly  paid. 
Replica.    Replication  in  pleading. 
Replicar.    To  reply;  to  argue. 
Rbporte.    Report,  information. 


GLOSSARY  893 

Reportero.    New  reporter. 

Reposici6n.     Restoring  a  suit  to  its  initial  state.      To  amend  a  decision; 

rehearing. 
Repreguntas.    Cross-examination. 
Reprbsentaci6n.     Memorial,  address.    Right  of  a  person  to  represent  his 

predecessor  in  interest. 
Rbpresbntar.    To  represent.    To  petition. 
Represent  ante.    Representative. 
Reprobaci6n.    Reprobation. 
Republica.    Republic. 
Repulsa.    Refusal,  repulse. 
Reputaci6n.    Reputation. 
Reputar.    To  repute,  estimate. 
Requerimiento.    a  demand. 
Reqtjisa.    Requisition. 
Requisar.    To  levy  horses  or  other  specific  property  which  the  government 

may  need  besides  money. 
Resaca.     Redraft  a  bill  of  exchange. 
Resacar.     To  redraw  a  bill  of  exchange. 
Resarcimiento.    Indemnity,  compensation. 
Resarcir.    To  compensate;  indemnify. 
Rescatar.    To  redeem. 
Rescatb.    Ransom. 
Rescindir.    To  rescind,  cancel. 
Resellar.    To  coimtermark. 
ReseSa.    Brief  description. 
Resguardo.    a  receipt. 
Residbncia.    Residence. 
Residenciar.    To  impeach. 
Residente.    Resident. 
Residuo.    Residue. 
Resistencia.    Resistance;  opposition. 
Resoluci6n.    Resolution,  decision,  cancellation. 
Resolutorio.    Pertaining  to  cancellation  of  contracts. 

Respaldar.     To  guarantee,  to  back.     To  state  on  the  back  of  a  bill  of  ex- 
change the  reasons  for  dishonoring  it. 
Rbspeto.    Respect;  regard. 
Respetuosamentb.    Respectfully. 
Respiro.    Respite;  extension  of  time  to  a  debtor. 
Responder.    To  answer,  guarantee. 
Responsabilidad.    Liability.    Responsibility. 
Restituci6n.    Restitution. 
RBSTiTtHR.    To  return;  restore. 
Restituci6n  in  fNTBCRUM.     Right  of  minors  and  other  incapacitated  or 

privileged  persons  to  demand,  under  certain  conditions,  the  restitution 

of  things  alienated  by  their  representative. 
Re8TRIcci6n.    Restriction,  limitation. 
Retracto.     Right  of  redemption  ])olonging  to  co-owners  or  copartners,  or 

stipulated  in  contracts,  by  which  any  of  the  co-rnvners  or  copartners  or  the 


894  GLOSSARY 

grantee  of  such  right  may  buy  the  thing,  right  or  share  belonging  to  any 
of  the  other  co-owners  or  copartners  or  the  grantor  at  the  same  price 
and  under  the  same  conditions  that  a  sale  is  contemplated  to  a  stranger. 

Retraer.    To  exercise  the  right  of  retracto. 

Retraso.    Delay. 

Resultandos.  Paragraphs  of  a  judicial  decision  in  which  the  judge  sets 
forth  the  facts  forming  the  basis  of  such  decision.  They  are  followed  by 
the  Consider andos  or  statement  of  the  legal  fovmdation  of  the  judgment. 

Retroactivo.    Retroactive. 

Retrotraer.  To  bring  the  effects  of  a  law  or  contract  back  to  a  time  previous 
to  its  enactment  or  execution. 

Retrovendbr.    To  sell  back  to  the  vendor. 

Retroventa.    Sale  on  reversion. 

Reuni6n.    Meeting.    Consolidation. 

Revalidaci6n.    Ratification. 

Revalidar.    To  confirm,  ratify. 

Revendedor.    Retailer. 

Revender.    To  resell. 

Revbrsi6n.    Reversion. 

Revisar.    To  review;  revisar  las  cuentas,  to  audit  accounts. 

Revisi6n.    Review. 

Revocable.    Revocable. 

Rbvocaci6n.    Revocation. 

Revocaci6n  por  contrario  imperio.  Annulment  of  a  judicial  decree  by  the 
judge  who  rendered  it. 

Revocar.    To  revoke. 

Revoltjci6n.    Revolution. 

Revolucionario.    Revolutionist. 

Rezagar.    To  leave  behind  or  defer. 

RiEGO.    Irrigation. 

Riel.    Rail,  iron  bar  laid  on  ground  on  one  side  of  railway  track. 

RiBSGO.    Risk,  danger. 

Rifa.    Lottery. 

Rijoso.    Quarrelsome. 

Rif5^A.    Quarrel. 

Rival.    Rival,  competitor. 

RivALiDAD.    Rivalry,  emulation. 

RoBAR.    To  plunder,  steal,  rob. 

RoBO.    Robbery,  theft.    It  includes  burglary. 

RuBRiCA.    Flourish  added  to  one's  signature. 

RtTBRicAR.  To  subscribe  a  document  with  one's  peculiar  flourish  with  or 
without  signing  the  name. 

Rumor.    Rumor,  hearsay. 

RxjiA.    Itinerary,  way. 

RtJTiNA.    Routine. 

Sacar  testimonio.    To  make  a  first  certified  copy  of  an  original  document. 

Salario.    Wage,  earnings. 

Salario  medio  diario.    Average  daily  earnings. 


GLOSSARY  895 

Saldo.      Balance. 

Salubridad.    Healthfulness;  j«nta  de  salubridad,  board  of  health. 

Salvaguardia.     Safeguard;   passport. 

Salvamento.      Salvage. 

Salvavidas.     Life-preserver;  bote  salvavidas,  lifeboat. 

Salvedad.     Reservation. 

Salvo.    Excepting;  qicedar  a  salvo,  without  injury. 

Salvoconducto.     Passport,  permission. 

Sambenito.    Garment  worn  by  penitent  convicts  of  the  Inquisition.     Note 

of    infamy. 
Saneamiento.     Indemnification  of  the  vendee  by  the  vendor  in  case  the 

former  is  judicially  dispossessed  of  the  thing  sold.    Sanitation. 
Sangre.      Blood. 

Sanguinario.    Sanguinary,  bloodthirsty. 
Sang.      Sound. 

Satisfacci6n.     Satisfaction,  amends,  apology. 
Satisfacer.    To  satisfy;  to  pay. 

Secano.     Dry,  unirrigated;  tierra  de  secano,  unirrigated  land. 
SECRETARfA.     Secretary's  office. 
Secretario.     Secretary. 

Secuela.    Sequel;  la  secuela  de  la  causa,  the  course  of  the  proceedings. 
Secuestrar.    To  sequestrate,  to  abduct,  to  kidnap. 
Secuestro.     Attachment. 
Sedici6n.     Sedition,  mutiny. 
Sedicioso.     Seditious,  mutinous. 
Seducir.    To  seduce,  corrupt,  entice. 
Seductor.      Corrupter. 
Seguro.     Insurance. 
Seguro  de  incendio.     Fire  insurance. 
Seguro  dotal.    Endowment  insurance. 
Seguro  sobre  la  vida.    Life  insurance. 
Seguro  contra  accidentes.    Accident  insurance. 
Sello.     Seal,  stamp. 
Sello  de  correo.    Postage  stamp. 
Semaforo.     Semaphore. 
Semana.    Week. 
Semana  SANTA.     Passion-week. 
Semanero  (ministro).    One  of  the  judges  of  a  court  sitting  in  turn  during 

a  given  week  to  take  care  of  the  daily  business. 
Sembrado.    Sown  ground. 
Sementera.     Sown  land. 
Semestral.     Semiannual. 

Semiplena  prueba.    Incomplete  or  partial  evidence. 
Semoviente.    Cattle. 
Senado.     Senate. 
Senador.     Senator. 
Send  A.     Footpath. 

Sentencia.    Judgment;  pronunciar  sentencia,  to  pass  judgment. 
Sentencia  absolutoria.     Judgment  dismissing  the  complaint.     Acquittal. 


896  GLOSSARY 

Sentencia  adversa.     Adverse  judgment. 

Sentencia  condenatoru.     Sentence  of  guilty. 

Sentencia  ejecutoriada.    Judgment  against  which  no  appeal  can  be  taken. 

Sentencia  favorable.   -Favorable  judgment. 

Sentencia  interloctjtoria.    Decision  relating  to  incidental  issues. 

Sentencia  firme.     An  irrevocable  judgment. 

Senoraje  or  se5Joreaje.     Seignorage. 

SENORfo.     Seignory. 

Sepelto.     Burial. 

Sepulcro.     Sepulchre,  grave. 

Sepultar.     To  bury. 

Sepulturero.     Sexton. 

Servidumbre.    Easement,  both  personal  and  real;  servitude. 

Servidumbre  aparente.  Easement  which  is  revealed  by  merely  Idoking 
to  the  things  subject  to  it,  as  the  leaning  of  a  beam  of  a  house  on  the  wall 
of  another,  or  a  window  open  in  the  wall  which  divides  one  house  from 
another,  as  distinguished  from  servidumbres  no  aparentes,  which  are  de- 
tected by  no  apparent  state  of  things,  like  the  right  of  the  owner  of  a 
house  to  forbid  the  owner  of  another  to  build  his  house  higher. 

Servidumbre  contintja.  Easement  which  exists  independently  of  the 
actual  act  of  its  beneficiary,  such  as  that  arising  out  of  a  window  or 
aqueduct,  as  compared  with  servidumbre  discontinua,  which  requires 
some  positive  act,  as  right  of  way  through  another's  property. 

Servidumbre  de  paso.    Right  of  way. 

Servidumbre  de  luz.  Right  to  receive  light  as  a  rule  through  a  window 
opening  in  a  wall  dividing  two  houses;  easement  of  light. 

Servidumbre  de  prospecto.  Right  to  have  windows  overlooking  another's 
property;  easement  of  view. 

Servidumbre  legal.  Easement  created  by  the  law,  as  compared  with 
servidumbre  voluntaria,  which  is  established  by  contract. 

SiGiLO  PROFESiONAL.     Professional  secrecy. 

SiGLo.      Centurj'. 

SiGNiFicAR.     To  make  known. 

SiNONiMiA.     SjTionymy. 

SfNDico.    Trustee,  assignee,  receiver. 

SiNDico  DEL  AYUNTAMiENTO.  Official  of  the  town  government  charged  with 
representing  the  interests  of  the  community  in  court. 

Sine  qua  non.     Essential. 

SiN  PERJUicio.     Without  prejudice. 

SiNiESTRO.    Damage,  loss  (in  matter  of  insurance). 

SiRViENTE.     Servant,  menial. 

SiSA.     Excise. 

SoBORNAR.     To  bribe. 

Soborno.     Bribe. 

Sobrecarga.     Overload. 

Sobrecargo.     Super-cargo. 

Sobreseer.    To  dismiss.    Discontinuance  of  legal  proceedings. 

Sobreseimiento.    Dismissal,  discontinuance  of  legal  proceedings. 

Social.    Social;  belonging  to  partnerships  or  corporations. 


GLOSSARY  897 

SociALisMO.      Socialism. 
SociALTSTA.     Socialist. 
SociEDAD.     Association,  partnership. 
SociEDAD  an6nima.    Stock  company. 
SociEDAD   coLECTivA.     Partnership. 
SociEDAD  EX  coMANDiTA.     Limited  partnership. 
SociEDAD  co-OPERATiVA.     Co-operativc  society. 
Socio.    Partner,  member  of  an  association  or  partnership. 
Socorro.    Succor,  help. 
SoFiSMA.     Sophism,  fallacy. 

Solar.    Ground-plot  for  homestead.    Ancestral  mansion. 
SoLARiEGO.    Land  descending  from  ancestors;  ley  solariega,  homestead. 
SoLEMNE.    Formal:  contrato  solemne,  contract  which  requires  certain  formal- 
ities to  be  binding. 
SoLiDARio.     Jointly  and  severally  liable. 
Solid  ARID  AD.    Joint  and  several  Uability;  soUdarity. 
SoLTERo.     Single,  unmarried. 
SoRDOMUDO.    Deaf  and  dumb. 
SoRTEAR.     To  cast  lots. 
SoRTEO.     Casting  of  lots. 
SosPECHOSo.     Suspicious. 
SosTENER.    To  support;  to  defend. 
SuBALTERNO.     Subordinate,  inferior. 

SUBARRENDAR.      To  Sublet. 

Stjbasta.     Auction. 

SuBASTAR.    To  sell  at  auction. 

Sotdito.     Subject  of  a  country. 

SuBENTENDER.    To  Understand  what  is  tacitly  meant. 

Sublevaci6n.     Insurrection. 

SuBLEVAR.     To  rise  in  rebeUion. 

SuBMARiNO.     Submarine. 

SuBORDiNAR.     To  Subordinate. 

StJBREPncio.     Surreptitious,  fraudulent. 

StJBR0GACi6N.     Subrogation,   substitution. 

SuBSCRiBiR.     To  subscribe. 

Subscripci6n.     Subscription. 

SuBSECRETARio.    Assistant  secretary. 

SuBsiDiARiAMENTE.     Subsidiarily. 

SuBsiDio.    Subsidy,  pecuniary  aid. 

SuBSiSTiR.     To    subsist. 

SuBSTANciAR.     To  try  a  case. 

SuBSTRAER.    To  Subtract;  to  elude  by  subtraction. 

SuBSUELO.     Subsoil. 

Subvenci6n.     Subsidy. 

SuBVERSivo.      Subversive. 

SuBVERTiR.     To  destroy,  to  ruin. 

Sue  ESI  6n.     Succession. 

SucESO.      Event. 

SucESo  iNciEHTO.    Contingency. 


898  GLOSSARY 

SucESOR.     Successor,   heir. 

SiTCESOR  A  TiTULO  PARTICULAR.  Successor  in  another's  right  to  a  thing  due 
to  a  contract  or  bequest  particularly  referring  to  that  thing. 

SucESOR  A  TfxuLO  UNIVERSAL.  Successor  to  another  in  a  general  way,  as  is 
the  case  in  inheritance,  bankruptcy,  etc. 

SuELDO.      Salary. 

SuELO.     Ground,  soil,  land. 

SuERTE.     Hazard,  lot. 

SuFRAGAR.     To  defray,  to  make  up* 

SuFRAGio.     Vote,   suffrage. 

SuFRiR.     To  suffer,  to  undergo. 

SuGERiR.     To  suggest. 

SuiciDA.     Suicide. 

SuiciDARSE.     To  commit  suicide. 

SuMA.    Sum,  addition. 

SuMARio.  Preliminary  investigation  in  a  criminal  suit,  similar  to  the  secret 
investigation  of  the  grand  jury  in  the  United  States. 

SuMARiAMENTE.    Summarily. 

Sumisi6n.    Submission  to  the  jurisdiction  of  a  judge. 

Sumisi6n  expresa.    Express  submission  to  the  jurisdiction  of  a  judge. 

SuMisiON  tacita.  Implied  or  tacit  submission  to  the  jurisdiction  of  a  judge, 
deduced  from  the  fact  that  the  party  appears  in  his  court  without  re- 
serving the  right  to  claim  lack  of  jurisdiction. 

SuNTUARio.    Sumptuary. 

SuPERAViT.    Surplus. 

SuPLANTAR.    To  forge,  alter  by  fraud. 

StJPLicA.    Review  of  the  case  by  the  same  court  which  rendered  the  decision. 

SuPLicATORio.    Letter  rogatory  sent  by  a  judge  to  another  of  equal  authority. 

Suposici6n.    Supposition. 

Suspensi6n.    Temporary  removal  or  suspension  from  an  employment. 

SuPUESTO.    Supposition. 

Suspension  de  pagos.    Suspension  of  payments,  insolvency. 

Sustracci6n.    Abduction. 

Taberna.    Tavern. 

Tabernbro.    Tavernkeeper. 

Tabernario.    Low,  vile  (refering  to  language). 

Tablado.    Stage,  scaffold. 

Tabl6n  de  edictos.    Official  bulletin  board  in  the  court  house  for  advertising 

notices. 
Tactica.    Tactics. 
Tacha.    Objection  to  witness. 
Tachar.    To  challenge  a  witness. 
Tala.    Felling  of  trees. 

Talar.    To  fell  trees;  to  lay  waste  a  country. 

Tal6n.    Any  check,  note,  invoice  or  voucher  detached  from  a  stub  book. 
Talon  ARID.    Stub  book. 
Tallar.    Woodland  fit  for  cutting. 
Tanda.    Gang  of  workers  working  in  rotation  or  turn  with  others. 


GLOSSARY  899 

Tanteo.    Right  to  buy  at  the  same  price  at  which  the  seller  agrees  to  sell  to 

another  person.    Computation. 
TAQUiGRAFfA.    Shorthand. 
Taquigraficamente.    In  shorthand. 
Tara.    Tare. 

Tarde.    Afternoon.    Late. 
Tardio.    Late. 
Tarea.    Task. 
Tarifa.    Price  list;  tariff. 
Tasa.    Measure,  standard,  valuation. 
Tasaci6n.    Valuation. 
Tasador.    Appraiser. 
Teatral.    Theatrical. 
Teatro.    Theater. 
Tejido.    Texture;  tissue. 
Telefonar.    To  telephone. 
Telegrafiar.    To  telegraph. 
Tele  grama.    Telegram. 
Tema.    Theme. 

Tembrario.    Rash,  imprudent,  baseless. 
Tenedor.    Bearer,  holder. 
Tenedor  de  libros.    Bookkeeper. 
Tenencia.    Tenancy;  physical  possession  of  a  thing  without  any  idea  of  being 

the  owner  of  it. 
Tener  tacha.    To  be  objectionable  (a  witness). 
Tentativa.    Attempt. 

Terceria.    Intervention  by  third  party  in  a  lawsuit. 
TERCERfA  coADYUBANTE.    Intervention  in  which  the  third  party  supports  the 

action. 
TercerIa  de  dominio.    Intervention  in  which  a  third  party  claims  to  be  the 

owner  of  the  thing  subject-matter  of  the  contention. 
TercerIa  de  preferencia.    Intervention  in  which  a  third  party  claims  that 

he  should  be  paid  first  with  the  proceeds  of  the  attached  property. 
TERCERfA  excluyente.    Intervention  in  which  a  third  party  claims  against 

the  plaintiff  as  well  as  the  defendant. 
TERMING.    Term,  maturity,  end. 
TfRMiNO  DE  PRUEBA.     Period  granted  to  the  parties  in  a  lawsuit  for  producing 

evidence. 
TfiRMiNO  FATAL  Or  IMPRORROGABLB.     Period  fixed  by  law  the  duration  of 

which  cannot  be  extended  by  the  judge. 
Terna.    List  of  three  persons  proposed  for  an  oflBce  or  position,  among  whom 

the  election  must  be  made.    Ternary. 
Terraplen.    Embankment. 
Terrateniente.    Landowner. 
Terreno.    Piece  of  ground. 
Territorial.    Territorial. 
Territorio.    Territory. 
Tesis.    Thesis. 
TESORERfA.    Treasury. 


900  GLOSSARY 

Tesorero.    Treasurer. 

Test  ADO.  Crossed  out  (word  or  sentence);  sucesiOn  testada,  succession  by 
will,  as  compared  with  sticesidn  intestada,  which  indicates  succession  by 
intestacy. 

Testadob.    Testator. 

Testamento.    a  will. 

TE.STAR.    To  will. 

Testificar.    To  testify,  to  witness. 

Testigo.    Witness. 

Testigo  de  ofoAS.    Witness  whose  testimony  is  based  upon  hearsay. 

Testigo  de  vista.  Witness  whose  testimony  is  based  upon  his  direct  knowl- 
edge. 

Testimonio.  Testimony.  First  certified  copy  taken  by  a  notary  from  an 
original  deed  entered  in  the  protocolo. 

Texto.    Text,  quotation. 

TiENDA.    Shop,  store. 

Tierra.    The  earth,  land,  soU;  tierra  de  pan  llevar,  plough  land. 

TiLDAR.    To  cross  out  anything  written.    To  brand. 

Tim6n.    Helm,  rudder. 

Tfo.    Uncle;  iia,  aunt. 

TfrxTLO.  Title;  title  deed;  justo  titulo,  real  or  presumptive  legal  title;  titulo 
precario,  right  of  a  person  who  possesses  a  thing  in  another's  name. 

TfTULO  COLORADO.    Colorable  title. 

TfTULOS.    Instruments,  bonds,  securities. 

ToMADOR.    Payee  (of  a  bill  of  exchange). 

Tonelada.    Ton. 

ToNELADA  METRiCA.    Metric  ton. 

ToNTiNA.    Tontine. 

ToRNAGufA.    Landing  certificate. 

ToRPEDBRO.    Torpedo  boat. 

Torpedo.    Torpedo. 

Total.    Total. 

Trabajador.    Worker.    Laborious. 

Tradici6n.    Tradition,  physical  delivery  of  possession. 

Traducci6n.    Translation. 

Traficar.    To  trade. 

Tragaluz.    Skylight. 

Traici6n.    Treason;  alta  traiddn,  high  treason. 

Traidor.    Traitor;  treacherous. 

Trajinantb.    Professional  carrier. 

Trajinar.    To  cart  goods. 

Tramitaci6n.    Judicial  proceedings. 

Tramitar  txN  incidente.    To  carry  the  proceedings  to  an  interlocutory  issue. 

Tramite.    Judicial  proceeding. 

Tramposo.    Tricky,  cheater. 

Transacci6n.    Compromise;  contract. 

Transcribir.    To  transcribe. 

Transcripci6n.    Transcription,  copy. 

Transcurrir.    To  lapse. 


GLOSSARY  901 

Transbunte.    Sojourner,  passer-by,  person  temporarily  sojourning  in  a  town 

or  place. 
Transferencia.    Transference. 
Transferible.    Transferable. 
Transferir.    To  transfer,  convey,  make  over. 
Transgredir.    To  infringe. 
Transigir.    To  compromise. 
Transitar.    To  travel. 
Transitorio.    Transitory. 
Transmitir.    To  transfer. 
Transportar.    To  carry,  to  transport. 
Transporte.    Transportation. 
Trapacero.    Cheating. 
Trashumante.    Nomadic. 
Traslaci6n  de  DOMINIC.    Conveyance  of  title. 

Traslado.    Delivery,  serving  of  a  copy  or  proceedings.    Certified  copy. 
Traspaso.    Conveyance;  assignment. 
Trata.    African  slave  trade. 
Tratado.    Treaty;  treatise. 
Tratamiento.    Treatment.    Title  of  courtesy. 
Tratar.    To  trade. 

Traumatico.    Traumatic,  relating  to  wounds. 
Tren.    Train. 

Tren  expreso.    Express  train. 
Tren  de  recreo.    Excursion  train. 
Tribuna.    Tribune,  rostrum. 
Tribunal.    Court;  tribunal  de  cuentas,  exchequer. 
Tributaci6n.    System  of  taxation. 
Tributo.    Tribute. 
Trimestral.    Trimestrial. 
Triitnfar.     To  triumph. 
Tronco.    Origin  of  a  family.    Team  of  horses. 
Tropa.     Troop. 
Tropel.     Crowd. 
TROPELfA.     Vexation,  outrage. 
Trueque.      Barter. 
TruhXn.     Rascal,  knave. 
TruhanerIa.     Rascality. 
TuMULTO.     Uprising,  faction,  mob,  riot. 
Turno.     Turn. 
Tutela.     Guardianship. 
Tutor.     Guardian. 

Ultimar  tin  contrato.    To  close  a  transaction. 

Ultimatum.     Ultimatum. 

Ultraje.    Outrage,  abuse. 

Unanime.      Unanimous. 

Unanimidad.     Unanimity. 

Univerbidad.     University. 


902  GLOSSARY 

Urbanizar.    To  lay  out  and  build  a  town. 

Urbano.    Referring  to  city  life  and  property,  as  compared  with  rural;  firwn 

urbana,  house  in  a  town;  finca  rUstica,  a  farm. 
Uegencia.     Urgency. 
Uso.    Usage.     Type  of  usufruct. 
U8ucapi6n.     Acquisition  of  ownership  through  prescription  or  statute  of 

limitations. 
UsuFRUCTO.     Usufruct. 
Usura.     Usury. 
Usurpaci6n.    Usurpation. 
Utensilio.     Utensil. 
Utilidad.     Profit,  gain;  titihty. 

Vacante.     Unoccupied. 

Vago.     Wandering,  vagrant,  tramp. 

Vale.    Draft,  voucher,  note  of  hand. 

Valetudinario.     Infirm. 

Validez.     Validity. 

Valido.     Valid,  firm,  binding. 

Valioso.     Valuable. 

Valor.     Value. 

Valor  nominal.    Face  value. 

Valor  a  la  par.    Par  value. 

Valor  de  plaza.    Market  or  exchange  value. 

Valorar  or  VALORiZAR.     To  appraise. 

Vapor.     Steamer. 

Var6n.     Male  (man);  man  of  respectability. 

Vecindad.    Residence.    Right  acquired  by  residing  in  a  place. 

Vecino.     Resident.     Neighboring. 

Vedar.     To  prohibit. 

Veedor.     Inspector. 

Venal.     Venal,  mercenary. 

Vencimiento.    Maturity  (of  an  obligation).    Expiration  of  a  term. 

Vender.     To  sell. 

Venta.     Sale.     Roadside  inn. 

Venta  publica.     Public  auction. 

Ventaja.     Advantage;  profit. 

Ventana.     Window. 

Ventero.     Inn-keeper. 

Ventura.    Hazard;  a  la  ventura,  at  random,  at  hazard. 

Verbal.     Verbal,  oral. 

Verdad.    Truth. 

Verdugo.     Hangman;   executioner. 

Verificaci6n.     Proof  of  debts  (in  bankruptcy). 

Verificar.     To  verify. 

VerisImil  or  verosimil.     Likely,  credible. 

VIa.     Way,  road.     Proceedings. 

VfA  DECLARATiVA.    Proceedings  in  contentious  jurisdiction. 

VfA  DE  APREMio.     Proceedings  to  compel  execution  of  a  judicial  decision. 


GLOSSARY  903 

VfA  DE  autorizaci6n.  Proceedings  in  which  the  functions  of  the  judge  are 
confined  to  giving  authenticity  and  solemnity  to  an  act;  voluntary  juris- 
diction. 

VfA  EJECUTivA.  Summary  proceedings  which  begin  by  an  attachment  of 
the  debtor's  property. 

ViAjE.     Journey,  trip. 

ViAJERO.      Traveler. 

V1.A.TIC0.     Provision  for  a  journey. 

Vicec6nsul.     Vice-consul. 

Vicio.     Defect;  vice. 

VicTiMA.     Victim. 

ViDA.     Life. 

Vigente.     In  force,  standing. 

ViL.      Mean. 

Vinculaci6n.     Entail;  act  of  entailing;  bond. 

ViNcuLAR.    To  entail  an  estate. 

VfNcuLO.    Tie,  bond  of  union. 

Vi>a)icACi6N.     Vindication. 

ViNDicTA  PUBLicA.     Public  prosecutiou  of  criminals. 

Violaci6n.      Rape. 

ViOLENCiA.     Violence. 

ViRAR.     (Naut.)  To  tack. 

VisiTA.     Inspection. 

VisPERA.    Eve;  the  day  before. 

Vista.     Inspector.     Hearings  in  a  case. 

Vista  de  ojos.    Judicial  inspection  of  places  as  means  of  evidence. 

ViSTO  BUENo.  The  mark  or  formula  "approved,"  usually  abbreviated 
V°B°;  O.  K. 

ViTALicio.     Lasting  for  life. 

ViTUPERAR.     To  vituperate. 

VixiDA.     Widow. 

ViUDEZ.      Widowhood. 

ViUDO.     Widower. 

VfvERES.     Provisions.     Food  supplies. 

Vocal.  Member  of  an  assembly  provided  with  the  right  of  voting;  judge 
of  a  court. 

VoLUNTAD.     Will,  volition. 

VoLUNTARiAMENTE.     Spontaneously. 

VoTo.     Vote.     Vow. 

VoTo  DE  CALiDAD.     Casting  vote. 

VoTo  PASivo.    Qualification  to  be  elected  for  a  function. 

Voz.  Power  or  authority  to  speak;  tcJier  vox  pero  no  voto,  to  be  entitled  to 
speak  in  an  assembly  but  not  to  cast  a  vote.  " 

Yacente.    Vacant;  herencia  yacenle,  vacant  inheritance. 
Yacimiento.     Ore  bed,  ore  deposit. 
Yanqui.     Native  of  the  United  States. 
Yerho.      Mistake. 
Yu8i6n.     Precept,  order. 


904  GLOSSARY 

Zafarrancho.    Clearing  for  action  (naut.);  ravage,  destruction. 

Zafra.     Sugar  crop. 

Zanja.     Ditch,  drain. 

Zanjar.    To  open  ditches.    To  compromise  amicably. 

Zona.     Zone. 

ZuRDO.     Left-handed. 


INDEX 


ABANDONMENT — by  an  insured  of  insured  and  damaged  goods  to  the 
underwriter,  459. 
of  goods  by  a  consignee  to  the  carrier,  417. 
of  proceedings  in  a  judicial  action  and  its  effects,  760. 

ABSENCE — when  that  of  a  partner  causes  the  rescission  of  the  partnership 
agreement,  234. 
of  the  owner  of  a  commercial  house,  when  it  gives  ground  for  a  declaration 
of  bankruptcy,  615. 

ACCEPTANCE— of  an  agency,  325. 
of  a  commission,  328. 
of  a  bill  of  exchange  guaranteed  by  its  drawer,  491. 

when  it  is  not  necessary,  508. 

place  in  which  it  must  be  requested,  508. 

period  within  which  it  must  be  made  or  refused,  509. 

its  revocation,  511. 

persons  qualified  to  request  it,  512. 

its  form,  512. 

its  date,  513. 

effects  of  a  promise  to  make  it,  516. 

and  its  effects  upon  the  payment  of  the  bill,  524. 

for  honor,  when  and  how  it  can  be  made,  543. 
by  an  arbitrator  of  his  charge,  799. 

ACCEPTOR — for  honor  of  a  bill  of  exchange,  preference  when  there  are 
several,  543. 
his  obligations,  544. 

his  signature  does  not  need  to  be  acknowledged  to  prepare  an  execution 
against  him,  549. 

ACCION  EJECUTIVA.    See  Executive  Action. 

ACCOMPLICES  OF  THE  BANKRUPT,  661. 

ACCOUNT  which  must  accompany  a  redraft,  items  which  it  must  contain,  552. 

ACCOUNTING— obligation  of  factors,  119. 
of  auctioneers,  138. 
of  directors  of  a  corporation,  225. 
of  liquidators  of  a  commercial  association,  237. 
of  a  comisionisia  or  agent,  336. 
of  a  receiver  in  bankruptcy,  642. 
905 


906  INDEX 

ACKNOWLEDGMENT  OF  SIGNATURE— when  it  is  necessary  in  order  to 
prepare  an  execution  of  the  debtor  of  a  bill  of  exchange,  549. 
in  a  private  instrument,  784. 
made  before  a  notary  valid  in  Panama,  796. 

ACTIO  AD  EXHIBENDUM,  its  character,  766. 

ACTIO  OF  JACTITATIO  {Acddn  dejactancia),  when  it  lies,  769. 

ACTIONS — for  the  declaration  of  nullity  of  a  contract  are  extinguished  by 

confirmation  of  the  agreement,  314. 
for  rescission  on  account  of  hidden  defects  of  the  thing  sold,  384. 
of  the  carrier  for  the  payment  of  freight  and  charges,  115. 
of  the  payer  for  honor  of  a  bill  of  exchange,  546. 
derived  from  bills  of  exchange  in  case  of  non-acceptance,  548. 
non-pajonent,  547. 

their  character,  549. 
their  different  forms,  764. 

of  greater  importance  (juicios  de  mayor  cuantia),  790. 
of  lesser  importance  (judicios  de  menor  cuantia),  790. 
ordinary,  790. 

for  ejectment  of  tenants,  790. 
See  Executive  Actions,  Judicial  Actions,  Summary  Actions. 

ACTS — when  are  they  commercial,  34-40. 

of  a  father  which  create  a  presumption  that  he  has  authorized  his  son  to 

trade,  72. 
of  a  husband  which  constitute  a  presumption  that  he  has  authorized  his 

wife  to  trade,  72. 
of  the  parties  as  means  of  interpretation  of  a  contract,  300. 
of  administration  as  compared  with  acts  of  alienation,  73,  notes  29  and  32. 
and  contracts  subject  to  inscription  in  the  commercial  registry,  90. 
of  a  factor  which  enable  the  principal  to  rescind  a  contract  entered  into 

with  him,  121. 
of  a  principal  which  release  his  employees  from  their  obligations,  122. 
done  by  limited  partners  which  are  not  considered  management  and  do 

not  make  them  jointly  liable  for  the  common  transactions,  241. 
of  merchants  presumed  to  be  gratuitous,  301. 
of  the  insured  which  release  the  insurer,  438. 
which  create  presumption  of  bankruptcy,  614. 
of  a  merchant  which  are  revoked  by  a  declaration  of  bankruptcy,  628. 

ADMINISTRATION.    See  MANAGEMENT. 

ADMINISTRATION  OF  JUSTICE— in  Argentina,  712;  in  Bolivia,  714;  in 
Brazil,  716;  in  Chile,  716;  in  Colombia,  718;  in  Costa  Rica,  719; 
in  Cuba,  720;  in  Ecuador,  721;  in  Guatemala,  722;  in  Honduras,  722; 
in  Mexico,  723;  in  Nicaragua,  724;  in  Panama,  725;  in  Paraguay, 
726;  in  Peru,  722;  in  San  Salvador,  728;  in  Santo  Domingo,  729; 
in  Uruguay,  729;  in  Venezuela,  731. 


INDEX  907 

ADMISSION — of  the  paries  to  a  suit,  as  a  means  of  evidence,  778. 

a  means  to  prove  the  existence  of  a  partnership  in  Argentina,  169,  note 

38. 
of  a  new  partner,  187. 

AGE — necessary  for  a  minor  to  be  authorized  to  trade,  72. 
a  married  woman  to  be  authorized  to  trade,  75. 
being  appointed  a  factor,  117. 
to  be  a  clerk,  125. 

AGENCY— Its  definition,  315. 

its  difference  from  partnership,  315,  note  1. 

when  commercial,  326. 

completion  of  the  contract,  328.    See  Agents. 

AGENTS — of  foreign  corporations  in  Bolivia,  254;  in  Brazil,  257;  in  Chile, 
258;  in  Colombia,  259;  in  Costa  Rica,  261. 
their  obligations  in  case  they  refuse  to  accept  the  charge,  329. 
cannot  delegate  their  powers,  334. 
their  obligation  to  obey  the  principal's  instructions,  334. 

to  consult  with  him  in  unforeseen  circumstances  and  use  proper 

diligence,  335. 
to    execute    the  agency    in    good    faith   and    to    account  to    their 
principals,  336. 
their  liabilities  in  endorsing  a  bill  of  exchange,  501. 
See  Agency,  Del  Credere  Agent,  Comisionista. 

ALCABALA  in  Mexico,  77. 

ALCALDES  (Ward  justices):  in  Argentina,  713;  in  Bolivia,  714;  in  Costa 
Rica,  719;  in  Nicaragua,  724;  in  Santo  Domingo,  729. 

ALCALDES  AUXILIARES  in  Honduras,  722. 

ALCOHOL,  duty  upon  it  in  Venezuela,  61. 

ALDERMEN,  their  jurisdiction  at  fairs,  142. 

ALIENATION — acts  of,  see  Acts  of  Administration. 

of  property  without  consideration  made  by  a  bankrupt  is  void,  630,  632, 

633-638. 
of  property  by  an  agent  requires  special  power,  322,  323. 

ALTERNATIVE   OBLIGATIONS,  298. 

AMBASSADORS — cases  affecting  them  and  diplomatic  agents,  come  under 
the  jurisdiction  of  the  Supreme  Court  of  the  nation,  698  to  699,  701, 
717,  718,  725,  729. 


908  INDEX 

AMICABLE  COMPOUNDERS,  their  character  and  functions,  798  and  aeqs. 

AMPARO,  in  Mexico,  707;  in  San  Salvador,  728. 

ANCILLARY  PROCEEDINGS  (juicio  alractivo),  their  character,  622. 

ANNUAIRE  DE  LEGISLATION  COMPAREE,  2. 

ANSWER — to  a  complaint,  period  for  entering  the  same,  774. 
to  a  complaint,  its  requirements,  775. 
of  a  party  to  a  suit  to  posiciones  of  the  other  party,  778. 
See  Posiciones. 

ANTICRESIS,  its  character,  630. 

ANZILOTTI,  editor  of  Revista  di  Diritto  Internazionale,  2. 

APPEAL— when  it  lies  and  its  various  effects,  756. 
in  the  execution  of  a  judgment,  797. 

from  a  decision  rendered  by  arbitrators  or  amicable  compounders,  799. 
in  non-contentious  jurisdiction,  801. 

APPELLATE  COURTS,  See  Camaras  Db  Ai>elaci6n. 

APPLICATION  OF  PROPERTY  to  the  payment  of  debts  when  there  are 
several,  302,  359. 

APPRAISAL — of  the  thing  sold  when  the  vendor  fails  to  deliver  it  to  the 
vendee,  380. 
of  the  loss  in  case  an  insured  thing  is  destroyed  by  fire,  448. 
who  must  defray  the  expenses  of  it  in  case  of  destruction  by  fire  of  an 
insured  thing,  450. 

ARBITRATORS— their  character  and  functions,  798. 
their  acceptance  of  their  charge,  799. 
their  proceedings  must  be  held  before  a  clerk  of  a  court  of  first  instance, 

799. 
must  confine  themselves  within  the  terms  of  the  compromiso,  799.    See 

this  word. 

ARCHIVIO  GIURIDICO,  2. 

ARGENTINA,  its  commercial  laws,  15. 

ARREST  OF  THE  BANKRUPT,  when  it  lies,  621. 

ASOCIACION — meaning  of  this  word  in  Spanish  law,  156,  in  note. 
en  participacion,  166,  244. 

requisites  of  its  organization,  246. 


INDEX  909 

ASOCI  AC  ION— Continued. 

who  is  the  owner  of  its  capital,  245. 
its  relations  with  third  parties,  246. 
relations  of  its  partners  w'ith  one  another,  247. 
its  liquidation,  248.    See  Joint  Adventure. 
of  capital  and  industry,  166. 

ASSIGNEE  IN  BANKRUPTCY.     See  Receivers. 

ASSIGNEE — of  a  share  of  stock,  his  libaility  for  the  price  of  the  share,  210. 
of  a  credit  must  notify  the  assigmnent  to  the  debtor  in  order  to  prevent 
the  latter  from  releasing  himself  by  paying  the  original  creditor,  390. 

ASSIGNMENT — of  rights  of  a  general  partner  is  prohibited,  184. 
of  a  limited  partner  and  its  effects,  242. 
of  non-endorsable  credits,  its  requisites,  390. 

ASSIGNOR — of  rights  of  a  limited  partnership,  242. 
of  non-endorsable  credits,  390. 
is  responsible  for  the  existence  of  the  credit  but  not  for  the  solvency  of  the 

debtor,  391. 
of  a  share  of  stock,  his  liabilities,  210. 

his  rights  against  the  assignee  who  fails  to  pay  the  balance  due  on  a 
share,  211. 

ASSOCIATED  JUDGES  in  Venezuela,  731. 

ASSOCIATES — their  individual  capital  is  a  guarantee  for  the  debts  of  a  part- 
nership, with  preference  to  the  associate  creditors,  162. 

their  liabilities  for  the  common  obligations  as  a  means  of  classifying 
associations,  165. 

method  of  settling  differences  among  them,  172. 

minimum  number  required  for  the  organization  of  a  corporation,  204. 

when  they  are  less  than  a  certain  number  the  association  must  be  dis- 
solved, 233. 

their  character  in  a  joint  adventure,  245. 

their  liabilities,  246,  247. 

ASSOCIATION  FOR  THE  REFORM  AND  CODIFICATION  OF  THE 
LAW  OF   NATIONS,    1. 

ASSOCIATION  OF  BROKERS,  128. 

ATTACHMENT  of  a  debtor's  property,  when  it  lies  and  order  in  which  it 
must  be  carried  out,  792. 

ATTORNEY  GENERAL,  732. 

AUCTION   SALE,  manner  of  carrying  it  out,  137. 


910  INDEX 

AUCTIONEERS— their  qualifications,  136. 
books  they  must  keep  and  requisites,  137. 
their  obligations,  138. 

AUDIENCIAS  in  Cuba,  720. 

AUTHENTICITY— of  the  signature  of  a  notary,  how  to  prove  it,  326. 
of  a  signature  of  instrimient,  how  to  verify  it  when  in  doubt,  784. 

AUTHORIZATION— given  to  minors  for  trading,  71. 
form  of  the  same,  72. 

given  to  a  married  woman  for  trading,  75. 

its  requisites,  75. 

its  form,  76. 

its  withdrawal,  77. 

when  it  is  unnecessary,  78. 

its  effects  on  the  various  kinds  of  property  of  the  consorts,  79. 

of  the  government  for  establishing  corporations,  189. 

cases  in  which  it  is  not  necessary  in  Argentina,  252. 

it  is  necessary  in  Bolivia,  190,  254;  in  Brazil,  190,  255,  257;  in  Chile,  191, 
258;  in  Colombia,  192,  261;  in  Ecuador,  Guatemala  and  Honduras, 
192,  193,  265;  in  Haiti,  193;  when  it  is  necessary  in  Mexico,  193;  in 
Honduras,  265;  in  Nicaragua,  194;  in  San  Salvador  only  in  certain 
cases,  194;  in  Panama  foreign  insurance  corporations  only,  270;  in 
Uruguay,  195,  274. 

contained  in  a  general  power  of  attorney,  321. 

which  requires  special  power,   322ff. 

AUTOS  ACORDADOS,  723. 

AUXILIARY  BOOKS,  their  evidential  force,  114. 

AUXILIARIES  OF  COMMERCE— their  functions,  116. 
their  different  kinds,  117. 
dependent,  117. 
independent,  125. 

AVAL  (suretyship  on  a  bill  of  exchange) ,  its  character  and  form,  518. 
its  effects,  519. 
capacity  of  women  to  make  it,  520. 


B 

BAD  FAITH — its  effects  in  Panama  in  case  a  penalty  clause  was  stipulated, 
297. 
in  contracts  of  insurance,  429. 

BAD  TREATMENT  of  a  factor  or  clerk  on  the  part  of  his  principal  author- 
izes him  to  leave  employment,  122. 


INDEX  911 

BAILEE.    See  Depositary. 

BAILOR — must  compensate  the  bailee,  345. 

his  rights  in  case  of  deposit  of  ear  marked  money,  and  when  the  money 
is  not  specified,  347. 

BALANCES  OF  ACCOUNT  considered  as  loans  when  relating  to  agencies 
or  advances  in  mercantile  transactions,  360. 

BALANCE  SHEET— book  which  must  contain  that  of  a  merchant,   106; 
the  directors  of  corporations  must  present  one  to  the  regular  meeting 

of  stockholders,  225. 
obligation  of  stock  companies  in  Argentina  to  present  one  quarterly  to 

the  Department  of  Justice  for  publication,  252. 

BANKER'S   LETTERS   OF  CREDIT,   592. 

BANKING  LAWS,  in  Argentina,  62,  note  49;  in  Brazil,  62,  note  50;  in 
Mexico,  63,  note  51 ;  in  Venezuela,  66,  note  64. 

BANKRUPT.     See  Bankruptcy,  Debtor,  Rehabilitation  of  the  Bank- 
rupt. 

BANKRUPTCY— of  brokers,  134. 

of  associations  as  a  cause  for  the  dissolution  of  the  same,  231. 

of  a  partner  as  a  cause  for  the  dissolution  of  the  partnership,  232. 

of  the  parties  to  a  contract  of  insurance  and  its  effect,  434. 

of  an  insured  in  a  fire  insurance  policy,  442. 

of  the  drawer  of  a  bill  of  exchange,  517. 

its  general  principles,  and  their  exclusive  application  to  merchants,  600. 

state  of,  612. 

when  it  exists,  614. 

who  may  demand  it,  615. 

effect  of  its  declaration  on  the  capacity  of  the  debtor,  619. 

on  the  person  of  the  debtor,  621. 

in  regard  to  judicial  actions,  622. 

on  non-matured  obligations,  623. 

in  regard  to  co-debtors,  124. 

retroactivity  of  declaration,  627,  639. 
revocation  of  the  acts  of  the  delator  prior  to  its  declaration,  628. 
revocation  of  the  decree  declaring  the  same  and  its  effects,  639. 
the  initiation  of  proceedings,  640. 
Receivers.    See  this  word, 
different  kinds,  658. 

when  it  must  be  declared  fraudulent,  659. 
accomplices  of  the;  l)ankrupt,  661. 
discontinuance  of  proceedings  and  its  effects,  671. 
rehabilitation  of  the  bankrupt,  (572. 
of  partnerships  and  corporations,  675. 


912  INDEX 

B  A  NKRVVTCY— Continued. 

of  public  service  companies,  679. 

effects  of  a  declaration  of  suspension  of  payments  of  such  companies,  680. 
approval  of  the  settlement  of  such  companies  with  their  creditors,  680. 
effects  of  such  settlement  in  regard  to  the  associates,  681. 

BANKS — power  of  the  federal  government  in  regard  to  them  in  Argentina  and 
Brazil,  62;  in  Mexico  and  Venezuela,  63. 
(it  seems  that)  foreigners  cannot  establish  them  in  Venezuela,  276. 

BANKS  OF  ISSUE,  governed  by  federal  laws,  62,  63. 

BARTER,  its  character,  390. 

BENEFICIARY — his  name  must  be  stated  in  a  life  insurance  policy,  451. 

his  rights  in  an  insurance  policy  are  superior  to  those  of  the  creditors  and 

heirs  of  the  insured,  456. 
of  a  letter  of  credit,  his  obligations,  590. 
relations  between  him  and  the  payer,  591. 
his  rights,  592. 

BENEFIT — of  levy  of  execution  of  the  principal  debtor's  property  when  a 
surety  is  sued  by  the  creditor,  464. 
of  contribution  in  favor  of  a  surety  when  there  are  other  co-sureties,  465. 
See  Profits. 

BILL  OF  EXCHANGE— its  evolution,  473. 
two  forms  which  it  may  assume,  475. 
requisites  which  it  must  fulfill,  475. 
Uniform  Regulation  of  the  Hague  Convention,  476. 
capacity  of  the  parties  to  bind  themselves,  479. 
its  commercial  character,  478. 
its  date,  481. 

copies  of  the  same  which  can  be  made,  482. 
clauses  inconsistent  with  its  character,  484. 

effect  of  the  clauses  "value  on  account,"  "value  imderstood,"  485. 
its  terms,  485. 

maturity  when  it  is  due  on  a  holiday,  488. 
time  for  paying,  489. 
different  forms  of  drawing  it,  489. 

character  of  the  contract  between  the  drawer  and  the  payee,  491. 
its  presentation  for  acceptance  and  for  payment,  504. 
consequences  of  not  sending  it  in  proper  time,  508. 
period  within  which  acceptance  must  be  made  or  refused,  509. 
person  who  must  keep  it  between  presentation  and  acceptance,  509. 
cases  in  which  it  is  lost,  526. 
actions  arising  from  it,  546. 
when  it  is  lapsed,  550. 
conflict  of  laws,  554-557. 


INDEX  913 

BILL  OF  EXCHANGE— Coniinwd. 

acts  of  non-contentious  jurisdiction,  802. 

its  payment  by  a  bankrupt  drawee  after  the  date  of  his  cessation  of  pay- 
ments, 633,  635,  637. 

BILL  OF  LADING  Guia  or  Carta  de  porte),  its  contents,  395. 
its  effects,  397. 

must  be  surrendered  by  the  consignee  to  the  carrier,  416. 
See  Transportation,  Carrier,  Consignee,  Consignor. 

BLANK  ENDORSEMENT,  496. 

BOARD  OF  DIRECTORS.    See  Directors. 

BOND — required  to  be  a  Hcensed  broker,  131,  132,  note  72. 
necessary  for  obtaining  a  moratorium,  604. 

BONDS  issued  by  a  corporation,  their  character  and  requisites,  228,  229. 

BOOKKEEPER,  his  legal  character  and  powers,  107. 

BOOKKEEPING — its  purpose  from  a  legal  view-point,  98. 

of  a  partnership  can  be  supervised  by  any  of  the  partners,  182. 

cases  in  which  the  assignees  of  a  limited  partner  can  not  inspect  it,  242. 

of  commercial  associations  inspected  by  the  Bureau  of  Commerce  and 

Industry  of  the  Department  of  Agriculture,  Commerce  and  Labor 

in  Cuba,  263. 

BOOKS — those  prescribed  by  law,  102. 
who  is  bound  to  keep  them,  102. 
their  external  formahties,  104. 
their  internal  formalities,  104. 
manner  of  authenticating  the  same,  104. 
language  in  which  they  must  be  kept,  105. 
they  are  not,  as  a  rule,  subject  to  general  inspection  by  judges  or  other 

authorities,  108. 
evidence  derived  from  them,  108,  110. 

in  contentions  between  merchants,  110. 

and  non-merchants,  113. 
their  production,  and  their  exhibition,  108. 
those  subject  to  exhibition,  114. 
auxiliary,  their  evidential  force,  114. 

effect  of  failure  to  exhibit  them,  when  properly  requested,  114. 
those  which  must  be  kept  by  factors,  119. 
duty  to  preserve  them  and  commercial  papers  for  a  certain  period  of 

time,  115. 
those  which  brokers  must  keep,  128. 
their  probative  force,  129. 
of  auctioneers,  and  their  requisites,  137. 


914  INDEX 

BOOKS— Continued. 

those  of  a  partnership  can  be  inspected  by  partners,  182. 

cases  of  exception  to  the  above  rules,  242. 

they  cannot  be  inspected  by  stockholders,  195. 

of  foreign  companies  in  Costa  Rica,  261. 

failure  to  keep  them  at  all,  or  to  keep  them  in  proper  form,  as  a  ground 

to  declare  a  bankruptcy  fraudulent,  659. 
when  they  must  be  produced  in  preparatory  proceedings,  766. 
as  a  means  of  evidence,  778. 

BREACH — of  contract  as  a  basis  for  its  rescission  and  payment  of  damages, 
295. 
effect  of  such  breach  in  case  a  penalty  clause  was  stipulated,  297. 
of  a  partnership  agreement  and  its  effects,  233. 

BREVIARIUM  ANIANI,  11. 

BROKERS — their  economic  and  legal  functions,  125. 
definition,  126. 

their  power  to  authenticate  commercial  transactions,  127. 
must  keep  books,  127,  128. 

a  memorandum  of  each  transaction  and  give  copy  of  the  same  to  the 
parties,  127. 
must  certify  the  delivery  of  the  things  subject-matter  of  every  transaction 

in  which  they  intervene,  127. 
must  keep  records  of  prices  of  commodities,  127. 

give  notice  to  the  other  brokers,  128. 
their  association,   128. 
probative  force  of  their  books,  129. 

requisites  they  must  fulfill  in  order  to  obtain  a  license,  130. 
women,  131. 

their  different  kinds,  131. 
their  obligations,  133. 
their  disabilities,  143. 

their  liability  for  the  obligations  of  the  parties,  134. 
their  compensation,  135. 
contracts  entered  into  through  them,  291. 
their  memoranda  as  a  proof  of  obligations,  311. 
sale  through  them  of  goods  sent  to  a  commissionaire,  329. 

BULLETIN  ARGENTIN  DE  DROIT  INTERNATIONAL  PRIVE,  3. 


CAMARAS  DE  APE  LAC  I  ON  (Appellate  courts),  in  Argentma,  714;  in  Bo- 
livia, 715;  in  Brazil,  716;  in  Chile,  717;  in  Costa  Rica,  719;  in  Cuba, 
721;  in  Guatemala,  722;  in  Haiti  and  Honduras,  723;  in  Mexico, 
724;  in  Nicaragua,  725;  in  Panama,  726;  in  Paraguay,  727;  in  San  Sal- 
vador, 728;  in  Santo  Domingo,  729;  in  Uruguay,  730;  in  Venezuela, 
731. 


INDEX  915 

cAmARAS  DE  PAZ  in  Argentina,  717. 

CANGIANO,  his  definition  of  commerce,  32 

CAPACITY — for  becoming  a  merchant,  71. 
of  commercial  associations,  163. 
of  foreign  commercial  associations  in  Peru,  271. 
of  parties  to  a  contract  as  essential  requisite  for  its  validity,  282. 
for  being  an  agent,  315. 

of  persons  to  bind  themselves  in  a  bill  of  exchange,  479. 
as  affected  by  a  declaration  of  bankruptcy,  619. 
principles  which  regulate  that  of  a  person,  as  well  as  family  rights  in  case 

of  conflict  of  laws,  812. 
of  persons  according  to  the  Montevideo  treaties,  827. 

CAPITAL — of  commercial  associations,  161. 

is  a  guaranty  for  creditors,  162. 
of  a  partnership,  178. 
of  a  corporation,  198. 
minimum  required  to  be  subscribed  in  order  to  organize  a  stock  company, 

203. 
portion  of  the  same  which  needs  to  be  paid  in  for  such  organization,  204. 
requisites  for  reducing  that  of  a  corporation,  213. 
its  loss,  as  a  cause  of  dissolution  of  an  association,  231,  233. 
its  owner  in  a  joint  adventure,  245. 
of  a  foreign  association  in  Brazil,  255. 

a  portion  of  it  must  be  deposited  by  a  foreign  corporation  in  Brazil,  256. 
its  amount  is  the  basis  for  the  payment  of  fees  relating  to  the  registration 

of  association  papers,  in  Peru,  273. 

CAPITAL  PUNISHMENT,  as  a  penalty  for  non-political  crimes,  is  not 
covered  by  a  life  insurance  poUcy,  453. 

CARRIER — instrument  which  embodies  his  contract  with  the  shipper,  397. 

different  classes  to  which  he  may  belong,  401. 

his  obligations,   404. 

his  liabilities  in  case  he  fails  to  comply  with  legal  requisites  by  virtue  of  a 
formal  order  of  the  shipper  or  the  consignee,  410. 

period  within  which  he  is  answerable  for  any  complaint  made  by  the  con- 
signee, 410. 

his  rights  and  privileges,  413. 

his  lien  upon  the  goods  carried,  415. 

obhgations  and  rights  of  subsequent  carriers,  415. 

lawful  waivers  in  his  favor,  419. 

obligations  of  a  public  carrier,  419. 

CASACION  (quashing  a  judgment),  in  Chile,  717,  718;  in  Costa  Rica,  720; 
in  Cuba,  721;  in  Haiti,  723;  in  Mexico,  724;  in  Venezuela,  731. 
when  it  lies,  756. 


916  INDEX 

CASA  DE  C0NTRATACI6n  DE  SEVILLA,  15. 

CAUSE — as  an  essential  requisite  of  a  contract,  282,  285. 
mistake  concerning  it,  in  contracts,  283. 

its  meaning  as  compared  with  the  Anglo-American  consideration,  286. 
failure  to  express  it  in  an  instrument,  287. 
effects  of  the  nullity  of  a  contract  when  due  to  an  unlawful  "cause,"  313. 

CERTIFICATE — given  by  brokers,  of  the  delivery  of  things,  subject-matter 
of  a  contract  entered  into  through  them,  127. 
issued  by  a  warehouse,  its  character  and  kinds,  148,  149. 
effect  of  its  endorsement,  149. 
its  requisites,  150. 
must  be  detached  from  a  stub-book,  151. 

CHALLENGES— of  judges  and  judicial  officers,  739. 

of  experts,  785. 
of  witnesses,  788. 

CHECK-BOOK.    See  Checks. 

CHECKS— their  origin,  562. 
their  requisites,  563. 
places  on  which  they  can  be  drawn,  564. 
period  within  which  they  must  be  presented  for  pajonent,  564. 
they  must  be  paid  at  sight,  566. 

their  holder  must  acknowledge  the  receipt  of  their  amount,  566. 
when  a  duplicate  can  be  given,  566. 
crossed,  566. 

non-payment  and  protest,  567. 
cases  in  which  their  payment  can  be  refused,  568. 
they  must  be  detached  from  check-books.     Requirements  of  the  latter, 

569. 
liability  in  case  of  their  being  misused,  570. 

CIRCULARS  as  a  method  of  publicity  for  important  facts  relating  to  a  busi- 
ness enterprise,  89. 

CIRCULATION  OF  WEALTH,  as  the  aim  of  commerce,  and  its  conse- 
quences, 33. 

CITATIONS  (Citaciones),  their  purpose,  744. 
for  judgment,  789. 

CITIZENSHIP — a  requisite  for  brokers  to  obtain  a  license,  130. 
of  a  married  woman,  814. 

CIVIL  CODE,  the  federal  congress  has  power  to  enact  it  for  the  whole  coun- 
try in  Argentina,  51;  in  Brazil,  54;  in  Venezuela,  61. 


INDEX  917 

CIVIL  COURTS.    See  Administration  of  Justice. 

CIVILISTS,  their  opinion  on  the  matter  of  the  independence  of  commercial 
from  civil  law,  4. 

CIVIL  LAW,  when  it  applies  in  commercial  cases,  6. 
its  relation  to  mercantile  law,  5,  8,  281. 
is  based  on  history  and  customs  of  every  country,  9,  11. 

CIVIL  RIGHTS,  bankrupts,  as  a  rule,  not  deprived  thereof,  623. 

CLAIMS  of  creditors  of  a  bankrupt,  their  character,  646. 
their  classification,  648. 
rules  for  their  payment,  655. 

CLAUSES — inconsistent  with  the  character  of  a  bill  of  exchange,  484. 

"value  on  account,"  "value  understood"  their  effect  in  a  bill  of  exchange, 

485. 
modifying  the  regular  effects  of  the  endorsement  of  a  bill  of  exchange,  497. 
designed  to  discharge  the  holder  of  a  bill  of  exchange  from  his  obligation 

to  protest  it,  are  void,  as  a  rule,  523. 

CLERK— his  character,    122. 

binding  force  of  his  acts  on  his  employer,  122. 

his  powers,  122. 

when  his  power  does  not  need  to  be  specific,  124. 

his  rights  and  liabilities,   125. 

of  a  court  must  authenticate  all  proceedings  before  arbitrators,  799. 

CO-DEBTORS — how  they  are  affected  by  a  declaration  of  bankruptcy  of 
any  of  them,  624. 
effects  of  the  settlement  by  one  of  them  with  the  common  creditor  in  a 
bankruptcy,  668. 

CODE  OF  ALARIC,  11. 

CODE  OF  COMMERCE— of  Spain  and  its  principal  amendments,  14. 
of  Argentina  and  principal  amendments,  15. 
of  Bolivia  and  principal  amendments,  16. 
of  Brazil  and  principal  amendments,  17,  18. 
of  Chile  and  principal  amendments,  19. 
of  Colombia  and  principal  amendments,  20. 
of  Costa  Rica  and  principal  amendments,  21. 
of  Cuba  and  principal  amendments,  22. 
of  Ecuador  and  principal  amendments,  23. 
of  Guatemala  and  principal  amendments,  23. 
of  Haiti  and  principal  amendments,  24. 
of  Honduras  and  principal  amendments,  24. 
of  Mexico  and  principal  amendments,  25. 


918  INDEX 

CODE  OF  COMMENCE— Continued 

of  Nicaragua  and  principal  amendments,  27. 
of  Panama  and  principal  amendments,  27. 
of  Paraguay  and  principal  amendments,  28. 
of  Peru  and  principal  amendments,  28. 
of  San  Salvador  and  principal  amendments,  29. 
of  Santo  Domingo  and  principal  amendments,  30. 
of  Uruguay  and  principal  amendments,  30. 
of  Venezuela  and  principal  amendments,  31. 

the  federal  congress  has  power  to  enact  one  for  the  whole  of  Argentina, 
51;  Brazil,  54;  Mexico,  59;  Venezuela,  61. 

CODE  OF  EURIC  or  OF  TOLOSA,  11. 

COLECCION  DE  LAS  INSTITUCIONES  JURIDICAS  DE  LOS  PUEB- 
LOS MODERNOS,  2. 

COLLEGIATE  EXCHANGE  BROKERS— their  quaUfications,  128. 
their  liabilities,  144. 
their  functions,   145. 
record  of  their  transactions,  145. 
note  that  they  must  give  of  the  transactions  they  conclude,  145. 

CO-MANAGERS  in  commercial  associations,  when  they  can  be  appointed, 
180. 

COMMERCE,  considered  as  a  social  function,  34. 

COMMERCIAL  ACTIONS,  must  be  brought,  as  a  rule,  before  the  judge  of 
the  residence  of  the  defendant,  738. 

COMMERCIAL  ACTS.— principals  and  auxiliaries,  34. 

table  of  classification,  35. 

codes  which  include  a  list  of  them,  37. 

when  commercial  in  regard  to  one  of  the  parties  to  a  transaction  only,  39. 

conflict  of  laws,  40. 

COMMERCIAL  ASSOCIATIONS— their   character,   according  to  the  in- 
dividualists and  socialists,  156. 
influence  of  both  points  of  view  upon  positive  law,  157. 
as  legal  entities,  157. 
method  of  estabhshing  them,  164,  169. 
their  different  kinds,  164. 
legal  formalities  for  constituting,  167. 
their  organization  by  means  of  a  public  instrument,  167. 
that  instrument  must  be  registered,  167. 
their  organization  by  means  of  a  private  instrument,  168. 
effects  of  failure  to  comply  with  legal  formalities  in  organizing  them,  168. 
jstatute  of  limitation  in  reference  to  them,  170. 


INDEX  919 

COMMERCIAL  ASSOCIATIONS—Continued. 

method  of  settling  differences  arising  among  their  members,  172. 

pubhcity  of  acts  concerning  them,  177,  228. 

how  their  capital  is  formed,  178. 

their  management,  178. 

majority  required  for  deciding  matters  by  their  board  of  directors,  179. 

character  of  their  managers,  179. 

privileges  of  their  members  in  case  of  partnerships,  181. 

obhgations  of  their  members  in  case  of  partnerships,  182. 

requisites  for  reducing  their  capital,  213. 

their  administrative  agencies,  216. 

general  meetings  of  their  stockholders,  261. 

unlawful  decisions  reached  at  their  general  meetings,  222. 

effects  of  the  resolutions  passed  upon  by  their  general  meetings,  222. 

methods  for  their  supervision,  227. 

bonds  issued  by  them,  228. 

general  causes  of  their  dissolution,  230. 

special  grounds  for  dissolution  of  stock  companies,  233. 

obligation  of  registering  their  premature  dissolution,  235. 

their  legal  entity  survives  dissolution  while  the  liquidation  is  going  on,  236. 

appointment  of  their  liquidators,  236. 

functions  of  their  liquidators,  237. 

relation  of  the  liquidators  to  them,  238. 

functions  of  their  general  meeting  of  stockholders,  during  the  liquidation, 

238. 
law  which  governs  the  validity  and  form  of  their  organization,  272. 
their  representatives  in  case  of  bankruptcy,  678. 

COMMERCIAL  CODE.     See  Code  of  Commerce. 

COMMERCIAL  COURTS,  in  Argentina,  714;  in  Brazil,  716;  in  Guatemala, 
722;  in  Panama,  727;  in  Santo  Domingo,  729;  in  Uruguay,  730. 

COMMERCIAL  HOUSE  or  FIRM— its  definition,  98. 

effect  of  its  inscription  in  Brazil,  98;  in  Panama  and  Venezuela,  99. 

COMMERCIAL  LAW — its  practical  international  interest,  4. 
its  independent  character,  opinions  on  the  matter,  4. 
its  evolution  and  relation  to  the  civil  law,  9,  281 . 

COMMERCIAL  REGISTRY— its  object,  85. 
its  organization,  89. 

acts  and  contracts  subject  to  inscription  in  it,  90. 
special  method  adopted  in  Cuba,  92. 
provisional  registration  in  Panama,  94. 
effects  of  inscription  and  of  failure  to  inscribe,  94. 
its  connection  with  the  gcjneral  registry  of  i)roperty,  96. 
obligations  of  foreign  commercial  associations  in  reference  to  it,  97. 
obligation  to  inscribe  in  it  the  premature  dissolution  of  a  commercial 
association,  235. 


920  INDEX 

COMMERCIAL  REGISTKY— Continued. 

fees  payable  at  the  time  papers  are  entered  in  it,  253. 

in  regard  to  foreign  associations  in  Argentina,  252,  253;  in  Bolivia,  254; 

in  Brazil,  255,  256;  in  Colombia,  260,  in  Costa  Rica,  261;  in  Cuba,  262; 

in  Mexico,  266;  in  Panama,  268;  in  Peru,  271;  in  San  Salvador,  274; 

in  Uruguay,  274;  in  Venezuela,  276. 
inscription  in  it  is  a  necessary  requisite  to  obtain  a  composition  with 

creditors,  604. 
effects  of  the  failure  to  inscribe  in  it  a  mortgage,  burden  or  conveyance 

of  realty  in  case  of  bankruptcy,  632. 

COMMERCIAL  TRAVELERS,  342. 

COMMERCIAL  USAGES,  as  a  source  of  commercial  law,  6. 
as  a  guide  for  the  interpretation  of  contracts,  300. 

COMMISSION — its  distinction  from  commercial  agency,  328. 
its  acceptance,  328. 

cases  in  which  its  execution  is  not  compulsory  even  though  it  was  ac- 
cepted, 333. 
its  termination,  341. 
it  is  not  inconsistent  with  a  contract  of  current  account,  595. 

COMISIONISTA — his  character  and  differences  from  an  agent,  328. 

relations  between  the  parties  concerned  in  a  transaction  when  he  deals 
in  his  own  name,  330. 

when  he  deals  in  his  principal's  name,  330. 

his  obligations,  333. 

his  power  cannot  be  delegated,  334. 

his  special  liabilities,  337. 

lien  on  goods  sent  to  him,  for  the  payment  of  his  compensation  and  ex- 
penses, 339. 

See  Agent,  Del  Credere  Agent. 

COMMON  FUNDS  of  a  momentary  association   (joint  adventm-e),  their 
liability  for  all  debts  incurred  by  the  managing  partner,  247. 

COMPANIA,  meaning  of  this  word  in  Spanish  law,  156,  note  1. 

COMPARISON  of  handwritings  as  a  means  of  evidence,  784. 

COMPENSATION— of  factors,  120. 
of  brokers,  135. 
of  a  comisionista,  339. 

COMPETENCE — as  a  requisite  which  brokers  must  possess,  130. 
of  federal  and  supreme  courts,  697ff. 


INDEX  921 

COMPLAINT— its  requisites,  771 . 

documents  which  must  accompany  it,  771. 

copies  of  documents  which  must  be  presented  together  with  it,  772. 

COMPOSITION  WITH  CREDITORS  DURING  THE  BANKRUPTCY 
PROCEEDINGS— time  for  proposing  the  settlement,  661. 

how  to  obtain  it,  662. 

creditors  who  can  refrain  from  taking  a  share  in  it,  662, 

votes  necessary  for  its  acceptance,  663. 

opposition  to  its  approval,  664. 

time  for  demanding  disapproval,  666. 

its  effects  in  regard  to  the  creditors,  666. 
debtor,  667. 
co-debtors,  668. 

other  effects  produced  by  it,  669. 

its  rescission,  669. 

cases  in  which  it  cannot  be  made,  670. 

See  PREVENfTivE  Composition  with  Creditors. 

COMPROMISO— its  character  and  requisites,  798. 

acceptance  by  the  arbitrators  of  the  charge  embodied  in  it,  799. 
cases  in  which  it  is  void,  799. 

CONDITION  PRECEDENT  {condicidn  suspensiva)  its  character  and  effects, 
294. 

CONDITION  SUBSEQUENT  (condicidn  resolutoria) ,  its  effects,  294. 

CONDITIONAL  ACCEPTANCE  of  a  bill  of  exchange,  615. 

CONFIRMATION  of  a  contract  void,  314. 

CONFISCATIONS  suffered  by  a  carrier  of  goods,  402. 

CONFLICT  OF  JURISDICTION— in  Argentina,  713;  in  Bolivia,  715,  716; 

in  Chile,  718;  in  Costa  Rica,  720;  in  Cuba,  721;  in  Mexico,  724; 

in  Nicaragua,  725;  in  Panama,  726;  in  Peru,  727;  in  San  Salvador, 

728. 
rules  of  general  application,  737. 
two  methods  of  solving  them,  739. 

CONFLICT  OF  LAWS — in  classification  of  an  act  as  commercial  or  non- 
commercial, 40. 
in  the  performance  of  a  contract,  301. 
in  the  form  of  a  power,  317. 
in  fire  insurance  contracts,  450. 
in  l)ills  of  exchange,  554-557. 
in  reference  to  bankruptcy  proceedings,  681ff. 
general  principles,  811. 


922  INDEX 

CONFLICT  OF  LAWS— Continued. 

in  reference  to  status  and  capacity  of  persons,  812. 

in  reference  to  citizenship  and  domicil  of  a  married  woman,  814. 

real  property,  815. 

personal  property,  816. 

forms  of  contracts  and  legal  acts,  817. 

the  effects  of  contracts,  818. 

wills,  820. 

the  execution  of  foreign  judgments,  823  and  seqs. 
as  settled  according  to  the  Montevideo  treaties,  826  and  seqs. 

CONSEJO  DE  DEFENSA  FISCAL  in  Chile,  259. 
CONSEJO  DE  INDIAS,  15. 

CONSENT — of  co-partners  necessary  for  a  partner  to  engage  in  transactions 
for  his  own  account  when  the  partnership  has  not  a  defined  line  of 
business,  or  to  assign  his  interest  in  the  common  affairs,  184. 

effects  of  breach  of  this  rule,  186. 

as  a  cause  of  dissolution  of  a  commercial  association,  231. 

mutual,  as  an  essential  requisite  for  the  validity  of  a  contract,  282. 

defects  in  it  which  may  invalidate  a  contract,  283. 

CONSIDERATION,  as  compared  with  "cause"  as  a  requisite  for  the  validity 
of  contracts,  286. 
when  its  absence  does  not  invalidate  a  contract,  287. 
when  not  necessary  for  thr  validity  of  suretyship,  461. 

CONSIGNEE — he  must  return  the  bill  of  lading  to  the  carrier  when  the  latter 
delivers  the  transported  merchandise,  398. 
his  obligations,  416. 
his  rights,   417. 

CONSIGNOR— his  obUgations,  401. 

his  liabilities  for  instructions  given  to  the  carrier,  410. 
lien  upon  the  transportation  equipment,  413. 

CONSOLIDATION  OF  ACTIONS  {Acumulaci&n  de  acdones),  741. 

CONSULADO  DEL  MAR,  12,  15. 

CONSULS — they  may  authenticate  the  signatures  of  public  functionaries  in 

other  countries,  326. 
their  functions,  263,  264,  271. 
they  are  subject  to  the  jurisdiction  of  the  coiu-ts  of  the  coxmtry  in  which 

they  reside,  698-701. 
their  competence  in  acts  of  non-contentious  jurisdiction,  801. 

in  the  execution  of  last  wills,  820. 


INDEX  923 

CONTENCIOSO  ADMIN ISTRATIVO,  in  Costa  Rica,  719. 
CONTENTIOUS  JURISDICTION,  cases  within  it,  737. 
CONTINGENCY  FEES  {Pacto  de  quota  litis),  733ff. 

CONTRACT— essential  requisites,  282,  288. 

its  formation,  offer  and  acceptance,  289. 

entered  into  through  brokers,  291. 

its  effect  in  regard  to  tliird  parties,  292. 

its  definition,  293. 

it  constitutes  the  law  of  the  parties,  293. 

rules  for  its  interpretation,  299. 

made  in  foreign  countries,  301. 

cases  of  non-performance,  308. 

involuntary  failure  to  comply  with  it,  311. 

effects  of  its  being  declared  void,  313. 

when  it  can  be  nullified  in  case  of  bankruptcy,  if  no  consideration  stipu- 
lated, 632-638. 

entered  into  by  the  bankrupt  within  a  certian  number  of  days  before  his 
declaration  of  bankruptcy,  and  its  effects,  629,  630,  633,  634,  637, 
638. 

CONTRIBUTION  OF  PARTNERS  for  the  formation  of  a  partnership  must 
be  stated  in  the  partnership  agreement,  176. 
time  within  which  payment  of  the  same  must  be  made,  182. 

COPIES — of  a  bill  of  exchange,  their  requisites,  482. 

obhgation  of  the  drawer  of  giving  as  many  to  the  payee  as  he  may 

request,  491. 
of  the  memorandiun  of  the  protest  of  a  bill  of  exchange  that  the  protesting 

officer  must  give  the  parties  concerned,  540. 
which  must  accompany  a  complaint,  772. 
the  defendant  must  be  served  with  those  acompanying  the  complaint 

together  with  the  summons,  773,  793. 

CORPORATIONS— their  origin,  188. 

their  supervision  according  to  different  systems,  188-195. 

pubhcity  instead  of  supervision,  189. 

cases  in  which  their  organization  must  be  authorized  by  the  government, 
in  Argentina,  190;  in  Chile,  191;  in  Colombia,  192;  in  Guatemala, 
Haiti  and  Honduras,  193;  in  Nicaragua,  194;  in  Uruguay,  195. 

system  of  authorization  in  Bolivia,  and  in  Brazil,  190. 

when  such  authorization  is  required  in  Ecuador,  192;  in  Mexico,  193, 
and  in  San  Salvador,  194. 

limited  liability  of  their  stockholders,  195. 

legal  form  of  their  articles  of  incorporation,  196. 

methods  of  establishing  them,  199. 

method  of  Argentina,  200;  of  Mexico,  201. 


924  INDEX 

CORPORATIONS— Con^intfed. 

their  disabilities,  212. 

effects  of  a  declaration  of  bankruptcy  of  the  same,  675. 

acts  of  non-contentious  jurisdiction  in  regard  to  them,  802. 

CORREGIMIENTO  in  Panama,  726. 
CORTES  SUPERIORES  in  Peru,  727. 

CORTE  SUPREMA  in  Bolivia,  715;  in  Chile,  718;  in  Colombia,  718;  in 
Costa  Rica,  719;  in  Ecuador,  721;  in  Honduras,  723;  in  Panama,  725, 
726;  in  Peru,  727;  in  San  Salvador,  728;  in  Santo  Domingo,  729; 
in  Venezuela,  731. 

COSTS — their  taxation  and  distinction  between  personates  and  procesales,  759. 
in  executive  actions  they  are  taxed  against  the  defendant  even  though  he 
voluntarily  pays  after  judicial  proceedings  have  been  started,  792, 
794. 

CO-SURETIES— effects  of  a  guaranty  among  them,  468. 

COUNTERCLAIM,  775. 

COURTS — their  decisions  cannot  control  future  cases,  7. 

CREDIT  as  a  means  to  overcome  the  obstacle  of  time  in  business,  36. 

CREDIT  INSTITUTIONS,  when  they  are  governed  by  a  federal  law,  in 
Argentina  and  Brazil,  62;  in  Mexico  and  Venezuela,  63. 

CREDITORS — of  a  commercial  association  as  compared  with  those  of  the 

associates,   162. 
the  benefits  that  a  debtor  may  derive  from  a  life  insurance  policy  are 

superior  to  rights  of  creditors,  456. 
their  rights  with  respect  to  a  current  account  of  their  debtor,  595. 
composition  of  a  debtor  with  them.    See  PREVENrrvE  Composition  with 

Creditors,  and  Composition  with  Creditors  During  the  Bank- 
ruptcy Proceedings. 
which  of  them  are  entitled  to  vote  for  the  acceptance  of  a  proposition  of 

settlement  made  by  a  debtor,  609. 
when  are  they  entitled  to  demand  a  declaration  of  bankruptcy  of  their 

debtor,  615. 
classification  of  their  claims  against  a  bankrupt  debtor,  648. 
preference  for  the  payment  of  their  claims,  648. 
which  of  them  can  refrain  from  sharing  in  a  settlement  with  the  common 

debtor,  662. 
how  they  are  affected  by  a  settlement  granted  to  their  bankrupt  debtor, 

666. 


INDEX  925 

CREDITORS— Con^OTwed. 

rights  of  creditors  of  an  association  as  compared  with  those  of  any  of  its 

associates,  in  case  of  bankruptcy,  678. 
country  in  which  they  must  produce  evidence  of  their  claims  in  case  of  a 

bankruptcy  which  may  involve  persons  residing  in  different  countries, 

686. 

CROSSED  CHECKS.    See  Checks. 
CULPABLE  BANKRUPTCY.    See  Bankruptcy. 

CURRENT  ACCOUNT— filing  of  documents  relating  to  it  in  the  Commercial 

Registry  in  Cuba,  93. 

its  subject-matter  and  natural  effects,  594. 

it  is  not  inconsistent  with  the  contract  of  comision,  595. 

transactions  which  are  not  affected  by  it,  595. 

rights  of  creditors  of  any  of  the  parties  to  it,  595. 

its  termination  and  balance,  596. 

proofs  of  the  existence  of  the  contract  and  statute  of  limitation  in  connec- 
tion with  it,  597. 

CURRENT  PRICE  is  determined  by  the  records  of  exchange  brokers,  145. 

CUSTOMS  DUTIES,  in  Argentina,  51;  in  Brazil,  54;  in  Mexico,  58;  in  Vene- 
zuela, 60. 

CUSTOM-HOUSES— in  Argentina,  50;in  BrazU,  54;  in  Mexico,  59;  in  Vene- 
zuela, 60. 

CUSTOM  as  a  source  of  law  in  commercial  affairs,  5,  8. 

D 

DALMAN  Y  OLIVART,  editors  of  the  Revista  de  Derecho  Internadonal,  2. 

DAMAGES— when  paid  by  brokers,  134. 

caused  by  partners,  186. 

partners  must  be  indemnified  for  damages  sustained  by  them  as  a  con- 
sequence of  common  transactions,  182. 

when  a  penalty  clause  has  been  stipulated,  297. 

when  they  are  due  and  their  different  character,  309. 

in  the  contract  of  transportation,  406ff. 

covered  by  a  fire  insurance  policy,  437. 

those  which  are  not  covered  by  such  policy,  438. 

method  of  liquidating  them  at  the  time  of  the  execution  of  a  judgment 
797. 

DARRAS,  editor  of  the  Revue  de  Droit  International  PrivS,  2. 


926  INDEX 

DATE— of  a  bill  of  exchange,  481. 

prior  to  the  real  date  stated  in  an  endorsement,  499. 
of  an  acceptance,  513. 

DEATH — of  a  partner  as  a  cause  of  dissolution  of  a  partnership,  232. 

of  the  insured  in  a  fire  insurance  policy  must  be  notified  to  the  under- 
writer, 442. 
presumptive,  of  an  insured,  457. 
of  a  bankrupt,  637. 

DEBTOR — in  doubtful  cases  the  interpretation  of  a  contract  must  be  made 
in  his  favor,  301. 

means  by  which  he  may  release  himself  from  an  obligation,  303-308. 

when  he  may  obtain  a  moratorium  or  a  preventive  composition  with  his 
creditors,  602. 

how  affected  by  such  composition,  609. 

how  affected  by  his  creditor  taking  over  his  property  {adjvMcaciSn  de 
bienes),  611. 

when  he  may  be  declared  a  bankrupt,  614. 

how  affected  by  a  settlement  with  his  creditors  dm-ing  the  bankruptcy 
proceedings,  667. 

the  acknowledgment  of  his  signature  is  a  prerequisite  for  the  judge  is- 
suing a  writ  of  execution  against  him  based  upon  a  private  instru- 
ment subscribed  by  him,  791. 

See  Bankruptcy. 

DECEIT,  its  character  and  cases  in  which  it  invaUdates  a  contract,  284. 

DECISIONS   OF   COURTS,  their  authority  in  Latin-America,  7. 

DECLARATION  OF  BANKRUPTCY.    See  Bankruptcy. 

DECLARATION  UNDER  OATH  as  a  preparatory  proceeding,  cannot,  as  a 
rule,  be  requested,  766. 

DEED,  referring  to  the  title  of  a  thing  sold  must  be  produced  by  the  seller 
at  the  request  of  the  buyer,  in  case  of  eviction,  766. 

DE  FACTO  REMEDY  {Recur so  de  hecho),  when  it  lies  in  Ecuador,  722;  in 
Nicaragua,  725;  in  Panama,  725. 

DEFAULT  (Mora) — in  paying  the  contribution  to  a  partnership,  185. 

its  effects,  185. 
its  character,  308. 

in  paying  the  price  of  the  thing  sold,  389. 
in  paying  the  premium  in  a  fire  insurance  policy,  442. 
in  paying  the  premium  in  a  life  insurance  policy  in  Spain,  Mexico,  Peru 
and  San  Salvador,  455. 


INDEX  927 

DEFAULT  (Rebeldia),  its  character  and  effects,  748. 

DEFENSES — to  a  suit  arising  out  of  a  bill  of  exchange,  549,  794. 
in  an  ordinary  action,  775. 
in  an  executive  action,  793. 

DEFENDANT — he  must  be  served  with  summons  together  with  the  copies 
of  the  complaint,  773,  793. 
period  within  which  he  must  answer  a  complaint  in  ordinary  actions,  774. 
in  executive  actions,  794. 
when  he  is  entitled  to  demand  that  the  executive  action  be  stayed  and 

declared  void,  794. 
when  costs  are  declared  against  him,  792,  794. 

DEFINITION  of  commerce  by  economists  and  jurists,  32. 
Vidari,  33. 
as  an  economic  social  fimction,  34. 

DEL  CREDERE  AGENT,  his  character,  338. 

DELIVERY— method  of  making  deUvery  of  thmg  sold,  376. 
symbolic,  376. 

place  and  time  to  make  it,  378. 
failure  to  make  it,  379. 
expenses  of  making  it,  380. 
when  the  obUgation  of  making  it  lapses,  380. 
as  a  way  of  transferring  negotiable  instruments  payable  to  bearer,  577. 

DEPOSIT— when  is  it  mercantile,  344. 
manner  of  perfecting  it,  345. 
consisting  of  money,  347. 

when  the  character  of  the  contract  is  changed,  349. 
case  of  violent  substitution  of  the  same,  349. 
made  in  credit  institutions,  349. 
of  merchandise  made  through  a  judge,  801. 
See  Judicial  Deposit. 

DEPOSITARY— he  must  be  compensated,  345. 
his  obligations,  346. 
in  case  of  deposit  of  documents,  348. 

DERECHO  AL  TANTO— (Right  of  preemption),  among  copartners,  185. 
it  is  not  a  privilege  of  shareholders,  209. 

DESIGNATION  OF  TEN  DAYS  (Assigngdo  de  des  dias),  when  it  is  proper 
m  Brazil,  796. 

DIFFERENCES— arising  among  associates,  172,  177. 

between  managers  of  partnerships  in  matters  of  administration,  and  their 

settlement,  179. 
between  two  copies  of  a  contract  entered  into  through  brokers,  299. 


928  INDEX 

DILATORY  PLEAS  which  are  admissible  as  such  and  time  within  which 
they  can  be  entered,  773. 

DILIGENCE— required  of  brokers,  133. 
required  of  agents,  333ff. 

DIRECTORS — their  character  and  appointment,  195. 

are  always  subject  to  removal  by  the  general  meeting  of  stockholders, 

195. 
composition  of  their  board,  223. 
their  character  and  Uabihties,  224. 
particular  obligations  of  the  same,  225. 

DISCHARGE— of  a  factor,  121. 
of  a  clerk,  125. 
of  a  surety,  469. 

of  a  debtor  after  his  creditors  take  over  his  property,  611. 
after  a  settlement  with  his  creditors  and  payment  of  what  he  agreed  to, 

667. 
of  a  bankrupt  as  compared  with  his  rehabilitation,  672. 

DISCOUNT  of  a  promissory  note  subscribed  by  a  bankrupt,  or  of  invoices 
drawn  on  his  name  are  void,  633,  639. 

DISRESPECT  on  the  part  of  the  factor  or  the  clerk  to  his  principal,  as  a 
cause  for  discharging  the  factor  or  the  clerk,  121. 

DISSOLUTION  OF  COMMERCIAL  ASSOCIATIONS— cases  in  which  it 

takes  place  before  the  termination  of  the  period  of  duration  stated 

in  the  articles  of  association,  177. 
general  grounds  thereof,  230. 

special  grounds  for  dissolution  of  partnerships,  232. 
special  grounds  for  dissolution  of  corporations,  233. 
it  must  be  registered  in  the  commercial  registry,  when  due  to  a  cause  other 

than  the  expiration  of  the  stipulated  period,  235. 
when  it  can  be  pleaded  against  third  parties,  236. 
survival  of  the  legal  entity  of  the  association  untU  the  Uquidation  is 

ended,  236. 

DISTRIBUTION  OF  PROFITS— method  of  doing  it  must  be  stated  in  the 
partnership  agreement,  177.. 
as  a  privilege  of  associates,  181,  209. 

DIVIDENDS— right  of  stockholders  to  receive  them,  209. 

directors  are  not  permitted  to  declare  them  out  of  anything  but  profits, 
226. 

DIVISIBLE  OBLIGATIONS,  298. 


INDEX  929 

DOCUMENTS — issued  by  warehouses,  their  character  and  kinds,  148. 
their  requisites,  150. 
which  must  accompany  a  judicial  complaint,  771. 
which  have  a  self-executing  effect,  791. 

DOMICIL — of  commercial  associations,  159. 

of  partners  must  be  stated  in  the  partnership  agreement,  176. 

of  an  association  must  be  stated  in  the  deed  of  organization,  177. 

of  an  association  according  to  the  Argentine  law,  251. 

of  commercial  associations  in  general,  272. 

how  that  of  the  plaintiff  and  of  the  defendant  may  affect  the  jurisdiction 

of  a  judge,  738. 
of  a  married  woman  and  a  widow,  814,  815. 
its  definition,  changes  and  effects,  826. 

DOUBTS — when  they  cannot  be  solved  by  the  application  of  the  principles 
of  law,  commercial  usage  and  practice,  they  must  be  decided  in 
favor  of  the  debtor,  in  the  interpretation  of  a  contract,  301. 

DOWRY — deeds  constituting  that  of  a  merchant's  wife  must  be  entered  in 
the  commercial  registry,  91. 
invalidity  of  that  constituted  by  a  bankrupt,  628-639. 
anticipated  restitution  of  the  same  by  the  bankrupt  is  void,  632. 

DRAWEE  OF  A  BILL  OF  EXCHANGE— its  character,  473. 

period  within  which  he  must  accept  or  refuse  acceptance  of  a  bill  of  ex- 
change, 509. 

his  Uability  in  case  he  refuses  to  give  back  a  bill  delivered  to  him  for  ac- 
ceptance, 510. 

cases  in  which  he  can  revoke  his  acceptance,  511. 

when  his  obligation  of  paying  a  bill  of  exchange  begins,  516. 

case  in  which  he  pays  after  refusing  acceptance,  545. 

DRAWER  OF  A  BILL  OF  EXCHANGE— his  character,  473. 
his  signature  as  a  requisite  of  the  bill,  482. 
his  rights  in  case  the  clauses  "value  on  account"  or  "value  understood" 

are  stated  in  the  bill,  485. 
his  character  is  not  inconsistent  with  that  of  the  payee,  489. 
his  liability  when  he  draws  the  bill  in  the  name  of  a  third  person,  490. 
character  of  the  contract  between  him  and  the  payee,  491. 
his  obligations,  491. 
effect  of  his  bankruptcy,  517. 

DUAL  CITIZENSHIP,  812. 

DUEL,  death  occasioned  by  it  is  not  covered  by  a  life  insurance  policy,  463. 

DUPLICIA  (Rejoinder),  776. 


930  INDEX 

DURESS — as  a  cause  of  nullity  of  a  contract,  284. 

for  a  drawee  to  withdraw  his  acceptance  of  a  bill  of  exchange,  511. 


EARNEST  MONEY  (Arras),  its  meaning  in  commercial  transactions,  389. 
ECONOMISTS— their  definition  of  commerce,  32. 

EFFECTS — of  the  matriculation  of  a  merchant,  87. 

of  the  failure  to  comply  with  provisions  of  the  law  in  reference  to  the 
commercial  registry,   94ff. 

of  the  endorsement  of  a  certificate  of  deposit  issued  by  a  warehouse,  149. 

of  the  non-fulfillment  of  legal  f ormahties  in  the  organization  of  commercial 
associations,  168. 

of  resolutions  passed  at  the  general  meeting  of  stockholders,  222. 

of  the  rescission  of  a  contract  of  partnership  in  regard  to  one  of  the  part- 
ners only,  235. 

of  the  offer  of  a  contract  before  it  is  accepted,  291. 

of  contracts  between  the  parties  and  in  regard  to  strangers,  292. 

of  the  nullity  of  a  contract,  313. 

of  a  receipt,  359. 

of  a  pledge,  362. 

of  a  guaranty  as  between  the  surety  and  the  creditor,  463. 
as  between  the  principal  debtor  and  the  surety,  466. 

of  a  guaranty  among  co-sureties,  468. 

of  endorsement,  497. 

of  the  failure  to  give  back  a  bill  of  exchange  to  the  holder  when  he  has 
left  it  in  the  hands  of  the  drawee  for  acceptance,  510. 

of  a  promise  to  accept  a  bill  of  exchange,  516. 

of  the  acceptance  of  a  bill  of  exchange,  516. 

of  the  bankruptcy  of  the  drawer,  517. 

of  the  aval,  519. 

of  protest  of  a  bill  of  exchange,  542. 

of  a  current  account,  594. 

of  a  settlement  between  the  debtor  and  his  creditors,  the  purpose  of  which 
is  to  prevent  bankruptcy,  609,  610. 

of  a  declaration  of  bankruptcy,  619  and  seqs. 

of  a  settlement  of  a  bankrupt  with  his  creditors,  666  and  seqs. 

of  a  declaration  of  bankruptcy  of  commercial  associations,  675. 

of  contracts  in  private  international  law,  818. 

EMINENT  DOMAIN,  its  relation  to  the  taxing  power,  49. 
ENDORSER,  his  rights  and  obUgations,  497,  548. 

ENDORSEMENT— its  definition,  495. 
its  formal  requisites,  495. 


INDEX  931 

ENDORSEMENT— Con<tn?z€(i. 
in  blank,  496. 
its  effects,  497. 
defective,  and  its  effects,  498. 
for  collection,  498. 

case  in  which  it  bears  a  date  previous  to  the  real  one,  499. 
effects  of  a  partial  one,  500. 
when  it  cannot  be  made,  500. 
hability  of  agents  who  make  it,  501. 
obUgation  of  the  payer  to  verify  the  endorsement  of  a  bill  of  exchange, 

529. 
void  when  made  after  the  declaration  of  the  bankruptcy  of  endorser  or 
within  a  certain  period  prior  thereto,  635. 

EMPLOYEES,  as  compared  with  partners,  178. 

ESCRITURA  (deed)  of  association,  its  requisites,  176,  177,  197. 
of  a  foreign  corporation,  251  and  seqs. 

EVIDENCE — derived  from  commercial  books.    See  Books. 

period  for  its  admission,  776. 

general  rules  for  taking,  777. 

different  kinds  which  can  be  employed  in  an  action,  777. 

See  Public  Instruments,  Private  Instruments,  Admission  op  the 
Parties  During  the  Action,  Opinion  of  Experts,  Judicial  In- 
spection, Witnesses. 

EXCHANGE — legal  and  ethical  question  in  relation  to  transactions,  142. 
systems  for  the  solution  of  such  questions,  143. 
lawful  and  unlawful  transaction,  143. 
of  money  as  the  basis  for  a  bill  of  exchange  in  some  countries,  477. 

EXECUTION  OF  JUDGMENT— when  it  lies,  797. 
Uquidation  of  damages,  797. 
rendered  by  arbitrators,  or  amicable  compounders,  800. 

EXECUTIVE  ACTION— cases  in  which  it  lies,  549,  579,  763. 
documents  on  which  it  can  be  based,  791. 
procedure,  792. 

defenses  that  the  debtor  may  use,  793. 
period  for  answering  the  complaint,  795. 

EXECUTIVE  POWER— functions  in  commercial  affairs  in  Venezuela,  62. 
his  authorization  necessary  for  organizing  a  corporation  in  Argentina, 
Bolivia  and  Brazil,  190;  in  Chile,  191;  in  Colombia,  192;  in  Guate- 
mala, Haiti,  Honduras,  and  Mexico,  193;  in  Nicaragua  and  San 
Salvador,  194;  in  Uruguay,  195. 


932  INDEX 

EXHIBITION — of  commercial  books,  as  compared  with  their  production 
in  courts,  when  it  lies,  108. 
of  the  thing,  subject-matter  of  a  litigation,  when  it  can  be  demanded  as 
a  preparatory  proceeding,  767. 

EXPENSES — those  incurred  by  a  partner  as  a  consequence  of  his  carrying 
on  common  transactions  must  be  refunded  to  him,  182. 

who  must  defray  those  incurred  in  a  contract  of  purchase  and  sale,  380. 

arising  out  of  non-acceptance  or  non-payment  of  a  bill  of  exchange  are 
guaranteed  by  the  drawer,  493. 

EXPERTS — their  opinion  as  means  of  evidence  in  a  suit,  785. 

EXPORT  DUTIES— in  Argentina,  51;  in  Brazil,  54;  in  Mexico,  57,  in  Vene- 
zuela, 60. 

EXTENSION— of  the  term  of  a  corporation,  214. 
of  judicial  periods  of  time,  743. 

EXTERNAL  FORMALITIES  OF  COMMERCIAL  BOOKS,  104. 


FACTORS— their  character,  117. 
capacity  required,  117. 
their  powers,   118. 
their  obligations,   119. 
books  which  they  are  bound  to  keep,  119. 
notice  of  termination  of  their  services,  119. 
they  cannot  trade  for  their  own  account,  119. 
they  cannot  delegate  their  power,  120. 
their  liabilities,  120. 

their  right  to  be  compensated  and  indemnified,  120. 
rescission  of  their  contract  with  their  principal,  121. 
their  disrespect  to  their  principals,  as  a  cause  for  their  discharge,  121. 

FAILURE — to  pay  the  debt  guaranteed  by  a  warrant,  151. 
to  perform  an  obligation,  308. 
by  the  drawee  to  give  back  a  bill  of  exchange  to  its  holder,  510. 

FAIRS — their  character  and  influence  on  the  application  of  the  law,  141. 

questions  arising  out  of  contracts  entered  into  at  fairs  must  be  decided 

at  oral  hearing,   142. 
when  they  are  designated  as  the  term  for  the  payment  of  a  bUl  of  exchange, 

485,  486. 

FEDERAL  CONGRESS — its  power  in  reference  to  commercial  affairs,  48 
and  seqs. 


INDEX  933 

FEDERAL  CODE  OF  PROCEDURE— power  to  enact  the  same,  694. 

FEDERAL  COURTS — powers  of  the  federal  congress  to  legislate  on  matters 

coming  under  their  jurisdiction,  694. 
their  organization  in  Argentina,  695;  in  Brazil,  695;  in  Mexico,  697; 

in  Venezuela,  697. 
their  jurisdiction  in  Argentina,  697;  in  Brazil,  698;  in  Mexico,  700;  in 

Venezuela,  701. 

FEDERAL  REPUBLICS  in  Latin-America,  48. 

FEDERATION,  a  mere  fiction  in  Latin-America,  50. 
its  powers,  51ff. 

FEES — paid  at  the  time  of  entering  papers  in  the  commercial  registry  in 

Argentina,  253. 
fiscal,  for  associations  in  Cuba,  263,  264. 
of  a  notary  for  the  protocolization  of  papers  referring  to  commercial 

associations,  267. 
payable  by  commercial  associations  in  Peru,  271,  272;  in  Uruguay,  275. 
of  lawyers,  733  and  seqs. 

FIAT  MONEY,  prohibited  in  Venezuela,  62. 

FINAL  PLEADINGS  (Alegatos),  789. 

FIRE  INSURANCE— its  subject-matter,  436. 
form  of  policy,  436. 
damages  covered,  437. 
losses  not  comprised  in  it,  438. 
cases  in  which  no  indemnity  is  due,  439. 
requisites  to  bind  the  insurer,  440. 
default  in  the  payment  of  the  premiums,  442. 
different  ways  of  paying  the  loss,  444. 

obligations  of  the  underwriter  in  case  of  two  or  more  policies,  445. 
ways  of  proving  the  loss,  448. 
appraisal  of  the  loss,  448. 
expenses  of  such  appraisal,  450. 
conflict  of  laws  in  regard  to  it,  450. 

FIRM,  COMMERCIAL.    See  Commekcial  Firm. 

FIRM  NAME  {Razdn  Social),  of  commercial  associations,  159. 
in  an  association  of  capital  and  industry,  166. 
joint  adventures  have  not  any,  166. 
how  it  is  formed  in  general  partnerships,  173. 
V:)inding  power  of  contracts  entered  into,  174. 

when  the  co-partners  are  not  bound  in  transactions  made  in  firm  name, 
175. 


934  INDEX 

FIRM  ^AMFr-Continued. 

it  is  necessary  to  state  it  in  the  deed  of  organization  of  a  partnership,  176. 
it  is  forbidden  to  a  partner  to  use  it  in  his  own  transactions,  184. 
of  a  limited  partnership,  239. 

FISCAL,  character,  732. 

FORCE  MAJEURE,  its  bearing  upon  the  obligations  of  a  carrier,  400. 
the  presentation  of  a  bill  of  exchange,  507. 

FOREIGN  COMMERCIAL  ASSOCIATIONS  AND   PARTNERSHIPS— 

obligation  of  inscribing  their  papers  in  the  commercial  registry,  97. 
protocolization  of  their  articles  and  by-laws  in  Colombia,  167,  note  30. 
general  principles  as  to  the  admission  of  an  association  into  a  country, 

249;  in  Argentina,  251;  in  Bolivia,  253;  in  Brazil,  255;  in  Chile,  258; 

in  Colombia,  259;  in  Costa  Rica,  261;  in  Cuba,  262;  in  Ecuador, 

Guatemala,  and  Honduras,  265;  in  Mexico,  266;  in  Panama,  268; 

in  Peru,  271;  in  San  Salvador,  273;  in  Uruguay,  274;  in  Venezuela, 

275. 
they  must  give  security  for  costs  if  they  are  plaintiffs,' 275. 

FOREIGNERS — they  enjoy  the  same  civil  rights  as  citizens,  81. 
exceptions  to  this  rule,  82. 
their  expulsion  from  the  country  and  limitation  of  their  powers  in  Mexico, 

83,  note  191. 
their  legal  capacity  to  receive  an  inheritance,  821,  822. 

FOREIGN  JUDGMENTS— they  cannot  be  executed  when  contrary  to 
good  morals  or  public  order,  811. 

rules  governing  their  execution  in  various  countries,  823. 

requisites  that  they  must  satisfy  in  order  to  be  enforceable  in  other  coun- 
tries, 824. 

FOREIGN   LAW — the  party  who  invokes  it  must  prove  its  existence,  811. 

FORFEITURE  OF  ACTION  in  case  of  abandonment  of  judicial  proceed- 
ings, 762. 

FORGERY— of  an  endorsement,  499. 

of  the  signature  of  a  drawse  of  a  bill  of  exchange,  as  a  defense  against 

the  executive  action  based  on  such  bill,  549. 
as  a  defense  against  any  executive  action,  793. 

FORM — of  enunciating  the  law,  8. 

of  authorization  given  a  minor  to  trade,  72. 
a  married  woman  to  trade,  76. 
of  powers  given  to  bookkeepers,  107. 
of  powers  given  to  factors,  118. 


INDEX  935 

FORM — Continued. 

of  a  judicial  decision,  752. 

of  authenticating  judicial  decisions,  754. 

to  clerks,  122. 
of  powers  of  attorney,  317. 

of  powers  executed  by  corporations,  partnerships  and  agents,  325. 
of  the  contract  of  pledge,  362. 
of  the  contract  of  transportation,  395. 
of  a  contract  of  insurance,  425. 
of  a  fire  insurance  policy,  436. 
of  a  life  insurance  policy,  451. 
of  an  overland  transportation  insurance,  457. 
of  a  suretyship,  470. 
of  a  bill  of  exchange,  480. 

different  forms  in  which  a  bill  of  exchange  can  be  drawn,  489. 
of  the  endorsement  of  a  bill  of  exchange,  495. 
of  its  acceptance,  512. 

of  attesting  the  failure  to  accept  and  pay  a  bill  of  exchange,  531. 
of  a  suretyship  relating  to  a  bill  of  exchange  (Aval),  518. 
of  the  memorandum  of  the  protest  of  a  bill  of  exchange,  538,  540. 
law  which  governs  form  of  contracts  and  acts,  in  case  of  conflict  of  laws, 
817. 

FORTUITOUS  BANKRUPTCY.    See  Bankruptcy. 

FRAUD— its  character,  309. 

when  it  is  presumed  in  the  acts  of  a  bankrupt,  628. 
as  a  cause  of  rescission  of  partnership  agreements,  234. 

FRAUDULENT  BANKRUPTCY.    See  Bankruptcy  and  Rehabilitation 
OF  THE  Bankrupt. 

FREIGHT — when  it  must  be  paid  by  the  consignor,  402. 
the  consignee,  416. 
its  payment  is  guaranteed  by  a  lien  upon  the  transported  goods,  414. 
damages  caused  by  the  carrier  can  be  deducted  from  it,  409. 

FUERO  JUZGO,  11. 

FUND  of  the  legal  partnership  between  husband  and  wife,  75. 

FUNDS — belonging  to  a  partnership  cannot  be  used  by  a  partner  in  business 

for  his  own  account,  184. 
obligation  of  the  drawer  of  a  bill  of  exchange  to  supply  the  drawee  with 

funds  to  pay  the  draft,  491. 
when  this  obligation  is  considered  performed,  493. 

GARCIA  MORENO,  editor  of  the  Colecddn  de  las  InstUuciones   Politicas 
y  Jundicas  de  los  Pueblos  Modernos,  2. 


936  INDEX 

GENE  RALES  DE  LA  LEY,  meaning  of  this  phrase,  788. 

GENERAL    MEETING    OF    STOCKHOLDERS— period  and  manner  of 
calling  it,  198,  217. 
its  powers,  198. 

special  meeting  and  manner  of  calling,  219. 
how  decisions  are  arrived  at  in,  220. 
unlawful  decisions  arrived  at  in,  222. 
effects  of  its  resolutions,  222. 

its  functions  during  the  liquidation  of  the  association,  238. 
must  be  held  at  the  domicil  of  the  company,  253. 

GENERAL  PARTNER— his  liabilities,  165, 174. 
exceptions  to  that  liability,  175. 
his  actions  against  managers,  181. 
his  privileges,  181. 
his  obligations,  182. 
his  disabilities,  184. 
his  liabilities,  185. 

cases  of  fraud,  abuse  of  power  or  gross  negligence,  186. 
admission  of  a  new  one  in  the  partnership,  187. 

GENERAL  PARTNERSHIP— its  equivalent  in  the  Latin-American  law, 
165. 
method  of  proving  its  existence  in  Argentina,  169,  note  38. 
formal  requisites  of  a  partnership  agreement,  176. 
its  employees,  as  compared  with  its  members,  178. 
its  management,   178. 
See  General  Partner,  and  Bankruptcy. 

GENERAL  WAREHOUSE— its  character  and  functions,  146. 

requisites  for  establishing,  146. 

documents  issued  by,  150. 

its  functions  in  case  of  failure  to  pay  a  debt  guaranteed  by  a  certificate 
of  pledge  issued  by,  151. 

managers  must  sell  the  deposited  goods  when  properly  required,  152. 

period  within  which  a  creditor,  holder  of  a  certificate  of  pledge,  can  de- 
mand the  sale  of  the  things  deposited,  152. 

its  liabilities,  153. 

GIFTS,  when  those  made  by  a  bankrupt  can  be  revoked,  629,  632-638. 

GIVER  OF  A  LETTER  OF  CREDIT— his  obligations  and  rights,  590. 

GOOD  FAITH— required  in  brokers,  113. 

the  performance  of  a  commercial  obligation,  299. 
necessary  for  positive  prescription,  307. 
in  a  comisionista,  336. 
in  the  contract  of  insurance,  428,  440. 


INDEX  937 

GOOD  MORALS — not  overruled  by  virtue  of  laws  enacted,  or  judgments 
rendered,  or  regulations  or  agreements  made  in  foreign  countries,  81 1 . 

GOVERNMENT  AUTHORIZATION  necessary  for  estabUshing  corpora- 
tions, i89fr. 


HABEAS  CORPUS,  720,  728. 

HABITUAL  OCCUPATION   IN  COMMERCE— as  a  characteristic  of  a 
merchant,  70. 

HAGUE  CONVENTION  of  1910-12  on  bills  of  exchange,  3. 
uniform  regulation  on  bills  of  exchange,  476. 

HANDELSGESET7E  DES  ERDBALLS,  3. 

HOLDER  OF  A  BILL  OF  EXCHANGE— his  liabilities,  502. 
cannot  be  compelled  to  receive  payments  in  advance,  523. 
his  identification,  523. 

whether  he  can  be  compelled  to  accept  partial  payments,  524. 
procedure  he  must  follow  in  case  of  local  bills  of  exchange,  526. 
his  rights  against  the  acceptor  for  honor,  545. 
effect  of  his  failure  to  comply  with  his  obligations,  550. 
See  Bills  of  Exchange,  Acceptor,  Drawter,  Protest. 

HOLDER  OF  A  CHECK — must  present  it  within  a  certain  period,  564. 
effect  of  his  failure  to  do  so,  565. 
must  receipt  the  check  when  paid,  566. 
his  obligations  in  reference  to  the  drawer,  567. 
his  liabilities  for  a  misuse  of  the  check-book,  570. 

HOLIDAY — maturity  of  an  obligation  or  bill  of  exchange  due  on  holiday, 
488. 
courts  may  authorize  taking  proceedings  on,  752. 

HONESTY,  as  a  requisite  which  must  he  proved  in  order  to  obtain  a  license 
as  broker,  130,  131. 
as  a  requisite  that  notaries  have  to  prove  in  order  that  they  may  exercise 
their  functions,  781. 

HORN,  editor  of  the  Nouvelle  Revue  Pratique  de  Droit  International  Privi,  2. 

HOUSE,  commercial.    See  Commercial  House. 


938  INDEX 

I 

IDENTIFICATION  of  the  holder  of  a  biU  of  exchange,  523. 

IMPAIRED  BILL  OF  EXCHANGE— cannot  be  endorsed,  501. 
gives  ground  for  a  defense  in  executive  actions,  794. 

IMPORT  DUTIES,  in  Argentina,  51;  in  Brazil,  54;  in  Mexico,  58. 

INCOMPETENT  PARTY— his  obligation  in  case  a  contract  is  declared  void, 
on  account  of  his  incapacity,  313. 

INDEMNITY — factors  must  receive  it  when  they  incurred  a  loss  while  per- 
forming their  duties,  120. 

which  must  be  paid  to  partners,  182. 

for  damage  in  case  of  default  in  complying  with  an  obligation,  310,  311. 

due  by  the  seller  of  a  thing  in  case  of  eviction  or  hidden  defects,  381  and 
seqs. 

which  a  carrier  must  pay,  404-410,  420. 

in  case  of  insurance,  437,  444. 

cases  in  which  it  is  not  due  by  the  insurer,  439,  453. 

INDIVIDUALISTS — their  theory  regarding  commercial  associations,   156. 
influence  of  such  theory  on  positive  law,  157. 

INDIVISIBLE  OBLIGATIONS,  298. 

INSANITY  of  a  partner  as  a  cause  of  dissolution  of  a  partnership,  332. 

INSPECTION— of  commercial  books.    See  Books. 
of  the  management  of  a  partnership,  181. 

by  limited  partners,  242. 
corporation,  227. 

INSURANCE— its  origin,  422. 

persons  who  participate  in  contract  of  this  kind,  423. 

its  subject-matter,  423. 

nature  of  the  contract,  424. 

its  requisites,  425. 

contents  of  a  policy,  426. 

nullity  of  the  contract,  effects  of  bad  faith,  imtruthful  declarations,  omis- 
sions or  concealments  on  the  part  of  the  part  of  the  insured,  428. 

case  of  difference  between  the  real  value  of  an  insured  thing  and  the 
amount  of  the  insurance,  429. 

lack  of  interest  on  the  part  of  the  insured  as  a  cause  of  nullity  of  the  con- 
tract, 429. 

effect  of  the  sale  of  the  insm-ed  property,  430. 

effects  of  reinsurance,  431. 

obligations  of  the  insured,  432. 


INDEX  939 

INSURANCE  BROKERS — requisites  of  their  books  in  reference  to  insurance 
contracts,  129. 

INSURANCE  COMPANIES— in  Brazil,  257;  in  ChUe,  258;  in  Cuba,  265;  in 
Panama,  270;  in  Venezuela,  276. 

INSURED— his  character,  423. 
his  obligations,  432. 

his  bankruptcy  and  its  effects  upon  the  policy,  434. 
acts  done  by  him  which  release  the  underwriter,  438. 
his  obligations,  440,  452. 
interest  in  the  preservation  of  his  life,  as  a  requisite  for  the  validity  of 

the  policy,  452. 
his  right  to  ask  for  a  liquidation  of  his  policy  after  he  has  paid  a  certain 

number  of  premiums,  456. 
his  presumptive  death,  457. 
his  privileges  in  an  overland  transportation  insurance,  459. 

INSURER— his  character,  223. 
his  obligations,  433. 
his  bankruptcy,  434. 
requisites  necessary  to  bind  him,  440. 
his  duties,  443. 

ways  in  which  he  may  pay  the  loss,  444. 

his  obligations  in  case  of  two  or  more  policies  on  the  same  thing,  445. 
his  rights,  446. 
his  special  obligations  in  case  of  overland  transportation  insurance,  459. 

INSTITUTE  OF  INTERNATIONAL  LAW,  1. 

INTEREST — as  indemnity  for  damages  in  case  of  non-performance  of  an 
obligation,   310. 
on  mercantile  loans,  315. 
freedom  of  the  parties  to  stipulate,  352. 
legal  and  its  character  in  Latin-America,  352. 
in  case  of  default,  353. 
in  case  of  loans  of  merchandise,  353. 
compoimd,  354. 
due  on  a  bill  of  exchange,  552. 

on  expenses  incurred  on  account  of  a  bill  of  exchange,  553. 
on  the  amount  of  a  redraft,  554. 
on  amounts  due  by  a  bankrupt,  626. 

INTEREST  ON  THE  PRESERVATION  OF  THE  LIFE  of  an  insured  per- 
son, as  a  requisite  for  the  validity  of  a  contract  of  life*  insurance,  452 

INTERNATIONAL   CONGRESSES,   of    Antwerp,    Brussels    and    Monte- 
video, 1. 


940  INDEX 

INTERNAL  FORMALITIES  OF  COMMERCIAL  BOOKS,  104. 

INTERNATIONAL  ASSOCIATION   FOR  THE    ADVANCEMENT  OF 
SOCIAL  SCIENCE,  in  Brussels,  1. 

INTERPELACiSn,  its  purpose  and  requisites,  308. 

INTERPRETATION  OF  CONTRACTS— its  rules,  299. 

INTERPRETATION   OF   LAW— courts    in   Latin-America   have   limited 

power  to  construe  the  law,  only  when  wording  is  not  clear  or  does  not 
cover  the  case  in  litigation,  7. 

INVENTORY — book  of  a  merchant  which  must  contain  it  and  the  periodical 
statements,  102,  106. 
when  it  must  be  taken  in  partnerships,  177. 

which  the  directors  of  a  corporation  must  produce  at  the  general  meeting 
of  stockholders,  and  its  criticism  by  the  superintendent,  225,  227. 

INVOICES— their  probative  force,  313. 

obUgation  of  the  vendor  of  merchandise  to  give  one  to  the  vendee,  385. 


JAHRBUCH  DER  INTERN  AT  ION  ALEN  VEREINIGUNG  FUR  VER- 
GLEICHENDE  RECHTSWISSENSCHAFT,  2. 

JOINT  ADVENTURE— as  a  form  of  association,  166. 
its  character,  244. 
form  of  the  contract,  246. 

relations  of  the  partners  among  themselves,  247. 
bankruptcy  of  managing  partner,  247. 
its  liquidation,  248. 

JOINT  LIABILITY — of  persons  who  allow  their  names  to  be  included  in  the 

firm  name  of  a  partnership,  when  they  are  not  members  of  the  same, 

173. 
of  a  general  partner  for  transactions  carried  on  for  the  account  of  the 

partnership,  174. 
when  partners  are  not  subject  to  it  notwithstanding  that  the  firm  name 

was  used  in  a  transaction,  175. 
any  stipulation  to  avoid  it  in  general  partnership  is  void,  174. 

JOURNAL — as  prescribed  among  the  necessary  books  of  a  merchant,    102. 
its  purpose,  106. 

JOURNAL  DE  DROIT  INTERNATIONAL,  2. 


INDEX  941 

JUDGE — when  he  may  ex  officio  declare  the  bankruptcy  of  a  merchant,  617. 
must  fix  the  date  from  which  a  merchant  becomes  insolvent,  627. 
in  non-contentious  jurisdiction,  can  modify  his  decisions  without  the  for- 
malities required  in  contentious  jurisdiction,  800. 
character  of  his  functions  in  non-contentious  jurisdiction,  803. 
See  Administration  of  Justice,   Contentious  Jurisdiction,  Non-Con- 
tentious  Jurisdiction. 

JUDGMENT — which  the  debtor  fraudulently  allowed  to  be  obtained  against 
him  can  be  set  aside,  if  detrimental  to  creditors,  636. 

its  kind  and  forms,  752. 

citation  for  hearing  it,  789. 

ordering  the  sale  of  attached  property  {sentencia  de  retnate),  794. 

rendered  by  arbitrators  or  amicable  compounders,  799. 

requisites  that  those  rendered  in  a  foreign  country  need  to  satisfy  in  order 
to  be  executed,  824. 

JUDICIAL  ACTIONS— how  affected  by  a  declaration  of  bankruptcy,  622. 
the  plaintiff  can  consolidate  as  many  as  he  may  have  against  the  defend- 
ant, provided  they  are  not  incompatible  with  each  other,  741. 
their  different  forms,  764. 

the  essential  parts  of  the  proceedings  in  them,  770. 
See  Executive  Actions,  Summary  Actions. 

JUDICIAL   DECISIONS— their  kinds  and  form  572. 
form  of  authenticating  the  same,  754. 
recourses  against  them,  756. 

JUDICIAL  DEPOSIT— of  the  thing,  subject-matter  of  an  obligation  {Con- 

signadon),  303. 
poor  litigants  are  excepted  from  the  obligation  of  making  any  when  the 

law  makes  it  necessary  for  litigants  in  general,  763. 
of  merchandise  in  case  of  transportation,  801. 

JUDICIAL  INSPECTION — as  a  means  of  evidence,  and  method  of  carrying 
it  out,  786. 

JUDICIAL  NOTICES  (Notificaciones),  744. 

JUDICIAL  ORDERS  or  RULES  (Providencias  a  decretos),  725. 

JUDICIAL  PERIODS  OF  TIME,  743. 

JUECES  DE  CIRCUITO— in  Panama,  725,  726. 

JUECES  DE  DISTRITO— in  Colombia,  719;  in  Ecuador,  721;  in  Uruguay, 
7.30;  in  Venezuela,  731. 

JUECES  DE  LETRAS— in  Chile,  717,  in  Honduras,  723;  in  Uruguay,  730. 


942  INDEX 

JUECES  DE  LO  CIVIL  (Judges  with  jurisdiction  in  civil  matters),  in  Ar- 
gentina, 713;  in  Mexico,  724. 

JUECES  DE  MERCADO~{Ma.rket  judges),  in  Argentina,  713. 

JUECES  DE  PARROQUIA  (Parochial  judges),  in  Venezuela,  731. 

JUECES  DE  PARTIDO— in  Bolivia,  715. 

JUECES  DE  PAZ  (Justices  of  the  peace),  in  Argentina,  713;  in  Brazil,  716; 
in  Honduras,  722;  in  Haiti,  723;  in  Mexico,  723;  in  Nicaragua,  724; 
in  Panama,  726;  in  Paraguay,  726,  in  Peru,  727;728;  in  San  Salvados, 
728;  in  Uruguay,  729. 

JUECES  DE  PRIMERA  INSTANCIA  (Judges  of  first  instance),  in  Costa 
Rica,  719;  in  Cuba,  721;  in  Guatemala,  722;  in  Nicaragua,  724; 
in  Paraguay,  727;  in  Peru,  727;  in  San  Salvador,  728;  in  Santo 
Domingo,  729;  in  Venezuela,  731. 

JUECES  INSTRUCTORES  (Delegated  judges),  in  BoUvia,  715. 

JUECES  MENORES,  in  Mexico,  723. 

JUECES  MUNICIPALES  (Municipal  judges),  in  Colombia,  719;  in  Cuba, 
720;  in  Guatemala,  722. 

JUECES  PARROQUIALES  (Parochial  judges),  in  Ecuador,  721. 

JUECES  SUBDELEGADOS— in  Chile,  717. 

JUEZ  SUPERIOR— in  Panama,  725. 

JUICIO  DE  ME  NOR  CUANTI  A— (Action  of  minor  importance),  721. 

JUICIO  VERBAL  (Oral  hearing) — as  way  of  settling  differences  arising  dur- 
ing fairs,  142. 

JUNTA  COMMERCIAL— in  Brazil,  147,  256. 

JURISDICTION— of  aldermen  during  fairs,  142. 

of  a  judge  in  case  of  plurality  of  proceedings  in  bankruptcy  in  different 
countries,  for  measures  which  may  affect  the  bankrupt,  687. 

waiver  of  the  same,  739. 

questions  referring  to  it  must  be  passed  upon  first  in  case  of  several  dila- 
tory pleas  entered  by  the  defendant,  714. 

JURISPRUDENCIA — its  meaning  in  Latin- America  and  its  value  as  a 
source  of  law,  6,  8. 


INDEX  943 

JURISTS — their  definition  of  commerce,  32. 

JUSTICES  OF  THE  SUPREME  FEDERAL  COURT— appointed  for  life 
in  Argentina  and  Brazil,  696. 

JUZGADO  DE  HACIENDA  (Fiscal  judges)  in  Uruguay,  730. 


LACK  OF  INTERST  in  the  preservation  of  the  life  of  the  insured,  as  a  cause 
of  invalidity  of  the  contract  of  insurance,  429. 

LAND.    See  Public  Lands. 

LAPSED  BILLS  OF  EXCHANGE.    See  Bills  of  Exchange. 

LAWFUL — subject-matter  of  a  contract,  as  essential  requisite  for  the  vahdity 
of  the  latter,  282. 
transactions  in  exchange,  144. 
waivers  in  the  contract  of  transportation,  419. 

LAW — its  sources  in  Latin-America,  5-8. 

order  of  preference  in  the  application  of  source  of  law,  8. 
different  ways  of  enunciating  the  same,  8. 
civil  and  commercial,  compared,  9. 

of  commercial  contracts,  various  systems  in  regard  to  its  independence 
from  the  civil  law,  281. 

LAW  OF  COMMERCIAL  ASSOCIATIONS— its  origin  in  Latin-America, 
155. 

LAW  OF  PROCEDURE— the  State  legislatures  are  vested  with  power  to 
enact  it  for  each  State,  in  Argentina,  51;  in  Brazil,  55;  in  Mexico  no 
express  power  has  been  given  to  the  Federation  in  matter  not  related 
to  the  federal  courts,  59;  in  Venezuela  the  power  is  vested  in  the 
Federal  Congress,  61. 

LAW  OF  THE  DOMICIL— its  effects  according  to  the  Montevideo  treaties, 

272. 
it  governs  subsidiary  the  status  and  capacity  of  persons,  812. 
in  some  countries  it  prevails  over  the  law  of  the  nationality  of  a  person 

in  governing  his  status  and  capacity,  813. 

LAW  OF  THE  NATION— governs  the  status  and  capacity  of  her  citizens, 
812. 
prevails  in  the  interpretation  of  contracts  entered  into  by  persons  having 
the  same  nationality,  819. 


944  INDEX 

LAW  OF  THE  PLACE  WHERE  AN  ACT  IS  EXECUTED— governs  the 

classification  of  acts  and  contracts  as  commercial  or  non-commercial, 

40. 
its  effects  in  commercial  acts  according  to  the  Montevideo  treaties,  272. 
governs  the  form  of  a  power  of  attorney,  317. 
governs  the  form  of  contracts  and  acts,  as  well  as  the  means  of  evidence 

for  such  contracts  and  acts,  811,  817. 
governs  the  form  of  a  will,  821. 

LAW  OF  THE  PLACE  WHERE  REALTY  IS  LOCATED  governs  the  xame, 

815. 

LAW  OF  THE  PLACE  WHERE  A  SUIT  ARISES  governs  the  classification 
of  an  act  or  contract  as  commercial  or  non-commercial  in  reference 
to  the  form  of  proceeding,  40. 

LAW  OF  THE  PLACE  WHERE  A  PERSON  HAS  HIS  PRINCIPAL  BUSI- 
NESS, its  effects  according  to  the  Montevideo  treaties,  272. 

LAWYERS — their  qualifications  and  functions,  733. 

their  fees,  general  idea,  733;  in  Argentina,  734;  in  Bolivia,  734;  in  Brazil, 
735;  in  Chile,  Colombia,  Costa  Rica,  Cuba,  Ecuador,  Uruguay  and 
Venezuela,  735;  in  Guatemala,  Honduras,  Mexico,  Nicaragua,  and 
Panama,  736. 

in  some  countries  a  litigant  aided  as  a  poor  person  by  the  court,  can  ap- 
point any  lawyer  to  assist  him,  without  compensation,  763. 

LEDGER — its  character  among  the  books  of  a  merchant,  102. 
its  purpose,  107. 

LEGAL  AID  TO  THE  POOR  (Habilitacidn  para  litigar  por  causa  de  pobreza) 
cases  in  which  it  takes  place  and  its  effects,  763. 

LEGAL  ENTITY — partnerships  as  well  as  stock  companies  are  considered 
such,  158. 
consequence  derived  therefrom,  159. 

LEGAL  FORMALITIES.    See  Form. 

LEGAL  PARTNERSHIP  between  husband  and  wife,  74. 
its  effects  on  property  of  the  consorts,  75. 

how  its  fund  is  affected  by  transactions  entered  into  by  the  wife  in  com- 
mercial affairs,  79,  80. 

LEGALIZATION  OF  POWERS,  326. 

LETTERS  AND  TELEGRAM  COPYING  BOOK— its  object  and  purpose, 
102,  107. 


INDEX  945 

LETTERS  MANDATORY  (Carta  orden  or  oficio),  746. 

LETTERS  OF  CREDIT— their  character,  586. 
their  requisites,  587. 
their  duration,  588. 
their  revocability,  589. 
when  they  can  be  protested,  590. 
obligations  of  their  giver  and  their  beneficiary,  590. 
addressed  to  different  correspondents,  491. 
given  by  bankers,  592. 

LETTERS  REQUISITORIAL  (Suplicatorio),  746. 

LETTERS  ROGATORY,  746. 

LEX  ROMAN  A  VISIGOTHORUM,  IL 

LIABILITY  OF  ASSOCIATES— in  the  various  kinds  of  associations,  165. 
in  general  partnerships,  174. 
exceptions  to  the  liability  of  partners,  175. 
in  stock  companies,  195. 
in  case  of  the  bankruptcy  of  the  association,  676. 

LIBRANZA  (Local  bill  of  exchange) — its  requisites,  558,  559. 
rules  peculiar  to  it,  559. 

LIEN — of  the  comisionista  on  goods  sent  to  him  on  commission,  339. 
of  the  consignor  on  transportation  equipment  of  the  carrier,  413. 
of  the  carrier  on  the  transported  goods,  415. 

LIFE  INSURANCE— object  of  the  contract,  451. 

interest  in  the  preservation  of  the  life  of  the  insured,  452. 
party  bound  by  the  contract,  453. 
risks  not  covered  by  the  policy,  453. 
effects  of  the  failure  to  pay  premiums,  455. 
when  a  life  insurance  policy  can  be  endorsed,  456. 
presumptive  death  of  the  insured,  457. 

LIMITED  PARTNERS — their  names  cannot  be  included  in  the  firm  name 
of  the  partnership,  239. 
their  liability,  240. 

prohibitions  to  which  they  are  subject,  240. 
their  rights  to  inspect  the  books  of  the  partnership,  242. 
assignment  of  their  rights,  242. 
their  liability  in  case  of  bankruptcy  of  the  partnership,  676. 

LIMITED  PARTNERSHIP— its  character  and  firm  name,  239. 

in  which  the  interest  of  the  limited  partners  is  divided  into  shares,  243. 
rights  of  its  members,  242. 

when  it  is  a  foreign  association  it  requires  authorization  of  the  govern- 
ment in  Brazil,  255. 


946  INDEX 

LINE  OF  BUSINESS — of  a  merchant  must  be  stated  in  his  matricula,  86. 
in  the  commercial  registry,  90. 

must  be  described  in  the  articles  of  organization  of  a  commercial  associa- 
tion, 176. 

LIQUIDATION — form  in  which  that  of  a  commercial  association  must  be 
made  needs  to  be  stated  in  the  articles  of  association,  177. 
of  a  stock  company,  236. 
of  a  joint  adventure,  248. 

when  a  merchant  makes  it  in  haste,  gives  groimd  for  the  presumption 
that  he  is  in  bankruptcy,  614. 

LIQUIDATORS— their  appointment,  236. 

their  functions,  237. 

their  relations  with  the  association,  238. 

limitation  of  actions  against  them,  171,  172. 

LOANS— their  kind,  350. 
their  character,  350. 
interest  on  them,  351. 
of  merchandise,  353. 
time  for  paying  them,  358. 

effects  of  a  receipt  of  the  amount  due  on  them,  359. 
method  of  application,  amounts  paid  on  account  of  them,  359. 
balances  of  accounts  are  considered  as  loans,  360. 
See  Interest. 

LOSS  OF  RIGHTS  IN  JUDICIAL  PROCEEDINGS  (caducidad  de  la  tn- 
stancia),  760. 

LOSS— of  the  thing  due,  304. 

of  goods  deUvered  to  the  carrier,  420. 

of  property  before  the  policy  becomes  effective,  432. 

not  comprised  in  a  fire  insurance,  438. 

of  the  insured  property  must  be  notified  to  the  insurer,  442. 

to  pay  loss,  an  obligation  of  the  insurer,  443. 

its  proof  in  case  of  fire,  446. 

its  appraisal  in  case  of  fire,  448. 

place  where  loss  sustained  in  overland  transportation  insurance  must  be 

proved,  458. 
of  an  instrument  payable  to  bearer  and  measures  which  must  be  taken  in 

such  case,  580. 

LOSSES — method  of  dividing  the  same  must  be  stated  in  the  articles  of  organ- 
ization of  a  commercial  association,  177. 
obligation  of  partners  to  share  in  them,  183. 
when  partners  are  bound  to  pay  those  sustained  by  the  partnership,  186. 


INDEX  947 

M 

MAIL,  addressed  to  a  bankrupt  must  be  delivered  to  the  receiver,  641. 

MAJORITY — required  in  the  management  of  a  general  partnership,  179,  186. 

submission  to  its  vote  must  be  expressed  in  the  articles  of  organization 
of  a  corporation,  198. 

necessary  for  reducing  the  capital  of  a  corporation,  215. 

necessary  for  special  decisions,  220. 

of  the  votes  is  required  for  demanding  a  moratorium  or  a  preventive  set- 
tlement with  creditors  of  a  corporation,  608. 

required  for  binding  the  creditors  to  accept  a  composition  with  their 
debtor  in  bankruptcy  proceedings,  663. 

MANAGEMENT — acts  affecting  it  as  compared  with  those  of  disposition, 
73,  note  29. 
of  general  partnerships,   178. 
partners  have  a  right  to  inspect  it,  178. 
of  corporations,  216,  223. 

MANAGERS — their  compensation  must  be  stated  in  the  articles  of  organiza- 
tion of  a  commercial  association,  177. 
their  discharge  in  a  partnership,  180. 
their  liability  toward  the  partners,  179,  181. 
their  number  and  functions,  198. 
of  corporations,  252,  254,  271. 

of  a  momentary  association,  or  joint  adventure,  247. 
their  bankruptcy,  247. 

of  a  warehouse,  must  sell  the  goods  deposited  when  properly  requested, 
152. 

MANAGING  PARTNERS — bind  the  members  of  a  partnership  jointly  when 
they  use  the  firm  name  of  the  partnership,  174. 

case  of  exception  to  that  rule,  176. 

their  name  and  compensation  must  be  stated  in  the  partnership  agree- 
ment, 176. 

all  partners  have  such  character,  unless  otherwise  stipulated,  178. 

their  character,  178. 

when  removable,  179. 

cases  in  which  they  are  personally  responsible  for  losses,  180,  181. 

MANCEBOS — as  special  kind  of  dependent  auxiliaries  of  commerce,  117. 

MARITIME  CONGRESS  OF  LISBON,  1. 

MARITIME  LAW — as  separate  from  civil  law,  10. 

MARRIED  WOMAN— as  a  merchant,  74. 

needs  her  husband's  authorization  to  trade,  76. 


948  INDEX 

MARRIED  WOMAN— Continued 

withdrawal  of  such  authorization,  77. 
property  liable  for  her  transactions,  79. 
her  power  to  sell  and  mortgage  real  estate,  80. 
her  power  to  appear  in  courts,  81. 

MATRICULA— its  purpose,  85. 
countries  which  require  it,  86. 
its  contents  and  effects,  86. 

MATRIMONIAL  STIPULATIONS— relating  to  a  merchant  must  be  in- 
scribed in  the  commercial  registry,  95. 

MATURITY — payment  of  a  bill  of  exchange  before  maturity,  522. 
of  an  obligation  in  case  no  term  is  stipulated  therefor,  295. 
of  a  bill  of  exchange  on  a  holiday,  488. 

payment  after  maturity  of  a  bill  of  exchange  is  presumed  valid,  523. 
of  a  promissory  note  which  bears  no  due  date,  56L 

MEETING  OF  STOCKHOLDERS— its  character  and  kinds,  216. 
its  functions  and  formalities  for  calling  the  same,  217. 
special,  when  it  must  be  called,  219. 
how  decisions  are  arrived  at,  220. 

MEETING  OF  CREDITORS.  See  Preventive  Composition  with  Credi- 
tors and  Composition  with  Creditors  During  the  Bankruptcy 
Proceedings. 

MEMORANDUM — of  brokers  for  every  transaction  made  through  them, 
127. 
of  brokers,  its  probative  force,  130,  311. 

MERCANTILE  CUSTOMS— as  a  source  of  law,  5. 

MERCANTILISTS — their  opinion  on  the  relation  between  civil  and  com- 
mercial law,  4. 

MERCHANTS — as  distinguished  from  non-merchants,  68. 
their  kinds,  69. 

their  character  and  definition,  69. 
their  legal  capacity,  71. 
minor,  7. 

when  married  women  can  become,  74. 
their  registry,  89. 
their  obhgation  to  keep  books,  102. 

to  account,  110. 

to  preserve  their  books,  115. 
are  subject  to  the  law  where  they  exercise  their  profession  according  to 

the  Montevideo  treaties,  272. 


INDEX  949 

MERCHANTS— Con^int^d. 

perform  a  social  function,  280. 

they  are  the  only  ones  who  can  be  declared  bankrupt,  613. 
when  they  are  bankrupt,  614. 

See  Commercial  Registry,   Commercial  Bookkeeping,   and  Bank- 
ruptcy. 

MERGER — of  an  association  with  another,  231. 

of  rights  of  creditor  and  debtor  in  a  same  person,  305. 

METHOD  OF  PUBLICITY  in  commercial  affairs  adopted  in  Mexico,  88. 

MEXICO — courses  of  comparative  law  in  the  National  School  of  Jurispru- 
dence, 3. 
its  mineral  fuels.    See  Petroleum. 

MINES — governed  by  federal  law  in  Argentina,  Mexico  and  Venezuela,  63- 
65. 
in  Brazil  belong  to  the  owner  of  the  soil,  64,  note  58. 

MINING  CODE — the  federal  congress  has  power  to  enact  it  in  Argentina, 
51;  in  Mexico,  59,  and  in  Venezuela,  61. 

MINISTERIO  PUBLICO— its  character  and  functions,  714,  731. 

MINISTER  PLENIPOTENTIARY— his  function  in  the  authentication  of  a 
will,  820. 

MINORITY — effect  of  its  dissent  on  the  liability  of  the  managers  of  a  part- 
nership, 180. 

MINORS — as  merchants,  71. 

authorization  given  them  to  trade,  71. 

their  powers  when  properly  authorized  to  trade,  72. 

age  at  which  they  can  be  authorized  to  trade,  72. 

age  at  which  they  can  be  factors,  117. 

they  cannot  be  agents,  316. 

their  protection,  732. 

MINUTA— its  character,  291. 

MISTAKE — when  it  invalidates  a  contract,  283. 

MONEY — kind  which  must  be  returned  in  case  of  a  loan,  355. 
in  which  payment  of  a  bill  of  exchange  must  be  made,  521. 

MONTEVIDEO  TREATIES,  3. 

their  provisions  in  reference  to  commercial  associations,  271. 
to  bankruptcy,  685. 

to  domicil,  property  rights,  obligations,  evidence,  and  proceedings, 
826. 


950  INDEX 

MORATORIUM.    See  Preventive  Composition  with  Creditors. 

MORTGAGE — special  power  necessary  to  make  it  through  an  agent,  322, 

323,  324. 
creditors  who  have  mortgage  are  not  entitled  to  vote  in  the  meeting  called 

for  a  preventive  settlement  with  the  debtor,  nor  are  they  affected 

by  that  settlement,  609. 
when  mortgage  entered  into  by  a  bankrupt  is  void,  628,  630-635,  637, 

638. 
creditors  guaranteed  with  mortgage  are  not  entitled  to  vote  in  a  meeting 

of  creditors  for  a  composition  with  the  debtor  during  the  bankruptcy 

proceedings,  662. 

MUNICIPAL  TAXES  in  BrazU,  55. 
MUNZINGER— his  definition  of  merchants,  69. 

N 

NAME  OF  A  PERSON  who  is  not  a  partner  cannot  be  included  in  the  part- 
nership firm  name,  otherwise  he  will  be  jointly  liable  for  the  firm 
debts,  173. 

NATIONALITY  of  commercial  associations,  160. 
See  Law  of  the  Nationality  of  a  Person. 

NATIONAL  TREASURY — sources  of  its  revenue  in  Argentina,  52;  in  Brazil, 

55;  in  Mexico,  59;  in  Venezuela,  61. 

NATURAL  PRODUCTS— duties  levied  upon  them  in  Venezuela,  61. 

NEGLIGENCE— liability  of  brokers  for,  135. 
its  character,  309. 
in  the  case  of  a  carrier,  406. 
in  the  case  of  a  depositary,  346. 

of  the  insured  is  not  a  reason  for  the  underwriter  not  to  pay  the  loss,  438, 
441. 

NEGOTIABLE  INSTRUMENTS  PAYABLE  TO  BEARER— their  nature, 
577. 
persons  who  may  create  them,  579. 
when  an  instrument  may  be  such,  580. 
measures  to  be  taken  in  case  of  loss  of  them,  580. 

NEGOTIATION  OF  BILLS  OF  EXCHANGE  THROUGH  BROKERS,  128. 

NEW  PARTNER— effect  of  his  admission,  187. 


INDEX  951 

NON-ACCEPTANCE  OF  A  BILL  OF  EXCHANGE— effect  of  a  protest  on 
account  of  it,  542. 
actions  derived  therefrom,  546. 

NON-COMMERCIAL  ACTS— 36. 

codes  which  have  a  hst  of  the  same,  39. 

conflict  of  laws  in  regard  to  their  classification,  40. 

NON-COMMERCIAL  ASSOCIATIONS,  164. 

NON-CONTENTIOUS  JURISDICTION— its  character  and  general  rules 

applicable  to  it,  800. 
when  their  proceedings  are  changed  by  those  of  contentious  jurisdiction, 

800. 
in  commercial  affairs,  801. 
in  deposit  of  merchandise,  801. 
in  relation  to  bills  of  exchange,  802. 
in  relation  to  purchase  and  sale,  contract  of  transportation,  partnership 

and  corporations,  appointment  of  experts  or  arbitrators,  802. 

NON-MATURED  OBLIGATIONS— effect  of  a  declaration  of  bankruptcy 
upon  the  same,  623. 
their  payment  made  by  the  bankrupt  is  void,  628. 

NON-PAYMENT  OF  A  BILL  OF  EXCHANGE— effects  of  protest  for,  542. 
actions  derived  therefrom,  547. 

NOTARIES — their  qualifications  and  functions,  781. 

duties  and  formahties  in  protesting  a  bUI  of  exchange,  537ff. 

NOTICE  OF  DISHONOR  OF  A  BILL  OF  EXCHANGE,  502. 

NOTICE] — given  by  brokers  to  other  brokers  of  transactions  effected  through 
them,  128. 
that  the  collegiate  brokers  must  serve  upon  the  exchange  and  its  board, 

145. 
given  by  the  insured  in  case  of  fire,  441. 
in  judicial  proceedings,  744. 

NOUVELLE    REVUE    PRATIQUE    DE    DROIT    INTERNATIONAL 
PRIVE,  2. 

NOVATION — its  character  and  requirements,  306. 

NOVISIMA  RECOPILACIOn,  9,  12. 

it  condemns  the  agreement  for  contingency  fees,  733. 

NUEVA  RECOPILACiSn,  9,  12. 


952  INDEX 

NULLITY — of  a  contract,  due  to  mistake,  283. 

to  duress,  intimidation  or  deceit,  284. 

to  the  character  of  its  subject  matter,  285. 

of  insurance,  428. 
of  a  second  policy,  430. 

of  a  preventive  settlement  of  a  debtor  with  his  creditors,  610. 
of  acts  undertaken  by  a  bankrupt,  628. 
of  a  settlement  of  a  bankrupt  with  his  creditors,  669. 
of  a  public  instrument,  782. 
of  a  compromiso,  see  this  word. 


OBJECT — of  a  contract,  and  things  which  can  not  become  such,  285, 
of  a  commercial  purchase  and  sale,  372. 

OBLIGATIONS — of  merchants  to  register  in  the  commercial  registry,  94. 

to  keep  books,  102. 
of  factors,  119. 
of  brokers,  133. 
of  partners,  182. 
of  shareholders,  210. 
sources  thereof,  280. 

of  giving  {obligatio  dandi),  and  of  doing  {obligatio  fadendi),  293. 
their  kinds,  293. 
several  and  joint,  293. 
conditional,  294. 
subject  to  a  term,  295. 
their  legal  term,  295. 
alternative,  298. 
divisible  and  indivisible,  298. 
performance  thereof,  299. 
place  of  performance,  301. 
the  receipt  and  its  effect  upon  them,  303. 
tender  of  payment  as  a  discharge,  when  followed  by  judicial  deposit  of 

the  thing  due,  303. 
extinction  of  the  same  by  payment,  301. 

by  the  loss  of  the  thing  due,  304. 

by  release  granted  by  the  creditor,  305. 

by  the  merging  of  the  creditor's  and  debtor's  rights  in  the  same  per- 
son, 305. 

by  set-off,  305. 

by  novation,  306. 

by  prescription,  307. 
non-performance  thereof,  308. 
involuntary  failure  to  perform,  311. 
proof  thereof,  311. 
of  an  agent,  329,  333. 
of  a  depositary  or  bailee,  346. 


INDEX  953 

OBLIGATIONS— Co«/i>iued. 

of  the  vendor,  375,  381,  383,  385. 
of  the  vendee,  387. 
of  a  carrier,  404,  415. 
of  a  receiver,  642. 

OFFER — and  acceptance  in  contract,  289. 
when  made  by  means  of  a  letter,  290. 
when  made  by  telegraphic  correspondence,  290. 
when  made  over  the  telephone,  290. 
its  effects  prior  to  acceptance,  291. 

OFFEREE — his  silence  in  regard  to  the  offer  and  the  effect  of  such  silence,  292. 

OFFEROR — when  he  can  withdraw  the  offer  made,  291. 

OPINION  OF  EXPERTS— as  a  means  of  evidence,  785. 

ORAL  HEARING  or  PROCEEDINGS— of  questions  arising  out  of  transac- 
tions entered  into  at  a  fair,  142. 
no  copies  of  the  complaint  and  documents  accompanying  the  same  are 
necesstry  in  such  proceedings,  773. 

ORAL   ORGANIZATION   OF   COMMERCIAL   ASSOCIATIONS— when 

possible,  168. 

ORDENANZAS  DE  BILBAO,   12,  13,  15,  25. 
ORDENANZAS  DE  BURGOS,   13,  15. 
ORDENANZAS  DE  SEVILLA,   13. 

ORDER  OF  PREFERENCE— in  the  application  of  the  sources  of  law,  8. 
in  the  payment  of  creditors'  debts,  655. 

ORIGINAL  INSTRUMENT— 781. 

OVERLAND  TRANSPORTATION   INSURANCE— its  subject-matter  and 
data  which  the  policy  has  to  contain,  457. 
risks  covered  by  it,  458. 

losses  and  place  where  they  msst  be  proved,  458. 
special  privileges  of  the  insured,  459. 

P 
PACKAGES — or  merchandise  transported  and  not  called  for,  421. 
PARTIAL  ACCEPTANCE— of  a  bill  of  exchange  and  its  effects,  515. 
PARTIAL  ENDORSEMENT— of  a  bill  of  exchange,  500. 


954  INDEX 

PARTIAL  PAYMENT — of  a  bill  of  exchange,  when  its  holder  can  be  com- 
pelled to  accept  it.  524. 

PARTNERS— their  liabilities  and  kinds,  174. 
their  privileges,  182. 

share  of  profits  of  those  who  contribute  their  services  only,  181. 
their  obligations,  182. 

those  who  contribute  their  services  only  do  not  share  in  losses,  183. 
their  special  disabilities,  185. 
their  right  of  preemption  in  case  a  copartner  sells  his  interest,  in  Mexico, 

184. 
damages  caused  by  their  fraud  or  negligence  to  the  partnership,  183. 
death,  insanity  or  withdrawal  of  any  of  them  as  a  cause  of  disolution  of 

the  partnership,  233. 
their  voluntary  withdrawal  from  the  partnership,  235. 
the  bankruptcy  of  any  of  them  causes  the  dissolution  of  the  partnership, 

232. 

PARTNERSHIP— requisites  of  the  agreement,  176. 
composition  of  its  firm  name,  174. 
its  management,  178. 

its  legal  entity  and  consequences  derived  therefrom,  157ff. 
special  grounds  for  dissolution,  232. 
rescission  of  the  agreement,  233. 
effects  of  a  partial  rescission  of  the  agreement,  235. 
law  which  governs  the  form  and  validity  of  its  organization,  272. 
acts  of  non-contentious  jurisdiction  relating  thereto,  802. 
See  Limited  Partnership,  Associations,  and  Partners. 

PASSENGERS — not  obliged  to  register  their  valises  or  hand  baggage,  420. 
PATENTS— in  Argentina,  52;  in  Brazil,  55;  in  Mexico,  60. 

PAYEE — of  a  bill  of  exchange,  and  its  character,  473. 
when  his  name  is  left  in  blank,  482. 

PAYER — of  a  bill  of  exchange,  his  obligation  to  verify  the  endorsement,  529. 
for  honor  of  a  bill  of  exchange,  and  order  of  preference  in  case  there  are 

several,  543. 
for  honor,  his  rights,  5345,  546. 

of  a  letter  of  credit,  legal  relations  between  him  and  the  beneficiary  of  the 
same,  591. 

PAYMENT — of  the  contribution  to  a  partnership,  182. 
of  the  share.of  a  corporation,  197,  198. 

its  character,  person  who  can  make  it  and  to  whom  it  must  be  made,  301. 
application  of  payment  in  case  of  several  debts,  302,  359. 
tender  of,  303. 
of  interest,  310. 
time  of  making  it  in  case  of  a  loan,  358. 


INDEX  955 

PAYMENT— Continued. 

time  of  making  it  in  obligations  without  any  stipulated  period,  295. 

of  losses  by  the  insurer  and  his  subrogation  to  the  rights  of  the  insured, 

434. 
of  losses  in  a  fire  insurance  pohcy,  and  different  ways  of  making  the  same, 

444. 
of  a  bill  of  exchange  is  guaranteed  by  its  drawer,  491. 
of  the  expenses  arising  out  of  the  non-acceptance  or  non-payment  of  a 

bill  of  exchange  is  guaranteed  by  the  drawer,  493. 
partial,  of  a  bLU  of  exchange.    See  Partial  Payment. 
where  pajonent  of  a  bill  of  exchange  must  be  made,  514. 
time  of  making  payment  of  a  bill  of  exchange,  520. 
money  in  which  it  must  be  made,  521. 
before  maturity  of  a  bill  of  exchange  and  its  effects,  522. 
in  advance  can  not  be  imposed  upon  the  holder  of  a  bUl  of  exchange  by  its 

payer,  523. 
of  a  matured  biU  of  exchange  is  presumed  vahd,  523. 
when  a  partial  pa^Tnent  can  be  made  on  bills  of  exchange,  524. 
in  case  a  bill  of  exchange  was  previously  accepted,  524. 
in  case  the  bill  has  not  been  accepted,  526. 
time  limit  for  making  payment  of  a  bill  of  exchange,  540. 
made  by  a  drawee  who  did  not  accept  the  bill  of  exchange,  545. 
of  a  check  must  be  at  sight,  566. 
of  a  crossed  check,  566. 

cases  in  which  it  can  be  refused  on  checks,  568. 
of  unmatured  obligations  made  by  a  bankrupt  is  void,  628. 
when  payment  made  on  debts  not  due  is  void,  630,  631,  633-635,  637,  639. 
made  by  the  bankrupt  otherwise  than  in  cash  is  void,  630,  631,  633. 
after  the  cessation  of  payments  and  before  the  declaration  of  bankruptcy 

is  voidable,  637. 

PENAL  CODE — the  federal  congress  has  power  to  enact  it  for  the  whole 
country  in  Argentina,  51;  in  Brazil,  55;  in  Venezuela,  61. 

PENALTY— clauses  in  a  contract,  297. 

stipulated  in  a  contract  of  transportation  o;in  be  deducted  from  the  freight, 

409. 
for  failure  to  present  a  check  in  proper  time,  565. 

PENSION — for  maintenance  is  not  subject  to  attachment  by  the  creditors  of 
the  beneficiary  bankrupt,  621. 
cases  in  which  they  can  be  partially  attached,  793. 

PERFORMANCE  OF  OBLIGATIONS,  299. 
place  in  which  it  must  be  done,  301. 

PERIOD — of  duration  of  a  partnership  must  be  stated  in  the  partnership 
agreement,  176. 
of  a  corporation,  case  in  which  it  is  extended,  221. 


956  INDEX 

FERIOD— Continued. 

expiration  of  that  provided  for  the  existence  of  a  corporation,  230. 

of  time  needed  for  prescription,  307. 

for  making  claims  on  account  of  fault  in  quality  or  amount  of  merchandise 

sold,  384. 
for  making  claims  in  case  of  transportation,  410. 
for  the  presentation  of  a  bill  of  exchange,  504. 

within  which  acceptance  of  a  bill  of  exchange  must  be  made  or  refused,  509. 
for  issuing  a  redraft,  554. 
in  which  a  check  must  be  presented,  564. 
for  entering  dilatory  pleas,  773. 
for  answering  a  complaint,  774. 
for  admission  of  evidence,  776. 
See  Judicial  Periods  of  Time,  General  Warehouses,  Protest. 

PERSONAL  ACTIONS— judge  having  jurisdiction  thereof,  738. 

PERSONAL  PROPERTY — law  which  governs  it  in  private  international 
law,  816. 

PETITION  FOR  A  MORATORIUM— or  preventive  composition  with  cred- 
itors, its  requisites,  602. 
its  effects,  606. 

PETROLEUM  and  mineral  fuels  in  Mexico,  66  note  63. 

PLACE — in  which  an  obligation  must  be  performed,  301. 

in  which  acceptance  of  a  bill  of  exchange  can  be  requested,  508. 
where  a  protest  must  be  made,  538. 
on  which  a  check  can  be  drawn,  564. 
See  Law  of  the  Place. 

PLAINTIFF — case  in  which  he  fails  to  prosecute  his  action,  761. 

his  obligation  to  present  together  with  his  complaint,  a  copy  of  the  same 

and  of  documents  accompanying  the  same,  772. 
See  Proceedings. 

PLEDGE— its  character,  361. 
form  of  the  contract,  362. 
its  effects,  362. 

enforcement  of  the  rights  derived  therefrom,  363. 
its  invalidity  when  made  by  a  bankrupt,  630,  633  to  635. 

PLEDGEE— his  obligation,  365. 
See  Pledge. 

POLICY— its  contents,  426. 

nullity  of  a  second  one  on  the  same  risk,  430. 

loss  of  the  property  insured  before  the  same  becomes  effective,  432. 


INDEX  957 

POLICY— Continued. 

obligations  of  an  underwriter  when  there  are  two  or  more,  445. 

its  effects  when  it  does  not  cover  the  full  value  and  when  it  covers  more 

than  the  real  value  of  the  thing  insured,  446. 
contents  of  life  insurance  pohcy,  451. 
of  life  insurance,  risks  not  covered  by  it,  453. 

failure  to  mention  others  at  the  time  of  taking  it,  455. 

privilege  of  the  insured  to  ask  for  a  liquidation  thereof  after  he  has 

paid  several  premiums,  456. 
its  benefits  accrue  to  the  beneficiary  over  and  above  the  rights  of  his 

creditors,  456. 
when  it  can  be  endorsed,  456. 
of  overland  transportation  insurance,  its  data,  457. 

POOR.    See  Legax,  Aid  to  the  Poor. 

POSICIONES — their  character  and   requisites,   778. 

POSSESSION — as  a  requisite  for  prescription,  307. 

POWER— of  a  minor  trader,  72. 

of  a  woman  merchant  to  bind  her  own  property  or  that  of  her  husband,  79. 
of  a  woman  merchant  to  sell  and  mortgage  real  estate,  80. 

to  appear  in  court,  91. 
of  a  bookkeeper,  107. 
of  a  factor,  118. 
of  a  clerk,  122. 
its  definition,  315,  317. 
of  a  minor  agent,  316. 
legal  requisites  of  form,  317. 
when  it  is  implied,  318. 
authorizations  contained   in  it  when  it  is   general,  and   when  it  needs 

to  be  special,  321. 
its  requisites  when  it  is  executed  by  partnerships,  corporations  or  agents, 

325. 
its  legalization,  326. 

POWERS  OF  THE  FEDERATION— as  compared  with  those  of  the  States, 
49. 

PREEMPTION — right  of  partners  to,  of  such  interest  in  the  partnership  as 
any  copartner  intends  to  sell  to  a  stranger,  184. 

PREFERENCE — in  case  of  various  acceptors  or  payers  for  honor  of  a  bill 
of  exchange,  543. 
of  creditors  in  a  bankruptcy,  648. 

PREFERRED  CLAIMS  IN  A  BANKRUPTCY— based  on  the  fact  that  the 
title  to  specific  property  constituting  a  part  of  the  bankrupt's  estate 
was  not  vested  in  the  bankrupt  legally  and  irrevocably,  646. 


958  INDEX 

PREFERRED  CLAIMS  IN  A  BANKRUPTCY— Continued, 
based  on  other  legal  grounds,  648ff. 

the  preference  established  by  the  law  of  the  place  where  the  proceedings 
in  bankruptcy  are  carried  on  prevails  over  the  provisions  of  the  law 
of  the  place  where  the  property  subject  to  the  claim  is  located,  687. 

PREPARATORY  PROCEEDINGS,  766. 

PREPARATORY  SWORN  DECLARATION,  766. 

PRESENTATION  OF  A  BILL  OF  EXCHANGE— for  acceptance  and  for 
payment,  502. 
period  for  making  same,  504. 
delay  on  account  of  force  majeure,  507. 
when  previous  acceptance  is  not  necessary,  508. 
See  Bills  of  Exchange,  Acceptance,  Payment,  Protest. 

PREMIUM— its  character,  423,  424. 

it  must  be  stated  in  the  insurance  policy,  427. 
its  payment  as  a  prerequisite  to  bind  the  insurer,  440. 
failure  to  pay  it  in  a  fire  insurance  policy,  442. 
in  a  life  insurance  policy,  455. 


PRESCRIPTION— its  requisites,  307. 
See  Statute  of  Limitation. 


PRETORES  (Justices  of  the  peace)  in  Brazil,  716. 

PREVENTIVE  ATTACHMENT  (Embargo  preventivo),  when  it  lies,  767. 

PREVENTIVE  COMPOSITION  WITH  CREDITORS— its  purpose  and 

effects,  601. 
prerequisites  for  obtaining,  602. 

effects  produced  by  the  application  made  by  the  debtor,  606. 
method  of  effecting  it,  607. 
its  effects  on  the  debtor,  609. 

in  regard  to  third  parties,  610. 
when  it  is  void,  610. 
when  it  can  be  rescinded,  611. 

PREVENTIVE  MEASURES  {Providencias  precavlorias) ,  their  character  and 
kinds,  767. 

PRINCIPAL— is  bound  by  the  acts  of  his  factor,  118. 
his  obligations  towards  his  factor,  120. 
effect  of  bad  treatment  of  his  employees,  122. 
when  bound  by  acts  of  his  clerks,  122. 
See  Agent. 


INDEX  959 

PRINCIPAL  DEBTOR — right  of  the  surety  to  demand  a  previous  execution 
on  his  property  before  the  surety  himself  may  be  compelled  to  pay 
the  debt,  464. 

his  obligations  in  regard  to  the  surety,  466. 

cases  in  which  he  must  pay  the  surety  before  the  latter  pays  the  creditor, 
467. 

PRICE — of  the  thing  sold,  its  determination,  373. 
when  the  obligation  of  paying  it  begins,  388. 
default  in  paying  it,  389. 

PRIVATE  INSTRUMENT— when  it  is  proper  in  the  organization  of  com- 
mercial associations,  168,  197. 

its  character  as  compared  with  a  public  one,  289. 

the  acknowledgment  of  the  subscribing  signature  of  the  same  as  a  pre- 
paratory step  towards  the  executive  proceeding,  766. 

as  means  of  evidence,  778,  784. 

proceedings  to  prepare  an  execution  with  it,  791. 

PROBATIVE  FORCE— of  commercial  books,  108,  110,  113. 
of  broker's  books,  129. 
of  a  broker's  memorandum,  130. 
of  the  testimony  of  witnesses,  312. 
of  an  invoice,  313. 
See  Evidence. 

PROCEDURE— in  countries  of  federal  system,  694flF. 
to  declare  a  law  unconstitutional,  702ff. 
rules  of  general  applications,  737ff. 
in  contentious  jurisdiction,  764fT. 
in  executive  actions,  792ff. 

before  arbitrators  and  amicable  compounders,  698ff. 
in  non-contentious  jurisdiction,  SOOff. 
rules  relating  to  it  in  private  international  law,  823. 

PROCEEDINGS— written  and  oral,  764. 

intestacy,  testamentary,  insolvency  and  bankruptcy,  765. 

before  the  complaint,  765. 

to  avoid  litigation,  765. 

See   Procedure,   Executive   Action,    Summary   Action,  Voluntary 

Jurisdiction. 
in  bankruptcy,  how  started,  615,  640. 
discontinuance  of  the  same  and  its  effects,  671. 
in  action,  their  essential  parts,  770. 

PRODUCTION  OF  COMMERCIAL  BOOKS— when  it  can  be  ordered  by 
the  courts,  108. 


960  INDEX 

PROFITS — method  of  dividing  them  must  be  stated  in  the  association  agree- 
ment,   176. 

the  manner  and  periods  in  which  they  should  be  divided  must  also  be 
stated  in  the  instrument  of  organization  of  the  association,  177. 

the  mere  fact  that  a  person  receives  a  share  in  profits  of  a  general  partner- 
ship does  not  make  him  a  partner,  178. 

to  share  in  those  of  a  partnership  is  one  of  the  privileges  of  the  partners, 
181. 

way  in  which  the  partner  who  contributes  his  services  only  is  entitled  to 
share  in  them,  181. 

those  obtained  by  a  partner  through  an  unlawful  use  of  tlu  common 
funds,  are  lost  by  him  to  the  partnership,  185. 

See  Partnership,  Corporation,  Partners,  Stock-Holders. 

PROMISE — of  a  gift  is  enforceable  in  Latin-America,  286. 
to  accept  a  bill  of  exchange  and  its  effects,  516. 

PROMISSORY  NOTE — its  inscription  in  the  commercial  registry  in  Cuba, 
93. 
its  maturity  when  a  term  is  not  stated  therein,  561. 
payable  to  bearer,  561. 

its  discount  is  void  when  made  by  a  bankrupt,  633. 
its  payment  after  the  date  of  cessation  of  payments  is  void,  633,  638. 

PROMOTERS  OF  A  CORPORATION— their  privileges,  198, 200,  203, 204. 

their  obligations,  201,  203. 
their  liabilities,  206. 

PROOF — of  a  loss  by  fire  in  case  of  insurance,  in  what  it  consists  and  upon 

whom  lies  the  burden  of  making  it,  448. 
of  obligations,   311. 
where  proof  of  the  loss  of  a  thing  must  be  made,  in  connection  with  the 

contract  of  overland  transportation  insurance,  458. 
of  the  existence  of  a  contract  of  current  account,  597. 
See  Evidence. 

PROPERTY — of  the  legal  partnership  between  the  husband  and  his  wife, 
and  in  relation  to  marriage,  74. 
liable  for  commercial  obligations  of  the  married  woman,  79. 
of  a  commercial  association,  161. 
of  general  partners  is  responsible  for  the  transactions  and  liabilities  of  the 

partnership,  174. 
recoverable  from  a  receiver  in  bankruptcy,  646. 

PROTECTION  OF  MINORS,  732. 

PROTEST  OF  A  BILL  OF  EXCHANGE— considered  as  a  matter  of  public 
interest,  is  subject  to  strict  formalities,  531. 
exceptions  to  that  rule,  532. 


INDEX  961 

PROTEST  OF  A  BILL  OF  EXCRA'NGE— Continued 
time  for  making,  534. 
when  necessary,  535. 
place  where  it  must  be  made,  536. 
official  who  must  perform  it,  537. 
necessary  persons  attending,  537. 
requisites  of  the  memorandum,  538,  540. 
for  non-pajTnent  is  necessary  even  when  the  bill  has  been  protested  for 

non-acceptance,  54L 
carried  out  before  persons  indicated  as  referees  in  case  of  need,  541. 
for  non-acceptance  and  its  effects,  542. 
effects  of  it  when  made  for  non-payment,  542. 
its  effects  on  the  preparation  of  an  executive  action,  792. 

PROTEST  OF  A  CHECK— where  necessary,  567. 

PROTEST  OF  A  LETTER  OF  CREDIT,  590. 

PROTOCOLIZATION — of  articles  and  by-laws  of  commercial   associations 

167,  note  30. 
of  the  minutes  of  an  incorporating  meeting  of  a  stock  company  and  its 

by-laws,  202,  203. 
of  papers  relating  to  foreign  commercial  associations,  and  by-laws,  in 

Colombia,  259;  in  Mexico,  266,  267;  in  Panama,  268. 

PROTOCOLO — duties  payable  on  each  of  its  sheets,  in  Mexico,  267. 
to  make  it  is  one  of  the  duties  of  a  notary,  781. 
its  description  and  requisites,  783. 

PROVISIONAL  INSCRIPTION  IN  THE  COMMERCIAL  REGISTRY— 
in  Panama,  95. 

PROXY — can  represent  a  share-holder  in  the  general  meeting  of  an  associa- 
tion, form  of  his  power,  222. 

PUBLIC  INSTRUMENT— when  necessary  in  the  organization  of  a  com- 
mercial association,  167,  196. 

when  void,  182. 

as  a  means  to  start  the  organization  of  a  stock  company,  199. 

its  definition,  289. 

as  a  means  of  proving  obligations,  311. 

as  essential  condition  for  the  existence  of  a  power  of  attorney  in  some 
countries,  318,  319. 

as  a  means  of  evidence,  778,  779. 

how  drafted  by  a  notary,  781. 

PUBLICITY — of  the  withdrawal  of  the  authorization  to  trade  given  to  a 

married  woman  by  her  husband,  77. 
economic  and  legal,  in  relation  to  commerce,  84. 


962  INDEX 

PUBLICITY— Con/mwed. 

method  adopted  in  Mexico,  88. 

in  reference  to  corporations,  228. 

of  the  premature  dissolution  of  a  commercial  association,  236. 

of  the  declaration  of  bankruptcy,  641. 

PUBLIC  LANDS — they  belong  to  the  nation  or  to  the  provinces  in  Argentina, 
63;  and  Brazil,  64;  they  are  governed  by  the  federal  law  in  Mexico 
and  Venezuela,  65,  66. 

PUBLIC  POLICY — provisions  relating  to  it  can  not  be  overruled  by  laws 
enacted,  or  judgments  rendered,  or  regulations  or  contracts  made  in 
foreign  countries,  811. 

PUBLIC  PROCURATOR— his  functions  and  character,  732. 

PUBLIC  SECURITIES — transactions  relating  to  them  made  through  col- 
legiate brokers  must  be  announced  on  the  exchange,  145. 

PUBLIC  SERVICE  COMPANIES— when  a  declaration  of  suspension  of 
payments  of  the  same  is  proper,  679. 
effects  of  such  declaration,  680. 
settlement  with  their  creditors,  679. 

PUBLIC  SUBSCRIPTION— in  order  to  organize  a  stock  company,  199. 

PURCHASE  AND  SALE — presumed  to  be  for  cash  in  public  stores,  141. 
its  character,  366. 
when  completed,  368. 
when  mercantile,  370. 
when  not  mercantile,  371. 
its  subject  matter,  372. 
determination  of  the  price,  373. 
specification  of  the  thing  sold,  374. 
effect  of  the  clause  "free  of  charges,"  375. 
obligations  of  the  vendor,  375. 
the  delivery  of  the  thing  sold,  376  to  379. 

expenses  incurred  in  such  delivery  and  who  must  defray  them,  380. 
warranty  of  title,  381. 
warranty  for  hidden  defects,  383. 
risk  of  loss  of  the  thing  sold,  385. 
obligations  of  the  vendee,  387. 
earnest  money,  389. 
of  a  commercial  house,  391. 


QUE  J  A  (Application  for  a  writ  of  mandamus) — in  Eucador,  722;  in  Nicaragua, 
725. 
when  it  lies,  758. 


INDEX  963 

QUESTIONS  OF  JURISDICTION— they  must  first  be  passed  upon  in  case 
of  several  dilatory  pleas  entered  by  the  defendant,  774. 
See  Conflicts  op  Jurisdiction. 


RAILROADS — in  Argentina,  53;  in  Brazil,  56;  in  Mexico,  59;  in  Venezuela, 
61. 

REAL  ACTION — judges  who  are  competent  to  take  cognizance  thereof, 

738. 

REAL  ESTATE — is  governed  by  the  law  of  the  country  in  which  it  is  located, 
815. 

RECEIPT — it  may  be  inscribed  in  the  commercial  registry  in  Cuba,  93. 
its  legal  effects,  303,  359. 
on  checks,  566. 

RECEIVER  IN  BANKRUPTCY— his  appointment,  640. 

his  duties,  642. 

his  compensation,  643. 

RECIPROCITY  (PRINCIPLE  OF)— in  the  capacity  of  foreigners  to  exer- 
cise civU  rights,  83. 
in  reference  to  the  capacity  to  inherit  in  Mexico,  822. 
in  the  execution  of  a  foreign  judgment,  823. 

REC0PILACi6n  DE  LEYES  DE  INDIAS,  9,  15. 

RECORDING  CLERKS  (Actuarios),  733. 

RECORDS  OF  BROKERS— of  prices  of  commodities,  127, 
of  transactions  entered  into  through  them,  145. 

RECOURSE  AGAINST  JUDICIAL  DECISIONS,  756. 

See  Appeal,  Casacion,  Revision,  De  Facto  Remedy. 

REDRAFT— its  purpose,  552. 
items  thereof,  552. 

only  one  is  admissible  in  a  bill  of  exchange,  553. 
interest  due  on  it,  554. 
period  for  issuing,  554. 

REEXCHANGE  account— its  object  and  items  it  may  contain,  563. 
REFEREES  IN  CASE  OF  NEED,  518. 
reference  IN  A  BILL  OF  EXCHANGE,  617. 


964  INDEX 

REGISTRADOR  GENERAL  in  Panama,  his  functions,  271. 

REGISTRARS — their  function  in  commercial  matters,  89. 

REGISTRATION — of  documents  after  the  cessation  of  payment  of  a  bank- 
rupt can  be  declared  void,  637. 
See  Commercial  Registry. 

REGISTRO  GENERAL  in  Cuba,  263. 

REGISTRY  OF  COMMERCE.    See  Commercial  Registry. 

REHABILITATION  OF  A  BANKRUPT— its  character  as  compared  with 
discharge  of  the  bankrupt,  672. 
when  proper,  673f675,  687. 

REINSURANCE,  431. 

RELEASE — its  effects  in  case  of  a  bill  of  exchange,  55. 
from  a  debt,  305. 

REMEDY  OF  NULLITY  in  Ecuador,  721;  in  Panama,  725. 

REPLEVIN — negotiable   instruments   payable   to   bearer  are   not  subject 
thereto,  577. 

R&PLICA—itB  nature,  775. 

REPORT — of  the  supervisor  of  a  stock  company  to  the  general  meeting  of 
stock-holders,  227. 

REQUISITES— to  be  a  broker,  130. 

of  a  partnership  agreement,  176. 

of  a  power  of  attorney,  317ff. 

of  a  contract  of  insurance,  425. 

of  a  suretyship,  463. 

for  a  surety  to  exercise  the  benefit  of  levy  of  execution  against  the  prin- 
cipal debtor,  464. 

for  a  bill  of  exchange  to  be  a  substitute  for  money,  475. 

in  a  bill  of  exchange,  480. 

of  the  endorsement  of  a  bill  of  exchange,  495. 

of  the  memorandum  of  protest  of  a  bill  of  exchange,  538. 

of  a  librama  (local  bUl  of  exchange),  558,  559. 

of  a  check,  563. 

of  a  letter  of  credit,  587. 

for  obtaiaiug  a  moratoriima  or  preventive  composition  with  creditors, 
602. 

of  a  settlement  with  a  pubUc  service  company  in  bankruptcy,  679. 

of  a  judicial  complaint,  771. 


INDEX  965 

REQUISITES— Con<inM«d. 
to  be  a  notary,  781. 
of  a  protocolo,  see  this  word, 
of  wills  are,  as  a  rule,  governed  by  the  law  of  the  country  in  which  they 

are  executed,  820. 
of  wills  executed  in  foreign  countries,  820. 
to  execute  judgments  rendered  in  foreign  countries,  824. 
See  Form. 

RESCISSION— of  partnership  agreement,  233. 

of  a  preventive  composition  with  creditors,  611. 

an  action  demanding  such  rescission  can  be  brought  against  the  debtor 

and  his  successors  in  interest,  637. 
of  a  settlement  of  a  debtor  with  his  creditors  in  bankruptcy,  669. 

RES  JUDICATA — its  effects  in  bankruptcy  proceedings,  623. 

RETROACTIVE  EFFECT  of  a  declaration  of  bankruptcy.     See  Bank- 
ruptcy. 

REVISTA  DE  DERECHO  INTERN ACIONAL  (Madrid),  2. 

REV  I  ST  A  DE  DIRITTO  COMMERCIALE,  2. 

REVISTA  I  TALI  AN  A  PER  LA  SCIENZE  GIURIDICHE,  2. 

REVISION — as  a  remedy  to  nullify  proceedings,  758. 

REVUE  DE  DROIT  INTERNATIONAL  ET  DE  LEGISLATION  COM- 
PAREE,  2. 

REVUE  DE  DROIT  INTERNATIONAL  PRIVE,  2. 

REVUE  DE  L'INSTITUT  DE  DROIT  COMPAR&,  2. 

RHODIAN  LAW,  10. 

RISK  OF  LOSS— of  the  thing  sold,  385. 
of  transported  goods,  402. 
covered  by  a  contract  of  insurance,  424. 
not  covered  by  a  life  insurance  pohcy,  453. 

RULINGS  (Autos)  in  judicial  proceedings,  752. 

S 

SALA  DE  ACUERDOS—m  Panama,  726. 

SALARIES — only  a  certain  portion  thereof  can  be  attached  in  execution  of  a 
debt,  793. 


966  INDEX 

SAXE  OF  A  COMMERCIAL  HOUSE,  391. 

SALE — of  insured  property,  430. 
See  Purchase  and  Sale. 

SEAL  put  on  the  doors  of  stores,  warehouses  and  other  places  where  the  per- 
sonal property  of  a  bankrupt  can  be  located,  641. 

SECRECY— required  of  brokers,  133. 

SECRETARIES  OF  COURTS— their  functions,  732,  745. 
challenge  of  the  same,  740. 

SECURITY  FOR  COSTS— various  systems,  774. 

SECURITY  OF  PROPERTY  IN  LITIGATION,  768. 

SETTLEMENT.    See  Preventive  Composition  with  Creditors  and  Com- 
position WITH  Creditors  During  the  Bankruptcy  Proceedings. 
by  arbitrators,  and  amicable  compounders,  798ff. 

SET  OFF — as  a  means  of  diminishing  or  extinguishing  an  obUgation,  305. 

SEVERAL  AND  JOINT  OBLIGATIONS,  293. 

SHAREHOLDERS.    See  Stock-Holders. 

SHARES  OF  STOCK— are  movable  property,  161. 

their  number  must  be  stated  in  the  articles  of  organization  of  the  com- 
pany, 197. 
subscription  thereto,  201,  202. 
their  different  kinds,  207. 
their  description,  207. 
their  indivisibility,  208. 

requisite  for  issuing  those  payable  to  bearer,  208. 
method  of  transferring  them,  210. 
new  issues  of  the  same,  211. 
corporations  can  not  buy  those  which  they  issue,  212. 

SHOP  CLERKS,  capacity,  rights,  duties  and  functions  of  the  same,  125. 

SIETE  PARTIDAS,  9,  12. 

SIMULATED  CONTRACTS,  when  they  produce  the  declaration  that  a  bank- 
ruptcy is  fraudulent,  659. 

SOCIALISTS — their  theory  regarding  commercial  associations,  156. 
influence  of  this  theory  on  positive  law,  157. 


INDEX  967 

SOCIEDAD — broad  meaning  of  this  word  in  Spanish,  156  in  note  1. 
en  Jiombre  coleclivo,  165. 
en  comandita,   165. 
anonima,  165. 

STAMPED  PAPER,  in  Venezuela,  61. 

STAMP  TAX.    See  Taxes. 

STATEMENT  or  BALANCE  BOOK,  102,  106. 

STATE  OF  BANKRUPTCY.    See  BANKRnprcY. 

STATE  TREASURY — sources  of  revenue  in  Argentina,  53;  in  Brazil,  56;  in 
Mexico,  59;  in  Venezuela,  61. 
trespasses  on  the  federation  in  Argentina,  53. 

STATUTE  OF  LIMITATION— in  reference  to  brokers,  136. 
in  reference    to  transactions  in  public  stores,  141. 
to  commercial  associations.  170. 
to  overland  transportation,  412. 
to  contracts  of  insurance,  435. 
to  negotiable  instruments,  571. 
See  Prescription. 

STOCK  COMPANIES— its  equivalent  in  Latin-American  law,   165. 
See  Commercial  Association,   Corporations. 

STOCK  CORPORATIONS— they  are  a  normal  development  of  commercial 

partnerships  in  civil  law  countries,  155. 
different  conception  of  the  same  in  La  tin- American  and  in  Anglo-American 
law,  156. 

STOCK-HOLDERS— their  obligations,  195. 

are  not  allowed  to  inspect  the  books  of  the  company,  195. 

minimum  number  required  for  the  organization  of  a  corporation,  204. 

their  es.sential  rights  and  privileges,  209. 

their  liability,  210. 

their  general  meetings,  216. 

functions  of  their  regular  meetings,  217. 

formalities  for  calling  such  meetings,  217. 

their  special  meetings  and  form  in  which  they  must  be  called,  219. 

their  privilege  of  withdrawing  from  the  corporation,  221. 

they  may  be  represented  by  proxy  in  the  general  meetings,  222. 

method  of  Argentina  for  the  representation  of  those  who  reside  in  foreign 

countrie.s,  222. 
their  liability  in  case  of  bankruptcy  of  the  corporation,  676. 

STORES— their  definition,   141. 

statute  of  limitation  in  regard  to  transactions  carried  therein,  141. 
purchases  made  in  them  are  presumed  to  be  for  cash,  141. 


968  INDEX 

STUB-BOOK— for  shares  of  stock,  210. 
for  checks,  569,  570. 

SUBROGATION,  of  the  insurer  to  the  rights  of  the  insured,  434. 

SUBSTITUTION,  of  one  thing  for  another  in  case  of  fire  insurance,  439. 

SUICIDE,  not  covered  by  a  life  insurance  contract,  453. 

SUMMARY  ACTION— 764. 

to  acquire  possession  (interdicto  de  adquirir  la  posesion),  to  retain  posses- 
sion {interdicto  de  retener  la  posesion),  to  recover  possession,  {inter- 
dicto de  recuperar  la  posesibyi),  to  prevent  a  new  injurious  possession 
{interdicto  de  obra  nueva),  against  ruinous  construction  {interdicto 
de  obra  ruinosa),  790. 

SUMMONS  {emplazamiento) — 744. 
method  of  serving  the  same,  745. 
in  foreign  countries,  747. 

SUPERIOR  COURTS.  See  Cortes  Superiores,  Corte  Suprema,  Tri- 
bunal, Supremo,  Tribunal  Superior,  Tribunal  de  Mercado  de 
Segunda  Instancia. 

SUPERVISION  OF  STOCK  COMPANIES,  methods,  188,  198,  227;  in 
Cuba,  263;  in  Uruguay,  274. 

SUPERVISORS— of  stock  companies,  227. 

they  are  appointed  in  case  a  debtor  appUes  for  a  moratorium  or  a  composi- 
tion with  his  creditors,  606. 

SU PLICA— in  Nicaragua,  725. 
when  proper,  756. 

SURETY— requisites  that  he  must  fulfill,  463. 
benefits  to  which  he  is  entitled,  464,.  466. 

when  he  may  proceed  against  the  principal  debtor  before  he  is  compelled 
to  pay  the  debt,  469. 

SURETYSHIP— its  definition,  460. 
obUgations  contained  therein,  462. 
its  effects  between  the  surety  and  the  creditors,  463. 
privilege  of  a  surety  of  asking  for  a  previous  levy  of  execution  against 

the  principal  debtor,  before  being  compelled  to  pay,  464. 
privilege  of  a  surety  of  demanding  contribution  from  the  cosureties,  465. 
its  effects  as  between  the  principal  debtor  and  the  surety,  466. 

among  cosureties,  468. 


INDEX  969 

SURETYSmV— Continued. 
when  commercial,  470. 
form  of  the  contract,  470. 
in  a  bill  of  exchange,  518. 
its  effects,  519. 

T 

TAKING  OVER  the  debtor's  property,  and  its  effect,  611,  670. 

TAXES — upon  real  estate,  50;  in  Argentina,  52;  in  Brazil,  55;  in  Mexico,  59; 

in  Venezuela,  60. 
stamp  tax  in  Argentina,  53;  in  Mexico,  59. 
on  foreign  corporations  in  Argentina,  253;  in  Bolivia,  254;  in  Chile,  259; 

in  Cuba,  264;  in  Mexico,  267;  in  Venezuela,  276. 

TELEGRAPHIC  CORRESPONDENCE,  290. 

TEMOR   REVERENCIAL,    its    meaning    and    effect    on    the   validity   of 
contracts,  284. 

TENDER  OF  PAYMENT,  form  and  effects  thereof,  303. 

TENIENTES  ALCALDES,  in  Uruguay,  729. 

TERM— for   obligations,    295. 
how  computed,  296. 
of  bills  of  exchange,  485. 
how  computed,  486. 
maturity  of  a  promissory  note  when  none  fixed  therein,  561. 

TESTIMONIO—hs  meaning,  266-268. 
its  character  and  requisites,  783. 

THING  SOLD— its  specification,  374. 
its  delivery.    See  Delivery. 
risk  of  loss  of  the  same,  385. 
obligation  of  receiving  it,  387. 
warranty  for  hidden  defects,  383. 

THIRD  PARTIES — as  affected  by  the  provisions  in  regard  to  commercial 

registry,  94,  235. 
their  rights  in  connection  with  a  joint  adventure,  244,  246. 

against  agents  of  foreign  companies  in  Chile,  258.  in  Panama,  271. 
as  affected  by  an  agreement  made  by  others,  292. 
in  relation  to  contracts  entered  into  through  agents  or  comisionistas,  331, 

332. 
their  interest  in  negotiable  instruments  payable  to  bearer,  585. 
how  affected  by  a  composition  of  a  debtor  with  his  creditors,  610. 
their  rights  in  reference  to  property  in  possession  of  a  bankrupt,  631. 


970  INDEX 

TIME — for  paying  a  bill  of  exchange,  489,  540. 
for  making  protest  upon  the  same,  534. 

in  which  a  debtor  can  demand  a  settlement  with  his  creditors,  661. 
for  demanding  the  disapproval  of  the  settlement,  666. 

TITLE — to  a  thing  as  an  essential  requisite  for  prescription.  307. 
limitation  of  the  above  rule  in  mercantile  affairs,  308. 
when  it  passes  from  the  seller  to  the  vendee,  358. 

TRADE  MARKS,  law  governing  them  in  Venezuela,  62. 

TRANSPORTATION  OVERLAND— its  character,  394,  399. 
its  form,  395. 

special  cases  of  rescission  of  the  contract,  400. 
how  affected  by  the  statute  of  hmitation,  412. 
obligations  of  public  carriers,  419. 
loss  of  goods  deUvered  to  the  carrier,  420. 
packages  and  merchandise  not  called  for,  421. 

See  Carrier,  Consignee,  Consignor,  Lien,  Overland  Transporta- 
tion Insurance. 

TRIBUNAL  DE  MERCADO  DE  SEGUNDA  INSTANCIA,  713. 

TRIBUNAL  SUPERIOR,  in  Colombia,  718;  in  Mexico,  724,  741;  in  Nicara- 
gua, 725;  in  Venezuela,  731. 

TRIBUNAL  SUPREMO,  in  Cuba,  720;  in  Guatemala,  722. 


UNCONSTITUTIONALITY  OF  LAWS,  in  Colombia  and  Panama,  702, 
704;  in  Bolivia,  Brazil,  Cuba,  Santo  Domingo,  Uruguay  and  Vene- 
zuela, 703,  721;  in  Argentina,  Haiti,  Honduras,  Mexico,  Nicaragua, 
and  San  Salvador,  705;  in  Chile,  Costa  Rica,  Ecuador,  Guatemala, 
Paraguay  and  Peru,  711. 

UNDERWRITER.     See  Insurer. 

UNIVERSAL  PROCEEDINGS  (Juicio  universal),  its  character,  622. 

UNLAWFUL — transactions  on  the  exchange,  143. 
waivers  in  the  contract  of  transportation,  418. 

UNLIMITED  PARTNERS— only  their  name  can  be  included  in  the  firm- 
name  of  the  partnership,  239. 
their  liabilities,  240. 
See  Partners,  Partnership,  Commercial  Associations. 

USANCES,  meaning  in  connection  with  bills  of  exchange,  487. 


INDEX  971 

V 

VALUATION,  of  property  lost  by  fire  in  case  of  insurance,  448. 

"VALUE  ON  ACCOUNT,"   "VALUE  UNDERSTOOD,"   effect  of  these 
clauses  in  a  bill  of  exchange,  485. 

VALUE,  of  the  thing  insured,  when  different  from  that  stated  in  the  policy 

how  it  affects  the  contract  of  insurance,  429. 

VENDEE — his  rights  and  obligations  in  case  of  eviction,  382. 
of  hidden  defects,  383. 
his  obligations  in  general,  387. 
his  default  in  paying  the  price,  389. 
See  Purchase  and  Sale. 

VENDOR— his  obligations,  375. 

case  in  which  he  disposes  of,  consumes  or  damages  the  goods  sold  by 

him,  379. 
his  warranty  of  title,  .381. 

cases  in  which  he  assumes  the  risk  of  the  thing  sold,  386. 
his  obligation  of  giving  an  invoice,  385. 
See  Purchase  and  Sale. 

VIDARI,  his  definition  of  commerce,  33. 

VOTES — of  subscribers  in  the  organization  of  a  stock  company,  201. 
necessary  for  reducing  the  capital  of  a  corporation,  213. 
limitations  of  the  voting  power,  219. 

necessary  for  accepting  a  composition  proposed  by  a  bankrupt  to  his 
creditors,  663. 

VOYAGES  OUT  OF  THE  COUNTRY,  if  death  occurs  during  them  it  is  not 
covered  by  a  life  insurance  policy,  454. 

W 

WAIVER — of  obligations  arising  out  of  future  fraud  is  unlawful  and  void, 

309. 
when  it  is  unlawful  in  the  contract  of  overland  transportation,  418. 
when  it  is  lawful  in  that  contract,  419. 
of  jurisdiction,  739. 
of  an  inheritance,  bequest  or  usufruct,  made  by  a  bankrupt  is  unlawful, 

632,  636. 
of  a  time  period  established  in  favor  of  a  bankrupt  ran  not  be  made  by 

him,  and  avoids  the  payment  made  thereunder,  633. 

WAREHOUSE.     See  Warehouses. 


972  INDEX 

WARRANTS— their  character,  149,  150. 
their  requisites,  150. 

must  be  detached  from  a  stub-book,  151. 
failure  to  pay  the  debt  guaranteed  by  them,  151. 
period  for  the  warehouse  to  sell  the  goods  subject  to  them,  152. 

WARRANTY— of  title,  381. 
of  hidden  defects,  383. 

WILL — its  production  in  court  as  a  preparatory  proceeding,  766. 

law  which  governs  the  form  and  validity  of  the  same  according  to  private 
international  law,  820. 

WITHDRAWAL — of  the  authorization  to  trade  given  to  a  married  woman 
by  her  husband,  77. 
of  a  partner  from  the  partnership  as  a  cause  of  dissolution  of  the  latter,  233. 

WITNESSES— admissibility  of  their  testimony,  312. 
how  their  testimony  is  taken,  786. 

WOMEN— as  brokers,  131. 

their  capacity  to  make  an  aval  (suretyship  on  a  bill  of  exchange),  520. 
See  Married  Women,  Legal  Partnership. 

WORKING  DAYS  AND  HOURS  {Bias  y  horas  hdUles),  751. 

WRIT—  of  habeas  corpus,  720,  728. 
of  mandamus,  722,  725,  758. 
of  ne  exeat,  622. 

WRITTEN  INSTRUMENT,  as  a  requisite  for  some  contracts,  288. 

Z 

ZEBALLOS,  E.  S.,  editor  of  Bulletin  Argentin  de  Droit  International  Prive,  3. 

ZEITSCHRIFT    FUR    INTERNATIONALES    PRIVAT    UND    STRA- 
FRECHT,  2. 

ZEITSCHRIFT  FUR  VERGLEICHENDE  RECHTSWISSENSCHAFT,  2. 

ZEITSCHRIFT  FUR  VOLKERRECHT,  2. 

ZEITSCHRIFT  FUR  HANDELSRECHT,  2. 


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